We begin a new series today. Periodically we will publish our picks and track those picks.
Buy the E Mini S&P 500 (ES – CME) June 2013 $1,496.75, or IYY ETF. They track the Dow which hit a historic high yesterday. Both the ES & the IYY are inexpensive and easy ways to ride the wave up with DOW.
We have long expressed the opinion that the US economy will pick up steam and is the best place to invest your money currently. We disagree with the proponents of the printing money theory, the gold buffs theory of currency devaluation, and the rest. Our comments have been expressed in detail in previous blogs, wherein we gave detailed analysis of why we hold these beliefs.
We believe that as the economic cycle is starting its entry into the next phase, the economic circumstances will continue to improve in the USA. The USA is the safest place to invest, as well as the place with the greatest profit potential.
We urge readers to ignore unemployment numbers and employment numbers that have been published. Firstly these numbers are severely skewed because they do not include those persons that supposedly have left the workforce, which is ridiculous, and further any number published is subject to revision the next month. We also point out two basic facts. Firstly, in every recovery the growth in employment numbers badly trails the other economic indicators. Unemployment numbers are a very misleading indicator of economic progress. Secondly, the workforce is dramatically changing because of the internet, social media, independent contractors, the right to work, and so many other factors. The world is changing and relying on old and outdated measurements of economic progress, leaves one far behind.
The Dow Jones Average
It is said that the stock market forecasts the economy and knows well in advance what the future holds. While this theory is also flawed, at the moment the stock market is forecasting prosperity. Yesterday the DJIA (Dow Jones Industrial Average) broke the 14,000 barrier for the first time in 5 years.
If one charts the index, it has shown a continual increase within a range of ups and downs since mid-2011. The range is continually pointing up and is remarkably consistent. This technical indicator happens to mirror our beliefs as to the state of the USA economy.
As the DJIA chugs upward, the question is how does the investor ride this train. There are many ways to buy securities that mirror the DJIA. We suggest either of two ways. Firstly, one might buy the IYY ETF. This is the iShares Dow Jones U.S. Index Fund, which corresponds generally to the price and yield of the US equity broad market. It does not exactly track the Dow as fees and expenses are deducted, but these are relatively light and far cheaper than any mutual fund charges. ETF’s trade like stocks and can be bought and sold in an identical fashion to stocks.
Another way is to purchase ES which is a futures contract on the CME (Chicago Mercantile Exchange). These have expiry dates and the March contract is coming closer. We suggest the June 2013 contract which currently trades at $1,496.75. This is our preferred way to track the DJIA.
After hitting a new high, the market tends to weaken and gather strength for the next push up. Looking at any chart in any time frame will clearly illustrate this. While we recommend this investment, waiting and watching for a few days would be a conservative way to play this. The current numbers may be a bit strong, so waiting a few days or a week might give a better entry price.
We may or may not have positions in the securities we name under ‘Whats-Hot-or-Not’. Whether an investment is made in a particular security depends on many factors, including portfolio balancing, timing, cash and capital reserves, asset allocation and numerous other factors. Readers are advised to do their own research on our picks and decide in light of their own circumstances, whether an investment is appropriate.
Whats-Hot-or-Not Historical Picks
February 2, 2013 E Mini (ES – CME) June 2013 $1,496.75, or, IYY ETF
We may or may not have positions in the securities we name. In making an investment decision numerous factors must be considered including portfolio balancing, timing, cash and capital reserves, asset allocation and other factors. Readers are strongly advised to do their own research. Matters discussed contain forward-looking statements that are subject to risks and uncertainties and actual results may differ materially from any future results, performance or achievements expressed or implied.
Views expressed are opinions and not investment advice. Persons investing should retain a licensed professional to guide them and not rely on the opinions expressed herein. This report is neither a solicitation nor a recommendation to buy or sell securities. We are not a registered investment advisor nor a broker-dealer. The information contained herein is based on sources which we believe reliable but is not guaranteed as being accurate or a complete statement or summary of the available data.
Categories: Stocks Recommended