Starting to think about 2008

Starting to think about 2008
But there are already a few points to be made about next year.

Historically, January has been one of the strongest months of the year. If the market doesn't show gains, it could be a tough go. Plus, according to the Stock Trader's Almanac, the market has risen in January nine out of past 13 presidential election years since 1950.

But the financial sector of the market faces continued turmoil because of the havoc created by the subprime-mortgage mess. This is important because financials represent nearly 20% of the market capital of the S&P 500. The financial sector of the S&P 500 is down 21% this year. There will be a near-constant debate in the early part of the year about whether the financials have bottomed. Most analysts see the bottom coming around mid-year.

Oil prices will be a constant issue, making life miserable for consumers around the world. The effect of high fuel prices, combined with the stress of facing financial companies, will give the Federal Reserve all the excuse it needs to cut interest rates at the end of January and probably once more after that.

Technology stocks had a monster year, especially big technology stocks like Apple, up 136% this year; Research in Motion (RIMM, news, msgs) up 175%; Amazon.com (AMZN, news, msgs), up 139%; and Google (GOOG, news, msgs), up 53%. The Nasdaq-100 Index is up nearly 20% on the year. There's lots of talk that this probably will continue. But remember that tech bubbles can be very nasty if you get out too late.

Lastly, foreign countries with huge cash stock piles, known as sovereign wealth funds, have been investing directly in giant American financial institutions such as Citigroup (C, news, msgs), Morgan Stanley (MS, news, msgs) and Merrill Lynch (MER, news, msgs). These include Abu Dhabi, China and Singapore. This trend is likely to continue, in part because the dollar is so cheap. But if what happens if the stocks don't start turning around? Watch out.

Stock Scouter picks (CZN, AT&T, GE, CELG,INTC,CSCO)

StockScouter picks for Dec. 28 Company Industry Friday's close Scouter score
Ingersoll-Rand (IR, news, msgs)
Industrial tools and machinery
$46.69
10

Citizens Communications (CZN, news, msgs)
Telecommunications
$12.83
9

General Electric (GE, news, msgs)
Conglomerate
$37.34
9

AT&T (T, news, msgs)
Telecommunications
$42.44
9

Apple (AAPL, news, msgs)
Technology hardware
$199.83
10

Activision (ATVI, news, msgs)
Video games
$29.27
10

Celgene (CELG, news, msgs)
Biotechnology
$47.00
10

Cisco Systems (CSCO, news, msgs)
Network and communication gear
$27.56
10

Intel (INTC, news, msgs)
Semiconductors
$26.76
10

Juniper Networks (JNPR, news, msgs)
Network and communication gear
$33.92
10

TRUPs vs Preferred - Looks like one and the same

[edit] United States
In the United States issuance of publicly listed preferred stock is generally limited to financial institutions, REITs and public utilities. Because in the US dividends on preferred stock are not tax deductible (like interest expense), the effective cost of capital raised by preferred stock is 35% greater than issuing the equivalent amount of debt at the same interest rate. This has led to the development of TRuPS (Trust-preferred security) which are essentially debt instruments with the same properties as preferred stock.

However, with a dividend tax of 15% and a top marginal tax rate of 35%[4], one dollar of dividend income taxed at these rates provides the same after-tax income as approximately $1.30 in interest.

The size of the preferred stock market in the United States has been estimated as USD 200-billion, as of August, 2006, compared to USD 16-trillion for equities and USD 5-trillion for bonds[5].

Possible purchases at good entry points

Columnar
Symbol Time Trade Change % Chg Volume Intraday Related Info
BBT 10:07AM ET 30.94 0.21 0.67% 500,581 Chart, Messages, Key Stats, More
BAC 10:07AM ET 41.15 0.31 0.75% 2,578,758 Chart, Messages, Key Stats, More
C 10:07AM ET 29.48 0.08 0.26% 7,678,771 Chart, Messages, Key Stats, More
XLF 10:07AM ET 28.97 0.04 0.14% 4,970,820 Chart, Messages, , More
HOG 10:07AM ET 47.28 0.10 0.22% 149,376 Chart, Messages, Key Stats, More
WFMI 10:11AM ET 41.08 0.27 0.65% 165,191 Chart, Messages, Key Stats, More
EFA 10:07AM ET 79.03 0.71 0.91% 896,729 Chart, , More
IVV 10:07AM ET 147.88 0.25 0.17% 396,376 Chart, , More
QQQQ 10:12AM ET 51.88 0.05 0.10% 16,738,924 Chart, Messages, , More

BROAD STORKS

Build a portfolio.

Buy insurance for stocks via options

Think 5 and 10 years ahead and see.

Slowly build positions.

buy call & short but make sure this does not scrw up other positions and thinking

Wait out a weird market - Jubak in MSN

I advise patience as we move into 2008. The risk is to the downside, and there's a good chance you'll be able to buy what you want to buy at a cheaper price later in the year. No guarantee, of course. And that makes waiting tough -- and carries its own risk.

If the prospect of sitting it out for six months is too painful, here's what I advise:

Buy, for example, 25% of what you think your final position might be when your target stock hits some normally attractive entry point, such as its 50- or 200-day moving average.

Use the time after your initial buy to see whether this really is a stock you'd like to own as a major position in any post-bottom portfolio. If it sinks to a new entry level -- say, from a 2007 low to its three-year low -- add a bit more to your position. Remember, you're not trying to hit the absolute bottom but to build a position at the best possible price for an eventual recovery in the debt markets and in the economy.

Dec 21 options expiry

Dec 21 was options expiry and triple witching.

DOW closed up 235.

BBT was as low as 30.36 and closed up at 31.94.

I find on the day of options expiry market opens low and then the stocks
fall before they go up and close high.

21-Dec-07 DOW Open 13,241.66 High 13,518.20 Low 13,241.66 Close 13,450.65