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Fifth Street Finance Corp. Message Board

  • thewisejman thewisejman Jan 30, 2013 11:06 AM Flag

    Has the economy caught up with the market?

    The economy did not seem to accelerate that fast in 2013, did not grow at all in Q4 2012, yet the stock market had been breaking new highs with DOW reached 14,000 and just retreated a bit today. Yesterday, I saw AMZN dropped almost 4% before closing, waiting for its earnings announcement, then its actual EPS of 21 cents was announced, comparing with the estimated 28 cents, it immediately dropped 2% more in the after market, then all of a sudden it rose 7% higher than its closing price. That means if you have the foresight of buying AMZN at right before closing and sell it in the after market, you will pocket a 7% profit. Both precious metal and oil went up crazy in these past few days with most oil refineries stock leading the way. HES went up crazy. What is going on here? Big jumps and big drops, some time on the same day. My AAPL did very well these past few days.

    I just had left eye cataract surgery this past Monday, now my left eye has almost perfect vision while my right eye is almost blurry, if I wear my glasses, my right eye has almost perfect vision while my left eye becomes blurry. It almost like that with the economy and the stock market, one appears to be doing great while the other appears to be lagging behind, then if you switch view, it becomes vice versa. If you do not participate in the stock market right now, you may miss the biggest rally yet to come, but if you go all the way and the market tanks, you may suffer a big correction. Therefore, to invest in this stock market, is like walking a tight rope. It all goes back to fundamentals if you can truely understand what the fundamentals of any stocks are these days, then you may do fine. I bought some GGN today. Still holding some of my AUY and SLW. Try to buy some NYMT if it drops. Watching PMT closely, it dropped 1.6% today but its yield is still a bit low. I am now holding some FSC and will buy some more if the price is right. FSC will become one of the long-term holds in my portfolio. Despite the temporary set back from IAG, one of my account had already rebounded and surpassed its 12-mo high, thanks to AAPL, COP, OXY and AUY. I cannot say how good an oil stock OXY will be, in months to come. I need to discipline myself in not to sell it for ST profit, but instead keep adding more of it to my portfolio. It is that good.


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    • Bought GAIN today. A small BDC, stable dividend, still sold way under its NAV (0.84x).

    • Not sure how deep your pockets are but as you add and it climbs start selling calls against it. if you bought at 80 and are buying again at 85 then sell a 87.5 call against the first 100 shares.

      If you get called you still made money. If it tanks all those fat call premiums will cushion the blow, plus you might still get some dividends.

      I'm mildly paranoid about getting clobbered so this is the sort of thing I do to take the edge off. I'd say I limit my profits but to be honest 8 out of 10 times I don't get assigned so it works pertty well over time.

      • 1 Reply to limper6
      • Thanks for the advice, sounds like a good strategy. I believe today the FED will announce they will continue the cheap money policy and stock market will continue to rise. It appears they will have no choice but keep interest rate low this year which will result in a continued rally. I don't believe the FED has any idea in how to reduce the money supply at this time, just kicking the can down the road, no difference than how the Congress treating the debt ceiling. We will pay for it down the road, just when. Therefore, if you do not participate in the market, you are doomed and if you are ALL in, you will be doomed. Your strategy may be one of the soundest one.

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