Kollur’s Blog

Goldman Sachs said today that the S&P 500 could hit 1060 by the end of the year.
David Kostin, Goldman Sachs’ chief investment strategist, based his S&P projection on strong earnings from Intel and JPMorgan. “The early reporting companies are often interesting barometers for what’s likely to take place,” Kostin said.
1060 is about 12% from today’s market close. Well market has been up about 10% in the last one week and given that, this is not much of a call.
The markets are challenging the year’s highs and can take off from here. The only concern is the volume, which has been light in the advance spanning the last few trading sessions.
If it scales the year’s highs I would be a buyer.

AAPL is reporting after close tomorrow.

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There are two new ETF sthat track the housing market of the major metros in the United States. The MacroShares Major Metro Housing Down Trust (NYSEArca: DMM) moves 3x inversely with average pricing of the Single Family homes and MacroShares Major Metro Housing Up Trust (NYSEArca: UMM) moves 3x in tandem with same prices.

This is a great way to invest in the housing market, hedge or double up.

Here is how they work :

 When MacroShares Major Metro Housing Up are created, an equal number of MacroShares Major Metro Housing Down are also created.  UMM funds are invested in the ‘Major Metro Housing Up Trust.’  DMM investor funds are invested in a separate ‘Major Metro Housing Down Trust’.

Both trusts enter into a settlement contract to pledge assets to one another over time, using a predetermined formula. The trusts feature a 3x leverage factor, such that the underlying value of each is intended to track three times the cumulative percentage change, upward or downward, in U.S. single family home prices, as measured by the S&P/Case-Shiller Composite-10 Home Price Index.

The products were developed by Karl Case and Robert Shiller. According to MacroShares, the trusts ‘provide investors with access to the housing asset class, allowing for leveraged investment in either the upward or downward movement of home prices with no issuer or counterparty credit risk.’

 

 

I came across this article a few days ago in Wall Street Journal.

 ” The Global Downturn Lands With a Zud on Mongolia’s Nomads”. Check the link :

http://online.wsj.com/article/SB124017991210632815.html

It is phenomenal that the events in a economy and society like Mongolia’s mirror the events have taken place in the US.

check out stocktwits.com. I am going to get started.

The Dow Jones Industrial Average is a price-weighted index. There are four stocks that are trading below 10 and will probably be replaced. 

1. Citigroup (C)

2. Bank of America (BAC)

3. Alcoa (AA)

4. General Motors (GM)

Here are my elections for possible candidates :

1. Cisco Systems (CSCO)

2. Goldman Sachs (GS)

3. Wells Fargo (WFC)

4. Google (GOOG)

5. Monsanto (MON)

The S&P 500 being a market capitalization weighted index now reflects the change in guard and shift to Technology as a major sector. Dow should also reflect this change and it is time CSCO become a blue chip and Google be rewarded for innovation and ability to continue to create jobs.

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It now seems inevitable that GM will file for bankruptcy or undergo some version of a pre-packaged bankruptcy. It is possible that the Government and the markets are underestimating the fallout from this event.

GM has 6500 dealerships in the United States and Toyota has about 2000 and Toyota sells more cars in the US than GM. Clearly there are excesses that have to work their way out, bankruptcy or otherwise. 

This might be the catalyst for the next down-leg in the equity markets.

SEC is debating re-instating the “uptick rule” at the time of this post. The uptick rule allows short-sale of a stock only if the last traded price was higher than the previous trade.

It is debatable that this will help. There are other ways of shorting the market, including the double and triple short ETFs like FAZ, SDS etc.

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