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Stock Investing:  What To Do Now…


The Dynamic Wealth Report
December 1, 2011

by Justin Bennett, Editor

After a strong October, the US stock market is once again trapped in a chokehold of European uncertainty.  Sovereign debt worries in Europe’s biggest economies have investors the world over pulling their hair out.

The tension is so thick you can cut it with a knife.  Volatility in the marketplace is exceptional- and it’s only intensifying.

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INDU Chart

As you can see, the Dow dropped from 12,100 on November 15th (red arrow) to 11,250 a few days later (green arrow)… a 6.6% shellacking.  But then, news of a global liquidity boost by central banks shot the Dow right back over the 12,000 mark… where we sit now (blue arrow).

No doubt about it, a 1,500-point market swing in just 10 short trading days makes for a challenging trading environment.  The constant barrage of European news headlines has the market dropping and popping by triple digits nearly every day.

Unless you’re psychic, the markets are challenging to decipher on a short-term basis.

That’s why it’s time to take a step back and look past all this volatility.

That’s right… ignore it.

The markets are trendless, choppy, volatile, and exceptionally tough to trade on a day-to-day basis.  Even if you’re watching the markets tick-for-tick, news headlines can change everything within minutes.

Even the most experienced market pros are having a tough time keeping up with news from across the pond.  Short-term traders are simply at the mercy of market moving headlines.

Of course, there are various strategies to take advantage of all this volatility.  But unless you’re sitting in front of a computer watching stocks all day, it’s a crapshoot at best.

That’s why it’s best to take a deep breath and go shopping…

Of course, I’m talking about value shopping for stocks.

Find stocks showing exceptional value.  Add small portions of these stocks to your portfolio on any pullback in the market.  And only consider stocks you would want to own through thick and thin.

Here’s a solid example…

Kinder Morgan (KMI) is a Houston, Texas based oil and natural gas pipeline company.  They operate pipelines, which move oil and gas liquids from the field to the marketplace.

Company insiders clearly like the stock at current prices.

In fact, Chairman and CEO Richard Kinder just loaded up on 19.7 million shares of KMI on November 22nd.  His pre-holiday stock-shopping spree is valued at a cool $500 million.

Insider buying is a great sign of value for a stock.  There’s no doubt Mr. Kinder knows his company inside and out.  And if he’s buying here, it’s a good sign he sees KMI trading higher in the future.

But here’s the best part…

KMI pays a 4% dividend.  So if the markets take another leg down in coming weeks, you’ll be paid to hold this stock while the markets fall.

Bottom line…

Whatever stock you pick, don’t load the boat on anything right now.  If things truly get out of hand in Europe (which is a growing possibility), there’s no telling what can happen with global markets.

But if you’re not overinvested and have plenty of cash sitting on the sidelines, you’ll be comfortable holding through whatever the market throws at you.


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Issue Date:
 Thursday, December 1, 2011


Notable Highs and Lows

•  Airgas (ARG) shot to a new 52-week high of $77.10.  Their market cap is now over $5.5 billion.

•  Citizens (CIA) surged to a new 52-week high of $8.65.  They now have a market cap of $394 million.

•  SolarWinds (SWI) jumped to a new 52-week high of $33.06.  Their market cap is now $2.2 billion.


Quote of the Day

"A market is the combined behavior of thousands of people responding to information, misinformation and whim."

                        -
Kenneth Chang


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TOP YTD Gainers

Company Gain
Pharmasset (VRUS) 508%
Inhibitex (INHX) 426%
Acadia Healthcare (ACHC) 413%
Silicon Motion Tech. (SIMO) 349%
eGain Communications (EGAN) 297%
*Year-to-Date, Mkt Cap > $100M


Worst YTD Losers


Company Loss
Frontline (FRO) 89%
American Supercond. (AMSC) 86%
SIGA Technologies (SIGA) 85%
Hanwha SolarOne (HSOL) 85%
Pacific Biosciences (PACB) 84%
*Year-to-Date, Mkt Cap > $100M


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