April 4, 2009
This week's rallies have been based upon good news for investors such as
the easing of mark-to-market accounting rules and Secretary Geithner's
plan to take to take toxic ("legacy") assets off banks' balance
sheets. This will allow banks to report profits rather than losses, and to
appear to be better going forward. And rising bank stocks have helped fuel
this rally. Here are two countervailing opinions regarding what April has
in store for the current bull market rally: Rally battles profit worries,
and Adjusting expectations.
But I've updated the sidebar discussion "With
the economy sinking like a stone, how can anyone seriously claim that a
new bull market is about to start?", and so far, I don't really
see the improvements in the economy to which the above articles refer. I
see a pattern of slight improvements over the past month or two that are
later revised downward to reveal an economic picture that is continuing to
deteriorate. (At the same time, I see the suggestion of a change in
curvature that betokens a market bottom.) You might want to take a look at
this and see what you think.
Irrespective of what I think or don't think, the
S&P 500 has now risen about 25% above its March bottom, and I've begun
some cautious deployment of cash. Specifically, I've purchased the shares
recommended by Paul Goodwin in the Cabot China and Emerging Markets
Newsletter. His first recommendation, Shanda Interactive (SNDA), is up 43%
since he recommended it at $30 a share, closing yesterday at $42.88. His
recent second recommendation, Aluminum Corporation of China (ACH) closed
yesterday at $17.65, up 10%. I'll have to wait until his third
recommendation is publicly posted before revealing what his
paid-subscription newsletter advises.
I've also established a small position in the Chinese
solar power purveyor Suntech (STP). Suntech should be a beneficiary of the
recently announced Chinese solar subsidy program, details of which have
yet to be released.
All four of these companies are Chinese, and would be
protected against a fall in the dollar, if that should occur.
Among U. S. stocks, I own First Solar.
Safe, Dividend-Yielding Stocks
The following table of safe, dividend-paying stocks is
based upon data given in the May, 2009, issue of Kiplinger's