The stock market's balloon has been losing a bit of air the past week or so. The S&P 500 Index has fallen 3.1% the past 5 sessions, while the Nasdaq Composite has slid 5.5% since it's mid-April recent high. Just a week ago the 'talking heads' on the financial shows were salivating over another yearly high for the Dow Jones 30 stocks, when the Federal Reserve hiked the lending rate a quarter point. The interest rate hike did not immediately register as negative for stocks - at least for one day. Then as if it was headline news, everyone started selling Thursday and Friday. Recent leaders in energy, oil, metals, materials, chemicals were all affected. Transportation stocks fell even as oil did; while utilities slid 2.7% on the week. I've been busy fishing for stocks that could run when the next rally starts. Also selling shares that have turned south for small losses. As 3 of 4 stocks fall due to the general market's direction, it's prudent to obey the rules and raise some cushion of cash. For example, Johnson & Johnson, a quality blue chip, has been neglected after they lost their bid to buy stent maker Guidant and shows signs of a comeback. It's 10 points off it's $70 high and sports a 2.2% dividend yield. For riskier souls who need income, the General Motors coupon notes due May, 2008 yield a juicy 13% to maturity in 24 months. GM faces difficulties to be sure, but I don't forsee a bond default with their cash and workout plan.
Soon to open is my web site, where more specific strategies and recommendations for clients will be given between quarterly letters.
"The worst crime against working people is a company which fails to operate at a profit" -Samuel Gompers