of all the component companies within any grouping such as Telecom. When there are an increasing number of companies breaking down, it soon becomes very clear on the graphic or chart for that Industry Group. With this in hand Investment decision-making (Buy / Sell / Hold) becomes quite easy.
The Utility Market Sector still have positive Industry Groups, Companies and ETFs that are doing well. The Telecom Industry Group is one of those that has turned the corner to be Un-Favorable. My Forecasts suggest that the good times of the past are waning along with the Utility Sector itself.
My current Forecast for the Telecom Industry suggests that selectively Holding Cash is more prudent than holding many of the Companies long. So, I do have a Strong Bearish “Warning” in place. This level of warning is only activated when I see some possibilities of again taking profits as being the current best investment strategy.
I continuously preach that Selectivity is what profitable investing is all about. When buying I select the current best and when selling or shorting I select the current worst.
You might want to read my “Being Selective” and my “Rotation Model.” articles for further insight into my investment methodology. I often share: “As the marketplace cycles from Bull to Bear typically the participating securities “rotate” into favor and then back out of favor. This produces an entirely new batch of both Industry Groups and individual Companies / ETFs on my Buy / Short asset management list from month to month.” These two Buy and Short list is simple refined through my analytics of being very selective when making Buying / Selling or Shorting / Covering investment decisions.
Staying on top of all of this in an ever-changing world of economics is quite a trick and requires much time these days. Some do their jobs well and others do not, it is just that simple.
A Special Note for Seniors / Retired & Income Investors
My Mission is to provide guidance and direction for conservatively providing consistent annual and superior dividend and growth results for each Formal Recommendation I make to my Clients. Utility companies often provide very good dividend payments and in good times growth of your investment dollars. Unfortunately, my current forecasts for many (dividend paying) Utility Companies are not going in the right direction with regard to growth of your principle. At these times in the ever cycling of the stock market I suggest that holding cash, for selected un-favorable Utility companies is currently your most prudent investment strategy.
The Table below shares several of my Component Industry Group Indicators and an ETF of the overall Telecom Industry. At this time they are not doing well, with a clear negative variances or divergence in my Analytics of how they Forecast.
Note: There are many more combinations of the above information in my Forecast before any investment decision can be prudently made. My Notes for Table will offer help to understand my Methodology of “Investing Wisely.” I hope this will provide you with profitable guidance.
Prudent Investment Decisions
Is it too late to Sell? At this time, the answer is No. You just might want to wait until there is the next Bullish General Market / Utility Inflection Point to do so. I believe this should this be your current investment strategy for the foreseeable future. I would be both cautious and highly selective in my securities choices you choose to hold.
My work/analytics starts with Forecasting and ends with very selective Formal Recommendations to Buy/Sell and Short/Cover. In between it is a matter of holding cash and waiting for the next General Market / Bullish or Bearish Inflection Point to invest your money wisely.
A Fourteen Year Perspective on the Telecom Industry ($DJUSFC)
It has NOT always been like you are being told by so many who do not take the time to do their homework and practice “Investing Wisely.”
You will quickly note that the Telecom Industry has taken a big hit – study the year 2008. You will also note that it has not even come close to replicating the S&P. There are many and currently clear reasons why, if you take the time to study this Industry Group closely and its relative performance to the S&P 500 Index. I hope you do.
Compare a Few (from a Percent Point of View)
Perspective is a very profitable investment tool and seldom used effectively to maximize profits. There were clear reasons both fundamentally and technically for these particular securities to both out-perform and more recently to under-perform. This is true about all Industry Groups, Companies / ETFs. Identifying those that have the prospect of “out-performing is obviously of incredible value and my Forecasting Methodology is always ahead of the fact. I hope you know what I mean about “ahead of the fact.”
At this time I must reiterate my Strong Bearish Warning and Strong Caution and prudence for holding many of the component securities of the within this Telecom Industry Group. Perhaps after a notable pull-back, I will once again be more proactive with my views on this Sector and Industry Group — but even then you will want to be highly Selective with you choices of investment securities.
Since the U.S and World economies remains quite weak, and the positives are most-often off-set with further negative economic data and the stock market itself is very over-valued and currently very over-bought. Interest rates are on the rise again! This does not bode well for investing wisely. TAKING PROFITS (and HOLDING-CASH, if you have any), is currently the best place to be. If you don’t have any CASH, I suggest you get some!
Oh yes, I have my exceptions, on my Bullish List, but it is diminishing almost daily. Holding with the focus on selling is my recommendation at this time.
There will again be fantastic investment opportunities if you will just be patient and disciplined with the management of your portfolio.
Most analysts remain overly optimistic, I believe my work / analytics deals with Reality. I hope you agree.
This article is brought to you courtesy of Steven Bauer, Ph.D. which appeared at Advisor Perspectives.