Daily Investment Interpretations

April 4, 2009

2009-4-4:  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 Magazine: