D&D Note (4-19-2012)
Do we make new highs or do we further correct? Do we trade off of earnings or do we trade off of Spanish headlines? Financial stocks keep beating earnings but still look very risky. Tech stocks have been missing earnings but due to demand or supply?
Buy Banks that make loans or buy banks that do trading. Buy Apple or sell Apple. Would you rather see Apple sell off into earnings or sell off after earnings?
Corporate earnings have been better than expected and so far more then 80% of companies in the S&P 500 have beat expectations and 11% have missed. Yet we are still seeing the markets go down.
It would seem what this market needs is some prozac. When uncertainty is high what do you do? Stick to your game plan. Nobody makes money by constantly changing their strategy. Sometimes you have to ignore the daily noise and focus on what and why you are investing.
At D&D we focus on a barbell strategy of Aggressive high beta on one end and Defensive high dividend yielders on the other end. Our top five holdings are: Apple (AAPL), Gold (GLD), Taiwan Semiconductor Manufacturing (TSM), EMC (EMC), and Altria Group (MO).
And when you feel like you just can’t win… go for sin. Well that is “sin stocks” which are sectors like alcohol, tobacco, and gambling. For alcohol/beverage stocks we like Brazilian company Cia de Bebidas ads Americas (ABV), and Mexican company Formento Economico Mexicano SAB de CV (FMX). For tobacco we like the earlier mentioned Altria Group (MO) which has a healthy 5.18% dividend yield, and Indonesian company PT Gudang Garam TBK (GGNPF) which makes krater (clove) cigarettes. And for gambling we like Wynn Macau Ltd (WYNMF) which is the casino company in China’s (well the People’s Republic of China) special administrative region of Macau (one of two special admin regions the other being Hong Kong) bordering the Guangdong province. And let’s face it the Chinese love to gamble.
Stick to your game plan. Do your homework. That way you’ll know wether to buy or sell when your stock goes up or down. And don’t let the daily chatter dictate your decisions, many times investors get caught up in trading news. Investing is not the same thing as trading and this must always be remembered. When you get a “hot tip” on a stock ask yourself is this advice for a trader or for an investor. Because what can be great for a trader could have an hour or daily timeframe, while what is good for an investor has a 6-month to multi-year timeframe.
All three indexes ended down today while Oil and Gold both rose.
Asian stocks ended mixed and the Eurozone ended lower.
D&D Investments 
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