The Super Bowl has come and gone, taking away the Patriots' dream of a perfect season and $100 of my money. I was not actually foolish enough to take the Pats and lay the points, but I did bet earlier this year that they would go undefeated. The one time I decide to be a momentum investor, and look what it gets me!
According to the much-lauded (and totally random) Super Bowl indicator, we will now have an up year in the stock market. We might. But keep in mind it is only February, and there are 11 long months to go. In my first two columns I have made no secret of my opinion that the next few months will be down.
I was asked last night how was I approaching the markets right now, given my outlook. To answer that, understand that I view my investments as two parts of a whole. One is my long-term portfolio, and this where I buy stocks I want to own for several years. I am big on asset-based investing and am looking to buy decent companies for less than book value and hold them for years. These are the stocks where I don't need to check the prices every day, because I do not care about today's price. I care about the price five years from now.
Most of the stocks in this portfolio get sold via an asset conversion method, usually a merger. I prefer stocks of companies that have very little debt and pay dividends where the insiders are buying. In this portfolio right now, I am doing nothing. I am making a list. I run screens pretty much every day to build an inventory of stocks I want, but I will not buy them until I believe they are close to a bottom.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider NYM to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
At the time of publication, Melvin had no positions in stocks mentioned, 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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