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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (38529)	7/16/2010 12:28:07 PM
From: E_K_S	Read Replies (1) of 78740

Hi Paul - Option expiration today off of a week of big gains. I am looking for a good blow out sell off today, perhaps coming near the daily low in the last hour. Look for a lot of those stocks closing at the nearest lower strike price so both Call & Put holders get screwed. I am going to try to do a bit of nibbling for a swing trade. We usually get a good rebound the following Monday after an extreme sell off. Longer term Mr. Market looks weak and I am trying to hedge my recent gains with in-the-money covered calls or with out right sells. I am planning on picking up the TPZ fund next week. This fund usually drops a few days after an extreme market drop. I am raising cash from a few of my NG holdings that have gains, low yields, or selling near highs to put the proceeds into TPZ. TPZ if entered at the right price is a good holding bucket that can be used as a source of funds for new purchases. Their monthly dividend now yields something near 7%. It's also not as volatile. The key is entering a new position at a good price point. I have targeted $20.50/share as my initial buy in point. This will be a new position created in the taxable account. (I have TPZ in the IRA and it has performed well). I am tempted to sit on the sidelines but from what I can tell, today's sell volume is actually quite low (similar to the low volume we had on the run up). When the dust settles in 30 days (ie next option expiration period), we will probably be in the same price zone. S&P at 1050 (low) - 1090 (high) . If we don't break lower than S&P 1050 by October then the recovery will continue forward slowly and hopefully the market will follow. The key will be to deploy new funds strategically picking up those value buys that get sold by investors not patient enough to wait out the recovery. The long term value propositions that I am looking to build are all in the natural resource sector somewhat diversified from what I already own. I want very low PE's with manageable long term debt. I will sacrifice current dividend yield for growth. I am betting that there will be significant long term capital gains from asset appreciation due to perceived long term double digit inflation. I want to own cheap hard assets that generate income and hedge the portfolio from inflation bleed. I am a bit concerned with these 10% moves on the S&P higher and then lower all on low volume w/i 45 days. I would not be too surprised to see an eventual waterfall sell off back down to S&P 880 (DOW 8,000). I just want to be sure I have my source of funds bucket full if this buy opportunity presents itself. EKS

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