March was one of the best months ever for stocks. Is it time for you to get in?
Fortunately, there are many "financial experts" eager to give you advice.
Mary Jane Matts is one of them. In a recent interview on CNBC, she advised investors to jump in and not to "over-think it."
She shared her stock picking strategies in a "choppy" market. It's really quite simple. She just buys the stocks that are the "cheapest." She looks for sectors that are the "most undervalued." She adds somewhat vaguely that she finds "the catalyst in the form of company-specific developments."
She even told investors which stocks meet her criteria, recommending United Health Group (UNH), Caterpillar (CAT) and Hewlett Packard (HPQ).
Voila! There you have it. A formula for stock picking success.
Ms. Matts is an expert at finding undervalued stocks. In an interview held August 16, 2006, she discussed how she found "anomalies... where the market is missing something." At that time, these "anomalies" included 3M (MMM), Molson Coors Brewing (TAP) and UST (UST).
3M was selling for $71.20 then. It is $52.11 now. Molson Coors Brewing was $70.15 then. It is $36.23 now. UST was $51.47 then. It was purchased by Altria Group in September, 2008 for $69.50 per share.
Ms. Matts has been at the helm of the Fifth Third Disciplined Large Cap Value Fund (FEINX) since July 25, 2005, no doubt seeking "anomalies" in the market that others have missed. It has been rough sledding.
According to Yahoo Finance, year-to-date, the fund is down a whopping 21.10%. It's trailing returns for the past three years (with Ms. Matts managing the fund) is a loss of 16.15%.
I am not sure what the market was "missing" during this period. The fund under performed its index in each year.
The pundits sound impressive and confident as they dispense their market views. They also look good, which is surprising.
I would have thought they couldn't sleep at night.
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eg James Glassman who co-wrote 'Dow 36,000' published in 1999. The prediction was for the Dow to hit 36,000 in three to five years at the time
In a recent interview he said he was still confident the Dow would hit 36,000 though not so sure when
So far, I have shares of a few solar producing stocks (2 domestic, one Chinese), an alternative fuel engine producer, and a company developing wind farms and biodeisel facilities in the US. I bought them all at close to their yearly lows. Three of the five have rebounded to levels where I could sell them and make a small profit. The other two aren't quite even yet.
I figured I would plan on holding them all at least a year, perhaps longer should they not rocket up so much I am tempted to sell for short-term profit. And I am building a smaller cash reserve for buying a select set of smaller, but dividend-yielding, other corporate stocks as my reserve allows.
Either way - playing for the long haul with these, plus my index-linked other funds, plus my pension plan (I am one of those wierd guys that actually still has one),... and in 20 years I should be OK.
It's the next 2-3 years that might be 'interesting'.
"3M was selling for $71.20 then. It is $52.11 now. Molson Coors Brewing was $70.15 then. It is $36.23 now. UST was $51.47 then. It was purchased by Altria Group in September, 2008 for $69.50 per share."
As far as these picks, MMM at $71 was a decent pick in the fall of 2006 if you consider it went all the way to $97 by early October of 2008, a gain of 36% in just a year. UST was obviously a good pick as it was bought out at a much higher price. Molson Coors was also a good choice as it ran up from $34 in September 2006 to $59 in May 2008. It was about $50 as recently as January and holding that stock would have served her much better than holding economically sensitive stocks since last summer.
You wonder how they sleep at night. I wonder why Americans aren't marching on Washington with torches and pitchforks.