June 20, 2013 Comments

The S&P 500 fell 2.5% today and Toronto fell 2.4%.

I did a bit of buying in the morning, which was early because the markets fell further in the afternoon.

I bought some Toll Brothers at $31.21, it closed at $31.70

I bought some Canadian Tire at $79.57, it closed at $79.65

So my prices on those worked out okay even though markets in general were down quite a bit more in the afternoon.

I also placed an order for Melcor if it should fall to $17.90 and for Canadian Western Bank if it should fall to $27.10.

While no one can predict markets in the short term, I don’t see any reason to expect a real dive in the markets. As documented in these daily updates I had sold some shares in recent weeks in order to reduce risk and to have cash for buying. If and as stocks fall my strategy will be to look to buy.

I think it is fair to say that in these comments and in articles updated recently I have indicated that long-term bonds were likely to be a bad investment. In the last couple of weeks long-term bonds have been falling as interest rates rise.

Stocks also fall with higher interest rates, all else equal. But while 30-year bonds were yielding 3% not long ago, stocks were never priced so high as to reflect 3% interest rates. Stock P/E ratios were a bit higher than historic averages. Bond P/Es (the reciprocal of yield) were basically at all time highs. So long-term bonds have a lot more to fear from higher interest rates than do stocks


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