The first half of the year is behind us, and the upcoming long weekend for the U.S. markets will be a much-needed breather for many of us. We have been bombarded with news and politics during the first half of the year, and at times I found my head spinning as I attempted to digest the endless stream of news. It has been increasingly difficult to concentrate on finding absolute bargains and ignore the market and economic fluctuations. I found myself paying more attention than ever before to economic and political news; I don't recall a time where government policies and pronouncements had such a sustained influence on stock prices.
I found it very hard to stay fully invested in spite of the tremendous mathematical bargains that existed back in January and February. In the face of the volatility and uncertainty, I had bought less of the bargain stocks I was uncovering than I might in normal times. I would have made far more money had I scraped up the courage to get massively long, but I have no regrets. The outlook for housing and employment has remained terrible, so my personal margin-of-safety bar has been set very high. I had a very good first half even with smaller positions, and I never lost a single moment of sleep.
I will continue to practice what I preach in the second half. I am watching for signs that the economy really is getting better, and until I see them, caution prevails. The upcoming earnings season is going to be critical and may serve as a wakeup call for stock prices. I hope so. I want to see prices decline to reflect the poor earnings outlook and total lack of consumer spending. I want to see real estate prices firm in the second half and at least stop declining. When that happens, I will begin to load up on community banks stocks. If I am fortunate, TCF Financial (TCB - commentary - Trade Now) will fall back to tangible book and I can back up the truck. After a very informative discussion with a reader who shares my interest and ownership of Hilltop Holdings (HTH - commentary - Trade Now), I hope the preferred shares of that company slip back to double-digit yield so I can load up with additional shares.
Investing Asset-Rich A&B Still Sells Cheap 6/30/2009 3:00 PM EDT Alexander & Baldwin offers shipping, real estate and agriculture at a low enterprise value.
Investing No Disconnect Here 6/30/2009 3:08 PM EDT When comparing Main Street and Wall Street, it all depends on your reference point.
At the time of publication, Melvin was long Hilltop Holdings, although positions may change at any time.Tim Melvin is a writer from Stevensville, Maryland, who spent 20 years a stockbroker, the last 15 as a Vice President of Investments with a regional firm in the Mid Atlantic area. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Melvin appreciates your feedback; click here to send him an email.
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