The outlook of the economy has shown nothing more than what many people can refer to as the perfect storm. There is a weak financial system many stemming from the real estate correction/bust, consumers’ purchasing power is dwindling, as seen through AXP and Tiffany’s, there is a weak dollar and the risk of the rise of inflation.
Yes, there are many opportunities for the long term in many sectors here for your portfolio; it is important to look at short term possibilities. We have seen that prices of business are dropping and when prices of decent business decline due to market conditions, it creates great buying opportunities due to fact that they may become acquisition targets in the short term.
MGM (acquisition .. short)
Let’s take a look at MGM. At the moment there is a tender offer for 80 dollars. It is currently trading at 68 dollars. Best case scenario is 17% return. If you remember the Dhando Investor method, Heads vs, Tails à Head you win a lot, Tails you win a little. Obviously this price is not set on stone, but the stock has traded between $61.17 and $100.50 over the past year and I believe can provide substantial profit in the short term.
NAK (short and long benefits)
I am a huge fan of this company. It holds the Pebble Project which will be magnificient: holds gold, copper, and moleynebum . With the risk of a recession, and the weakening dollar, people retreat to precious metals. Also, remember, Anglo American, the mining giant, has taken partnership with this company. If you look through my past articles, I value this stock over its current price. I would recommend some 3 month calls for the current price and let the call option speak for itself. It will increase in value. Believe me. The market hates uncertainty, and this company has one uncertainty. How big is the Pebbles Project, there is high uncertainty but low risk because you can liquidate the company right now and still get more the company than what it is trading at right now. HELLO, it is screaming opportunity.
I’ll end with a quote. Buffet said, “
Be fearful when others are greedy and greedy only when others are fearful.”
