Sell in May and Go Away? Hardly.

Barely half over, May has already been the most active month for us in quite some time. The increased volatility has restored some premium back into options, used to good advantage by writing calls against our gold positions.

Also, headline risk has presented us with some opportunities. Many European stocks have plunged along with the euro in recent weeks due to concerns over sovereign debt. Countries like Spain and Portugal being considered as possible sequels to the Greek debacle and investors are worried about those economies. However, like many U.S.-based corporations, the largest European companies should be considered multi-national corporations and not tied to any one nation in particular. Even in the worst of circumstances, these companies are positioned to survive and come out the other side. Enlightened-American Premium members received an action alert for one such company added to my portfolio last week.

Last week, I had some benign comments regarding the BP Gulf Oil spill and how it affects our investment. While I think some commentators have forgotten the ability of corporations to draw out these proceedings for decades, there is no denying that the scope of the the spill continues to grow and with it, BP’s liability exposure. Current share prices remain above our entry point so no permanent capital loss has occurred but I must pause to consider BP’s growing yet unseeable cost liability. While not selling my stake yet, I have BP on hold until further notice.

[This post is an edited re-print of this week's EA-Premium Watchlist post.]

More on this topic (What's this?)
European Troubled Assets Interests
Read more on European Union at Wikinvest

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