Inside the mind of the Master Investor: Jim Mellon updates his readers on his latest trading and investing activities.
Well, the big pull back anticipated by certain brokers (wrong at the top, wrong at the bottom) hasn’t happened, but may well do so. Yes, there has been huge liquidity injected into the system, just about everywhere, but it’s like a big bandage for a big wound – the world is going to need a lot of treatment beyond the initial staunching of the blood flow and a considerable period of convalescence.
Having gone long the Nikkei earlier this week, I just closed it out and am now a bit shorter of the S&P 500 and just put a short on the Nasdaq. Meantime, I’ve been adding to stocks that will provide upside in the recovery, including financials, notably Phoenix Group (LON:PHNX) and RSA (LON:RSA) in the UK, and JP Morgan (NYSE:JPM) in the US. I already hold Lloyds Banking Group (LON:LLOY) in the UK, and HSBC (LON:HSBA) of everywhere. All should be good providers of dividends in the future, and investors should lock them away for five to 10 years and revisit then. They are hugely beaten up now – but this is not 2008 and there is not a financial crisis. As James Ferguson has said, this is a self-induced (by governments) shock to the world economy.
This week, I also sold Tesco (LON:TSCO) and Gilead (NASDAQ:GILD), which reached my target of over $80 a share, and added to Rio Tinto (LON:RIO) which will do well as China recovers and restocks; BT Group (LON:BT.A), which seems to have been punished even though we are all on the internet, most of the time; and GM (NYSE:GM) in the US, which will surely do well in a US recovery, and unlike Tesla, is as cheap as chips with world class autonomous vehicle capability.
I heard a good commentator on the radio this morning talking about how even though our natural reaction is panic in a crisis, those who have done and will do well are those who resist the urge to give into it, make minor adjustments to their portfolios only and stick it out. That seems like sensible advice to me.
I also of course am banging the drum for gold. Bank of America this week suggested a price of $3,000 an ounce within 18 months. I think that is conservative.
A gilded life awaits for those who follow me into precious metals!
Meantime, things are opening here in the IOM, and we’ve had no new cases for a few days. Fingers crossed. The latest thing is an anti-ulcer drug, available over the counter, called famotidine. Remarkable results from New York. I am off to the pharmacy before this gets sent!