Dow Theory -- a market timing strategy that has been followed by the aptly named Dow Theory Forecasts and has proven highly successful for over five decades -- remains bullish on the outlook for stocks.
The strategy is bullish when strength in the Dow industrials is confirmed by strength in the Dow transports, as well as in the Dow utilities (although the latter is less critical).
Says Charles Carslon, "Dow Theory is squarely in the bullish camp." The advisor also sees a contrary reason for bullishness.
He notes, "Rarely does such impressive share-price action meet with such skepticism. A broad market advance has carried nearly all the major averages to significant highs, yet many reporters and analysts seem convinced the stock market has it wrong."
With the primary trend bullish and quality stocks available at "reasonable valuations," he believes investors should keep only 5% to 10% of their equity portfolio in cash, while continuing to look for opportunities.
One large cap Dow stock that rank as a Dow Theory "long-term buy" is General Electric (NYSE: GE). He notes that GE shares have moved to their highest level since mid-January after an analyst report argued the conglomerate should spin off several businesses, citing NBC Universal, GE Money, and GE Real Estate.
He concludes, "The combination of a reasonable valuation, decent growth prospects, and above-average yield should generate market-beating returns over the next 24 to 48 months.
For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free daily website, TheStockAdvisors.com.
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Reader Comments (Page 1 of 1)
5-04-2007 @ 2:59PM
Bruce E Warnock said...
We are retired folks and long time holders of GE. It is our largest investment. Sadly, we look back to the year 2000 and GE at $60. If this is a "growth stock", then it has a long, long way to go just to return to where it was in 2000. Spinning off the units described in the Citi Group report makes some sense to me. Spinning off Jeff Immelt also should be on the table.
5-04-2007 @ 4:53PM
shareholder said...
There is nothing better than owning a stock like GE that is diversified. It's like owning a fund.
It's just like a broker says. make sure your portfolio is diversifed. Please GE don't break up/
just do something that makes this stock go up and thank you for giving us a dividend.
5-05-2007 @ 12:01AM
Michael J Dunn said...
While that analyst works for citi they also as of 12/31/06 have 47,616,896 shares of ge. Are probaly intrested in ge money and ge realestate also. it seems funny to me,think about it.
Mike Dunn
Schenectady NY
5-06-2007 @ 1:28AM
gumbo said...
You all readers dont understand how GE got to where it is now. It was cheap materials!!! Copper was selling at 60 cents a pound. Moly at $2.50 a pound. Now metals had skyrocketed... GE is having a hard time paying for the expensive metals to make turbines, jet engines ,etc.... GE financials helped soften the blow. Jack Welch was just on a lucky streak...Cheap metals that is... Also cheap energy... Now GE labor force must be aging and GE will look more and more like General Motors with high legacy costs and a million retiree army to boot... GE is more profitable than GM with the cars which dealers have to haggle with balky consumers. This difference wont help much in the future. I o wn some GE shares anyway for the heck of it..GE is worth close to 400 billion now a very dizzying level!! Very hard to add on top of that, dont you think? Even GE sold Utah International, a highyly profitable mining company when Jack Welch started out. Didint that tell you enough ? GE needs cheap materials to thrive. If not, tsk, tsk, tsk.. What about you buyin gA ALCOA the last one to join the metal boom!! Aluminium is still at a low price per pound historically. ALCOA is a undervalued stock. Why dont you sell some GE and buy some ALCOA to balance and diversify a little, hmm? Psst, c'mon!!
5-08-2007 @ 1:47PM
gumbo said...
BLOGGERS?? MY ASS!!! ANOTHER NAME SAME LIARS AS THE NETWORK ,YOU KNOW?? THOSE MINDLESS LIARS SCURRYING AROUND AND FIX THINGS UP AND FORGETTING ABOUT THEM. SAYING ANYTHING TO FIT THE BILL!! KEEPING PROBLEMS GOING WHLE WITHOLDING REAL SOLUTIONS. KEEPING PEOPLE CONFUSED AND BUSY...