On Tuesday (2/24) I sold the last of my Kinross Gold (NYSE:KGC) as it hit my trailing stop loss and gold finally had a big down day. I've entered some orders to "catch a falling knife" if KGC and a few other of my favorites (Goldcorp--symbol GG, and Agnico-Eagle--symbol AEM) can correct at least 10% off their recent highs.
Now why would I mention Kraft Foods (NYSE:KFT), which moved up Tuesday by over 3%? Because it is a good example of a company that appears "recession-proof", pays an apparently sustainable dividend, generates lots of cash and recently hit a 52-week low.
Unlike the gold and silver miners which have all had an amazing run-up from their shocking lows of last autumn, companies like Kraft Foods and ConocoPhillips (NYSE:COP) have fallen off a cliff in the same time period. So have many of the other big energy companies.
It might not be the perfect time to "imbibe" fearlessly as an investor, but it might not be a bad time to consider some "nibbling".
Over the long-haul, well run companies that are leaders in what they do and produce things we can't seem to live without usually make investors a lot of money when they are purchased after a rip-snorting correction.
The major market indices finally had a nice up day on Tuesday. I'd almost forgotten what it feels like. Without a crystal ball I don't know if this is a one-day banquet or the beginning of a multi-week wedding feast. I don't even want to guess.
Speaking of guesses, I prefer "educated guesses" a.k.a. hypothesis, and that is what most articles on this topic contain. My article is no exception. I want to motivate the reader to check out my "hypothesis" and to have their eyes wide open.
That's one of the reasons I enjoy writing these articles. The only way most investors get to "sell high and buy low" is because they are lucky, patient and insightful. Any other reasons are sheer bravado from my point of view.
Warren Buffett has often said he doesn't have a clue what the stock markets will do tomorrow, but he buys great companies when fear is high that he's willing to hold for five years. He's also willing to buy more if it goes down after he buys his first portion.
Do any of us have a better formula than that? I seriously doubt it. Kinross, Kraft, and ConocoPhillips look like the ingredients of an excellent investment "banquet", and most of us either show up early or late to the table. One in a thousand show up at the so-called "right time".
But good ideas and careful analysis can lead to some lucrative starting points. This article is meant to generate some good ideas, but you should do the "careful analysis" or pay someone who is competent and independent to do it for you.
Never before have we writers, editors and investment publishers been more interested in closing what we say with some healthy disclaimers. I'll end this article with one I'm using which happens to also be instructive and timely. It goes like this:
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk.
Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please remember investments can fall as well as rise. And they will! Especially in this day and age.
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The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
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