testing out

Has the market reached the bottom?

With warren buffett coming out of hiding and willing to invest money in the stock market, i wonder whether market has reached its bottom. After all he is more seasoned and has lot of wisdom and understanding about the market than me.

It is true that the recent trends in the market shows relative calmness, which i attributed to the government's policies. Some how i still feel the market is going to head down for some more time and i am holding to the bearish view for the entire year.

A stock to watch

As listed here, for year 2008, i had considered buying the following stocks: Tata steel (TTM), INP, Visa (when IPO comes out) and AMGN.

Well change of plans - instead of buying INP and AMGN, my attention has shifted to TSM and COH. Coach is something i am interested because of their strong financial results. I believe the company is good - it has consistently produced profit for 8 years - sustained growth, low PE and good growth rate. With recession looming, i suspect there would be a lot of fear in the retail sector stocks. When everyone else is afraid get greedy. TSM is more of a bet that electronics and chip marker giant are going to have stronger growth in the future. I am not going to buy these stocks soon, still waiting to see how the stock market is behaving.

The market crash continues

The year 2008 is going from bad to worse. Just today alone i lost about $2K from my investment. I had invested in vhgex starting early 2006 @21.98. today (early 2008) it is at 21.00. In fact the 52 week high and low gives you a picture of the roller coaster. between $20.58 to $27.78. but i am not really worried. Today i decided to invest another $1400 into the fund. I am for the long run...and i sure dont mind the roller coaster ride.

The fall of interest rates

Although old news, the rate at which Feds are reducing the interest rate has a tell tale sign on the rate of CDs. unfortunately one of my CDs is maturing this month end and i am struggling to find a good enough rate. The CD was for 6 months and it had 5.50% APY. In six months time i cannot find that rate anymore. Things have changed so quickly. Lesson: Next time around, when the rates are higher, i will lock down the money for a longer period of time (at least for two). As for the CD that is maturing, i will put it again for a 6 months CD at what ever rate i get.

Jan 2008 review

January ended without any problem, well within the budget. Here is how we spend the money in Jan

39.2% - Saving
23.0% - Other saving funds ( fund ofr home, buying a new car, for travel and emergency fund)
22.4% - tax
7.6% - Rent
7.8% - Other expense

Of the close to 40% of savings about 10% was saved for buying stocks in taxable account, rest were investments in HSA and 401Ks. The tax rate of 22.4% might be a bit high, we plan to readjust the W4 around june. I want to make sure by year end i owe the government about $500. About expenses, they come to about 15% of the entire salary, of which rent takes away about half. But really the rent is only average for the area i stay. So all in all a good month for the books. Its a good start, i hope we can maintain the above 60% saving rate all through this year.

Time to buy mutual funds?

As a general rule, I think when the market is down, it is a good time to invest in the index mutual funds. Since these funds track the overall market, buying the fund during recession gives you a chance to invest in the sector the index fund is tracking. Investing in stocks during recession is harder as such decision really depends on the condition of the company more than the condition of the sector. Hence towards the end of this year (by which time i think recession would have had a painful effect), i plan to increase my investment into the index mutual funds.