If I gave you 1 million dollars, what would you invest in? Conditions: 1. Have to invest it and not buy items (such as booze, drugs, or hookers) 2. Outlook is 2 years. You invest now and cash in 2 years later. 3. Has to be traded on a public market or OTC. (ie cannot invest in your Uncle Bernie’s barbershop)
Any company that sells a non-commodity product with inelastic demand: 1. Diageo 2. Phillip Morris 3. Glaxo Smith Kline 4. Oil refiners–Valero and Tesoro I also like the CME. They have been growing their dividends at over 30 percent per year (signaling theory–indicates management’s confidence in their business model) and stand to benefit as OTC derivatives are increasingly standardized and moved to the exchanges. Like the oil refiners because their COGS is the price of oil (which is clearly lower) but their revenue is the price they receive at the pump. So long as they do not pass through all cost savings to customers (the price at the pump has not fallen as much as the price of oil yet their stocks have been hit like all oil stocks) and volume is not reduced dramatically (we are in a recession but gas is a short-term inelastic good) they stand to see expanding margins. Can’t seem to understand a 70% YoY decline in this sector when management continues to grow their dividends at rates much higher than inflation (signaling theory, again).
With a two year time horizon, I think I’d recommend something like 60% cash and the remainder in bond issues of companies with strong balance sheets and in defensive sectors. Maybe 10% in a diversified currency basket of foreign currencies, and possibly 5% in something like gold.
What about buying $1 million worth in oil?
buy s&p
tulips I hear they’re gonna be the next big thing?
tulips I hear they’re gonna be the next big thing?
NGLS…It is an MLP and hence a yield play. Currently yielding 30% assuming the distribution isn’t cut but even if it is cut in half you still would be yielding 15% and once the fear of a distribution cut is off the table shares will likely appreciate.
john_mclaugj Wrote: ------------------------------------------------------- > Any company that sells a non-commodity product > with inelastic demand: > > 1. Diageo > 2. Phillip Morris > 3. Glaxo Smith Kline > 4. Oil refiners–Valero and Tesoro > > I also like the CME. They have been growing their > dividends at over 30 percent per year (signaling > theory–indicates management’s confidence in their > business model) and stand to benefit as OTC > derivatives are increasingly standardized and > moved to the exchanges. > > Like the oil refiners because their COGS is the > price of oil (which is clearly lower) but their > revenue is the price they receive at the pump. So > long as they do not pass through all cost savings > to customers (the price at the pump has not fallen > as much as the price of oil yet their stocks have > been hit like all oil stocks) and volume is not > reduced dramatically (we are in a recession but > gas is a short-term inelastic good) they stand to > see expanding margins. Can’t seem to understand a > 70% YoY decline in this sector when management > continues to grow their dividends at rates much > higher than inflation (signaling theory, again). John, I just happened to tell this thing in an interview- buy ‘differentiated and inelastic’ goods company’s share and I am out! They thought I was too theoretical.
maybe pull a Madoff: invest it all in FNM and then sell of interests in the pool to my relatives, social connections, etc. (I can feel the spirit of CFA ethics threatening me now)!!
in reality: I think I would do something like bchadwick: maybe also look for some quality zero-coupon 2 year notes
Low P/E dow stocks, BA, DIS, MSFT, HPQ
bchadwick Wrote: ------------------------------------------------------- > With a two year time horizon, I think I’d > recommend something like 60% cash and the > remainder in bond issues of companies with strong > balance sheets and in defensive sectors. Maybe > 10% in a diversified currency basket of foreign > currencies, and possibly 5% in something like > gold. OK, thinking about this more, I might also have 10% in something like S&P and might even try selling covered calls. So maybe 40% cash, 25% conservative bonds (as above) and selected munis, 10% S&P index, 10% currency baskets, 5% gold, and 10% covered call strategy. Some of the cash I might put into TIPS, on the idea that they may have priced in deflation for now, and that inflation is likely to be hovering around the corner.
Mixture of US and foreign government bonds - Japan, Norway, and Germany. A much, much smaller percentage in Switzerland and Australia. Nothing over 5 years. Also probably some small percentage in gold (5%-10%) and/or gold miners (ABK, NEM, KGC, GDX). Just preserving capital and hedging against the possibility of a currency imploding. Extreme movements in currencies (Eur/Usd from 1.28 to 1.43 in two weeks for example) and articles like the following make me think we could be in for an extremely bumpy road ahead. http://www.bloomberg.com/apps/news?pid=20601087&sid=aFgHlh.Dn4Lc&refer=home That forgiving US debt is even an idea that’s being brought up publicly is a sign of how far the US has fallen.
munis, high yield, LT invgrade bonds, with a short treasury futures hedge US based debt free, FCF generating equities in staples businesses short dollar index long volatility futures indian small cap equities
Invest whatever you have an edge in, otherwise invest in the S&P.