• Home
  • Meet Scott
  • My Gut Feeling
  • In The Media
    • Financial Expert Scott Rothbort On TV
    • On The Radio
    • Facebook Feed / Upcoming Media Appearances
    • Stock Trading Commentary On Scutify
  • Private Wealth Management
    • Scottrade Adviser
    • Investment Strategies
    • Integrated Wealth Management
    • Financial Retirement Planning
    • Selling Of Business
    • College Savings Accounts
    • Expert Witness & Testimony
  • Contact
  • Home/
  • China Economy & Market/
  • My Gut Feeling For Today, January 27, 2014: Materials Company Stocks Are To Be Avoided

My Gut Feeling For Today, January 27, 2014: Materials Company Stocks Are To Be Avoided

January 27, 2014 / scott / China Economy & Market, Emerging Markets, Gold, Investment Strategies, Materials, Mobile Devices / No Comments

Friday was not pretty. It was the markets’ version of reverse peristalsis. It happens every occasionally. This time around, the causal stimulus was emerging markets anxiety. As I mentioned on Friday morning, it was a time for caution, but not panic. Unless you were 100% in cash before the day began, Mr. Market took its pound of flesh from you. It did seem that there were plenty of weak hands, likely the typical momentum or over leveraged traders who hit the panic button. I increased my cash levels to about 7.5% for our growth portfolios.

In My Gut Feeling For 2014, I said that “The Sochi Winter Olympics will be a public relations nightmare for Russia. The event will be plagued by old style Russian cheating and new style Chechen political unrest. A terrorist attack during the Olympics, either at Sochi or elsewhere in Russia will precipitate a global market pullback of 5 – 7%.” Well, there have been events leading up to the Sochi Olympics (which begins in less than two weeks) that have surfaced. Particularly, unrest in the Ukraine and Chechen terrorist concerns, have, during a period of emerging markets uncertainty all come together to help spark the market pullback.

So what do we do next? The first thing to do is not to head for the hills. After a near 30% surge in 2013, at some point, any rational investor should expect a pullback. As we now stand, the S&P 500 (SPX) is off about 3 ¼% from its all-time high and just over 3% since the end of last year.

The proper course of action is to look at one’s portfolio and ask this question: what has fundamentally changed in the last three weeks that would require letting go of a position? I have already talked about cutting back on exposure to consumer discretionary stocks. The emerging markets are large exporters of materials. China is a large consumer of materials. With material prices down due to currency devaluation and demand from China reduced, materials companies are not the place to be. Hence, I liquidated full positions in Freeport McMoRan Gold and Cooper (FCX) on Friday. If you own a company that drives most of its growth from the emerging markets, then it is time to let that one go. Try to focus on companies that are more oriented toward domestic or established economies.

No matter how ugly things may be in Argentina or Turkey or Indonesia or China, there are some things that everyone will still demand – that is mobile telecommunications. As a gentleman that I once knew back in the 1970s, used to say, “When the revolution comes, it will be broadcast on cable.” Now he is likely saying that “when the revolution comes, it will spread by smartphones.”

Speaking of smartphones, Apple (AAPL) will be reporting its December quarter earnings after the market closes today. Apple is expected to earn $14.09 per share on revenues of $57.46 billion. In the year ago quarter, Apple earned $13.81 per share on revenues of 54.51 billion.

I expect the equity market to stabilize in the next few days as bargain hunters step up with some cash. However, a turn in the market will likely take more time. We are running on emotion right now and that should never be a factor in decision making.

__________________________________________________________________________________

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.

LakeView Asset Management, LLC is a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website                                                                                      

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com 

Read Scott’s intra-day thoughts and comments on Scutify 

You can email Scott at scott.rothbort.lakeview@gmail.com

 

Share this with a friend!
Apple (AAPL), Freeport McMoRan Copper and Gold (FCX)

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Sample of My Gut Feeling on Bloomberg Radio

Financial Podcast With Scott Rothbort

Listen to more radio broadcasts

Search My Gut Feeling

My Gut Feeling Archives

March 2021
S M T W T F S
« Feb    
 123456
78910111213
14151617181920
21222324252627
28293031  

LakeView Restaurant and Food Chain Report

restaurant stock report
  • Listen to Scott On The Radio
  • Scott’s Facebook Feed
  • Watch Scott’s TV Appearances

Contact Us

  • (888)-9LAKEVIEW
  • (702) 749-9343 or (973) 564-8139
  • investlakeview@gmail.com
  • scott.rothbort.lakeview@gmail.com
  • Contact Us
    • Facebook
    • Twitter
    • Linkedin

Signup For “My Gut Feeling”

Latest From Scott

  • My Gut Feeling For Today, March 1, 2021: Fear Not Rates
  • My Gut Feeling For Today, February 11, 2021: Short Selling, Gamestop and Robinhood – Part 2
  • My Gut Feeling For Today, January 31, 2021: Short Selling, Gamestop and Robinhood – Part 1
  • My Gut Feeling For 2021
  • My Gut Feeling For 2020 – A Look Back
(c) 2013 - 2017 LakeView Asset Management, LLC. all rights reserved, 526 Carnforth Drive, Henderson, NV 89014 | Toll Free: (888) 9-LAKEVIEW I Website Disclosure