MarketBook 3/5/08

With some positive increases as a result of positive news in the tech sector, today has not been near as negative as the end of last week and beginning of this week.  At one point, I was down more than 3%; however, with today’s rallies, I have been able to fare somewhat better (though not yet back in the green overall).

With that being said, my primary strategy today has been geared around two key focus areas. 

First, I am trying to improve the portion of my portfolio that focuses on fixed income strategy holdings.  I have been conducting my research in this area for a while now, and I finally took the initiative to start officially building a portfolio that will generate dividends from higher yield stocks.  While most of my strategy still focuses on ETF’s, this is one area that I am more open to individual equities. 

I purchased AT&T (T) at $34.87, which I have been watching for a while now.  At the time of this writing, it is up .77%.  This will be a long term hold for me, with my primary focus being on the 4.55% yield and 0.40 declared dividend.  This is a developing strategy for me, and it is one that I do not take lightly.  Thus, I am putting a lot of time and focus into analyzing these plays. 

The other focus for me today (and ongoing) is on commodities, specifically on oil.  Last week, Boone Pickens said that he is shorting oil, stating that he expects the price to drop in the Q2 and then increase in the latter half of 2008.  Not only do I listen to Pickens’ outlook, but I agreed with the analysis, especially with the warmer months approaching and recent increases in Q1. 

However, as oil futures were increasing this morning, as a result of news around low supply numbers from OPEC, I decided to test a strategy that I had with OIL, a Barclays ETF that tracks the Goldman Sachs Crude Oil Return Index.  I initially put in a limit order before the markets opened, but when I saw it opened higher, I had to adjust and thus purchased a market order at $59.52, which in retrospect, I should not have done. 

This was not going to be a long play for me, because my outlook on oil right now follows Pickens’ recommendations above.  So, once this increased, I put in a stop limit order at $60.80, and it sold before 1:00 p.m. 

I am considering opportunities right now when it comes to commodities.  Ultimately, I do think that oil is going to come down in Q2, but I am not confident enough (or haven’t done enough research yet) to buy short.  I will likely make a move at that time, though, once it plays out a little throughout the year. 

Separate from oil, I am bullish on other commodities and am watching some possible buys in coal, natural gas and mining inside and outside the U.S.  I am bearish on gold.  More on all of that later. 

Just as a note, MarketBook is my semi-regular commentary about the market and my current investments and trading strategies.  Please remember that nothing I saw/write on this website should be misconstrued as investment advice or recommendations.

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