Is the market ready for a recovery?
May 5, 2008
Stocks ended on a mixed note Friday when news that employers cut 20,000 jobs from their payrolls in April, surprised economists who were expecting a larger deficit of 75,000 jobs. Economists were expecting the unemployment rate to rise to 5.2%, but it actually fell to 5% compared to the previous month.
The NASDAQ rose less than other indexes after Sun Microsystems (JAVA) reported a surprising quarterly loss late Thursday. Analysts expected Sun Microsystems' global sales base to turn a profit in the first three months of the year. Instead, the server and software manufacturer stunned investors by reporting a loss in its third quarter, caused in part by decreasing sales to U.S. consumer-oriented companies that were recently cutting costs. Sun's shares were punished at the open Friday’s session, falling more than 24 percent to close at 12.64. The company is also forecasting flat revenues for the fourth quarter and revealed plans to cut between 1,500 and 2,500 jobs in order to protect itself from a financial mayhem.
On a positive note, Chevron (CVX) reported quarterly earnings that surpassed forecasts on higher quarterly revenues due to record oil prices and demand. Also, Viacom (VIA) announced that first quarter revenues were up 15% to $3.12 billion, mainly due to strong gains by the company's television networks and movie studios. The company also reaffirmed its growth predictions for the next two years.
The Nebraska based investment giant, Berkshire Hathaway Inc., was also affected by the financial crises, and the company said on Friday that its first quarter profits fell 64 percent because it recorded an unrealized $1.6 billion pretax loss on its derivative contracts, and its insurance businesses generated lower profits. Berkshire's chairman and CEO Warren Buffett warned shareholders in his annual letter that the derivatives could make the company's earnings volatile. But he predicted the derivatives will ultimately be profitable. Buffett has said he expects insurance profits to fall in 2008 because increased competition has driven premium prices down, and a catastrophic loss could further hurt insurance profits. In this statement, he actually foresees a continued drop in earnings for 2008.
Anybody who feared from the first quarter earnings reports is probably relieved now. Despite the relatively bad results reported from the financial sector, other companies did reasonably well during this quarter, and the mood on Wall Street appears to be one of satisfaction. Now that the Federal Reserve may consider no more cutting interest rates, and is backing new limits on interest rates of banks and credit card companies, we may expect a shortening of the recession period and an end to the bearish market sooner than expected.
Regardless, up and down movement of financial markets is inherent to this environment and a smart investor must find ways to protect himself. Emotions can not be a part of the strategy; knowing when to buy, sell or enter and exit are the cornerstone of successful portfolio. Following closely the moves of other successful investors can help staying afloat. Which brings us to the next
paragraph.
Yalicoo’s highlights of last week
The Last
monthly competition, which ended last week, attracted a record of almost 1000 players who aspired to become the best monthly trader. Eventually,
fieldGoals' strategy worked well and he was ranked first with a 13.70% gain.
BanderaS (13.19%) ranked second, and BEars (11.79%) closed the top three winners of the competition. Few traders already boosted their returns after the first two days of the new monthly competition.
WaNnAeBe already gained 5.32%, gooD has 4.33% and JohnDoe is in third place with 4.20%. But the competition has only started and many changes are expected to occur in the upcoming weeks. As mentioned in the previous paragraph, following Yalicoo’s leaders, while not a guarantee, definitely increases the chance of realizing positive gains even in a turbulent market.
Agent (17.84%) continues to increase the gap in the
quarterly competition. Last week it was Google (GOOG) that boosted his returns, after the Internet giant reported results which were much better than expected for their first quarter of 2008. Sixpence is ranked second and has a good chance of getting closer to agent. Remember that we still have almost two months in the quarter, so don’t give up! (If you did not registered to the quarterly competition yet, do not hesitate to join!)
The market is volatile, thus choosing the right stocks is more important than ever because it can increase your portfolio return substantially in a short period of time. A great place to start looking for these right stocks is the portfolios of the leaders in this competition or in other Yalicoo’s competitions. As the history of
Yalicoo’s competitions has demonstrated Yalicoo’s leaders seem to know what they are doing. Invest wisely and eventually you will place yourself on the scoreboard and witness positive returns.
|
|