Monday, January 05, 2009
(Cont'd from above)...

Jim (cont'd):    So is that?... Are we just dead in the water? Until Obama jams something through? … Nah… Come on, it is better than that. Because today the market gave us something beautiful… it gave us, proof of life… which is also a solid, if overlooked movie… Today was a literal first for me. A commodity stock led rally, masked by Dow Jones downturn of 81 points… That I am smiling about. If you remember all last year I would rail against rallies led by the oils, the coals, the fertilizers, the infrastructure plays, because they were too narrow. And to contrary to any long term positive thesis. Because I believe they were all inflationary…
And too levered to China… But to the rally of the commodity stocks today, all I can say is… These stocks are saying, scratch that negativity… They are screaming, we are not going to have another great depression. We are only going to have a sever slowdown. They are shouting China is coming back…. The stimulus there is working. It might even work here. And they are most certainly telling us, the people who joined the great depression band wagon when we got off… Are going to have two eggs over easy all over their faces… I just came back from Mexico, these guys are going to have Huevos Rancheros all over their faces, with habenero sauce in their eyes… ouchie…

I have been petrified that there will be no signs of life from the commodity stocks, because after all the economy seems to have no pulse… Look, it seemed like it was playing dead, because you do not get rallies in the coppers… like back from the dead Freeport-McMoRan (FCX*)… and the coals like Peabody Energy Corp. (BTU) in the way back machine… and the sippers, think Cramer fave Nordic American Tanker (NAT)… Which is talking about raising its dividend now that it bought a new ship… And, yes of course, fertilizers without some proof of life, remember Terra Nitrogen Company, L.P. (TNH) is the beloved one in that stinky group.. Now don’t get me wrong, I am not endorsing these stocks as buys right here… They are up too much in just a couple of days time. I think they will come down if we get a hideous unemployment number on Friday… and believe me, I think we are going to get a hideous one...

Yet, it is plausible that the worst in the economy is over, just plausible… if we get that stimulus bill. Simply because you really gotta struggle to get worse than its been… And the fact that the commodity stocks could rally at all says.. Look its going to be a garden variety economic smash down… but nothing like 1932, so stop blabbering about it… Remember we stopped talking about that entirely. This time we have nothing fear… except an over bought market with stocks that have gotten ahead of themselves. That is hardly the stuff of FDR’s first inaugural… So what’s the new game plan for 2009? Same as the old one, sorry. All last year we advised do not chase rallies like the one we just had. Wait for pull backs, and then buy the stocks with notoriously B. I. G. juicy dividends…

Now apparently they are realizing a gigantic movie.. Just about this accidentally high dividend strategy… the biggie small strategy… it is called “Notorious”… and I will be waiting in line, overnight, just to discover whether Hollywood has balkanized the topic… or if it is sticking with rap music about juicy accidentally high yielders… the movie is rarely as good as the book…. Real Money the paperback edition… which hits the bookstores today…

Alright, with that bit of self promotion completely and utterly out of the way.. Remember the game plan is unchanged. Wait for a pull back… Scale out of the stocks that once had huge dividends… hey, Northrop Grumman (NOC) was a good one to scale out today… Nucor (NUE) a good one… by virtue of falling share prices. And be glad that the stock market is saying “Nah, Nah, Nah, Nah”… to the great depressionists… As once again I show that I am even more mature in 2009, than I was in 2008.

Bottom line…

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The Bottom Line!:     The rally in commodity stocks today confirms that we… Well, that things have gotten better… That we have moved out of Dante’s inferno… and into the stock market purgatory. But that is no reason to be buying like crazy… Be patient, stick to the dividend playbook, until we know for sure that help is really on the way, from Washington.  

The market showed signs of life today, but remember to be patient when buying...

[verbatim recap]

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Jim went on after this segment to take questions from callers, and responded with his comments...

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Q: I am looking forward to ringing in the new year with Cramer, and speaking of rings. With Valentines Day just around the corner. How do you feel about high end luxury stocks, like Tiffany & Co. (TIF), do you think they will outperform the rest of the market at large?

Jim: You know I saw Nordstrom Inc. (JWN) today doing very well, up from $12 to $15. And it made me think, do we go back and do we look at Coach Inc. (COH), do we go back and do we look at Tiffany? But you know what, I’m not going there, I think that once again.. Retail on rallies, I am not going to be excited about… except for the dollar stores and Wal-Mart (WMT*).

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Q: My question is oil, are we setting a new trend for 2009? Or are we going to hit bottom again?

Jim: No, I think that what is going to happen, that oil is going to be… and this is a term I learned, unfortunately, we need to do some Wall Street speak here.. It is going to be range bound… I think it is going from 40 to 55... That is what I said on Plunch today, Power Lunch.. With my friends, Bill and Sue… 40 to 55, we are nearing the top end of the range.. Remember we are now up 50% from the bottom.. I am a seller of the oil stocks, as I did today for ActionAlertsPlus.com, my charitable trust… These kind of rallies need to be sold into, not be bought. But., the floor is in for oil, because everybody went negative at 33, and everybody’s always wrong.

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Q: The last couple of months, I been pulling in this market. I took about 20% out, opened a discretionary fund, made about 40%, and now I see this market is going to level out a little bit. I want to go after the dividends, how do I chase them down?

Jim: No, you can’t now. I mean you have to be careful. Look, you are going to get price breaks… lets take the case of Verizon (VZ)… I come in today, and there is some guy..  I used to call "analyst communists," and then it turns out that one of them was a communist, and I felt like he was going to sue me or something… But there is a guy who downgraded Verizon (VZ) today.. He made Verizon sound like basically we are going to take out our cell phones and smash them.. We are going to rip out our phone lines.. And what we are going to do is use tin cans with string… I thought it was a radical over reaction. They come in, when a stock like Verizon comes in and the yield gets juicy… ala, notorious big.. Then you want to be a buyer. Not until then. Keep the gun next to your head. Do not pull the trigger.

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Q: Two weeks from tomorrow, we have a new president into office. What have you seen in every president elect that you have been there for, that you said , I told you to do that. That was one of the rules, if you missed it, where were you?

Jim: In this particular case, anytime we had a run up... Let me give you Reagan, I played, I stayed and when Reagan got elected, I bought all the military stocks, every single one of them… so sure enough he comes out and normally he comes out and talks about a strong defense… hey, shocker… and then you had to sell the stocks. You had to sell the stocks that day. Whatever that has run up big.. He talks about, you have to sell.. And that even includes my buddy pal friends in the infrastructure group, so let’s be careful. Whatever he is most linked with, is going to come down. That has been the tradition with presidents, this time will be no different.


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Dow down 82 cents, dollars to start. Fresh start in 2009. Now be patient. Stick to the juicy dividends… don’t wait for the juicy movie to come out… with notorious B. I. G… take it from me, it is time to get in line.

Read Jim's next Segment here