Monthly Stock Market Report – October 31, 2014

A Month of Corrections and a Big Rebound. Buy cruise lines!

Stock Market ReportThe “bumpiness” we predicted came true when the month of October began with days of scary “downs” followed by days of hopeful rallies. For the month, we experienced a 9.5% correction on October 15th (intraday low of 1,820 on the S&P 500 Index)  followed by an 10.9% rebound to a record close of 2,018 for the S&P 500 on October 31st. “Bumpy” may have been an understatement! Global concerns about a European recession drove down stocks of U.S. multi-national companies early in the month. However, as U.S. companies’ earnings and a positive GDP report (up 3.5% in the third quarter) allayed fears, the rally was on again. Despite the U.S. Federal Reserve (Fed) ending its stimulus efforts (QE3), the European Central Bank’s expected stimulus and the Bank of Japan’s surprise stimulus on October 30th added to the latest rally’s steam.

As we look towards closing the year, November and December could experience more volatility but should add slightly to the positive market trends established in October. While there may be unforeseen negative global developments, we see no need to change our current allocations for our TSOA retirement account allocation formulas  or in our Fun Stocks Index.

Buy Cruise Lines

In mid-October, my wife and I took a very enjoyable two-week river cruise from Amsterdam to Budapest (Viking River Cruises’ Grand European Tour). Viking did a fine job and we were impressed. Unfortunately, Viking is not a public company and therefore we cannot buy its stock so that we might “travel for free.” We do, however, own shares in Royal Caribbean (stock symbol RCL and it includes cruise line brands like Royal Caribbean, Celebrity, Azamara) and we have done well with its stock (up 45.7% since our January 8, 2014 purchase).

Other cruise lines with public stock include:

  • Carnival (stock symbol CCL and includes cruise line brands like Carnival, Holland America, Cunard, Costa, Seabourn, Princess)
  • Norwegian (stock symbol NCLH and includes cruise line brands like Norwegian, Pride of America, Genting), and of course,
  • Disney (DIS).

Although we cannot invest directly in river cruises yet, Celebrity (a Royal Caribbean brand) announced on October 20th that it will start offering ocean and river combination cruises (Celebritycruises.com/vacationpackages). Cruising (both ocean and river) are part of major megatrends, so I will be discussing these possible investment choices in coming months.  One of the best ways to “travel for free” is to own the stocks of the best travel-related companies. (See my blog “Invest in Travel Stocks and Travel for Free” and our Fun Stocks Index). So stay tuned…

Good Investing!

Jim Tso

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