What a week! It's pretty obvious from that user pic to the left that I tend toward the short side of things, and from that perspective I'm a very happy man. This was the most profitable week of speculation I've ever had.
That said, I've trimmed a lot of my exposure. I still have some puts on the S&P 500 and IYR, the commercial REIT index. Apart from that I'm mostly cash. Don't get me wrong; we're in a bear market, and I think the best strategy will continue to be to short any major rally and cover as equities fall. Shorting IYR (don't make the mistake of buying SRS, the ultrashort on this index) is still a good move in my opinion because troubles in CRE are just starting to come to light and the ratings agency downgrade of GGP can't help matters. Being short SPY will still make you richer in the long run. I just hope to pick up some more index puts cheaper after a rally.
That said, does anyone think it might be time to start nibbling on the long side of things? One sector I was thinking about getting into was Telecoms. T, VZ, and VOD all have reasonable P/Es, nice dividends, and presumably stable income. (I know a lot of people who would give up their houses before their cell phones or internet, for example.) A stock paying roughly 6% dividends in this environment seems like a pretty good deal to me. Maybe a covered call strategy is appropriate here to hedge a little against broader market downturns.
If you expand your universe to foreign telecoms, you can find several companies paying in excess of 8% dividends, like Cellcom Israel (CEL), Telecom Sao Paulo (TSP), and France Telecom (FTE). I haven't taken a look at these companies' financials yet, so I don't know why their yields are so high, but a 10.50% dividend like CEL's looks pretty tasty at first glance.
So what do you guys think going forward? Do you have any good value sectors or stocks to look at? Do you think we'll see a bounce in the coming days?
