Tuesday, October 7, 2008

Effects of the $700B not going as planned

My Portfolio :

(50.46% of portfolio) MEG -6.38%
(27.29% of portfolio) SMDC +9.21%
(6.41% of portfolio) DGTL -19.21%
(9.53% of portfolio) FLI -6.804%
(6.31% of portfolio) SMB -15.10%

I thought that I would make a killing this week. But the opposite happened, my stock position is down by -5%. I'm not panicking though. It's just that investors has not grasp the effects of the $700B in the market. With fractional reserve banking, the $700B impact in the economy would approximately $7 Trillion.

So just be patient wait a couple of weeks or months and prepare to invest more in your current portfolio if the stocks continues to dive to average out the losses.

My Stock Picks:
FLI 0.58 (P/E 8.16)
MEG 1.28
(P/E 8.42)
SMB 9.6 (P/E 18.46)

FLI and MEG has a P/E ratio less than 10, which makes it a bargain. SMB on the other hand, requires some speculative analysis, I choose SMB even with a P/E of 18.46, is that even though that figure seems so high and may make SMB overpriced, but based from my research, SMB is still paying SMC for the company split. Thus, this affects the net income of SMB which then affects the Earnings per Share (EPS). But after the debt is paid, the EPS may rise significantly.

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