Wednesday, November 7, 2012

Bad day in markets

All stocks were down except FNMA which was up 9% due to a profitable quarter. There are fears of gridlock between Republicans and democrats on the budget and taxes. There are also the Euro debt problems. It is a good time to buy silver, gold and stock. Silver will outperform gold and 2013 will be a good year for markets. All portfolios should have silver or gold or both.
   I recommend silver dimes for bullion and PSLV for silver in your brockerage account. Be careful about buying larger denominations of silver such as bars or silver dollars because China is counterfeiting bars and larger and older coins that have larger values. I also recommend avoiding numismatic coins because you will pay extra for the rarity and may not get that back. Jewelry generally is not a bullion investment; always be aware what you are paying per ounce and where spot is before buying.
   A nice gold related stock which I already hold is GNT, a Gebelli Closed End Fund. They pay a 10% annual  dividend and the pay is monthly. Much of what they trade in is gold and natural resources. This is not a speculative play, it is better held for the dividends. GGN is related to GNT and pays similar dividend based on gold and natural resources.
       PSEC is also a nice monthly payer with a 11% annual dividend. They recently had an offering a few days ago plus down again today.PSEC is not gold related; they are something like a BDC or closed end fund that works with loans to businesses.They are at a good entry point.
   REIT stocks have been down lately because of refinancing fears and I think the better ones will eventually turn around. I do not know how far they will go down but some are buying their shares back to keep values from dropping so much. AGNC is in my opinion the best run of the mortgage REITS and they have a book value of $32.49 but closed at $30.73 today. Book values are up but earning are down. I think AGNC and MTGE are a good value to enter now but maybe as part of a portfolio of unrelated stocks.
   An interesting stock to buy in small amounts is a grocery stock called RNDY or Roundys which is based in Milwaukee. They report earnings tomorrow after the close. They have paid a $.23 dividend in the past but the stock is down from the $10 range to $5.44 today with a book value of $5.61. RNDY may be down due to competition with Walmart but they have a superior brand called Our Family as well as they own Marianos stores which is premium quality like Whole Foods.
    As I have said before I believe oil and car gas will go down in price so I do not recommend investing in gas or oil.  Interest rates will also stay low; between these two people will have more money to spend and employment should improve.


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