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Thursday,
January 29, 2009
(Cont'd from
above)...
Jim (cont'd):
This isn’t a plan to
revived the economy…
it is just some sort
of life support…
enough to keep us
going on a
ventilator and
dialysis… but not
enough to get the
patient on his feet…
even worse… holy
cow… Obama came out
guns blazing today…
he had a press
conference… listen
to this zinger…
Obama “There will be
time for them to
make profits. And
there will be time
for them to get
bonuses, now is not
that time.”… Obama…
he is talking about
how the banks are
getting away with
murder… when it
comes to what he
calls shameless
bonuses… shameful
bonuses… which put a
damper on all the
bad bank
enthusiasm…plus the
fact that he said
there will be time
for them to make
profits… that means
the bad banks….
anybody who is in it
is not going to make
profits… I mean,
like we said last
night if you are in
a bad bank you are
done for.
Obama is clearly not
going to bad bank us
out of this mess… in
a way that’s getting
common stock
shareholders keep
their shirts…
including this nice
shirt from Pink’s
that I bought… I
paid a lot of money
for this… not only
are we not getting
the stimulus we
need… now we also
know that they won’t
make the bankers
whole… when Obama
started speaking the
Dow was down 209
points when he
started speaking…
when he finished it
was down 234 points…
now I had hoped that
the days the market
plummeting every
time the Commander
in Chief spoke were
over… but it looks
like Obama’s become
poisonous to stocks
to just like his
predecessor… the
absolute part… there
was nothing, nothing
in the whole package
to spur existing
home buying… what
the heck is Obama
thinking… I thought
this administration
would be smart… but
it is like they
don’t understand the
situation we are in
at all… housing is
everything… until
you fix it you can’t
truly fix the stock
market or the banks…
because the
financials are the
markets backbone.
Now Sheila Bear, the
boss at the FDIC,
she gets it… but, I
don’t know about Tim
Geithner,
everybody’s favorite
except for mine… our
new Treasury
Secretary… I don’t
know if he truly
comprehends the
situation we are in…
Geithner is just
looking at the usual
patchwork that he
stuck with the whole
time… the various
elegant lending
facilities to tide
things over… to
which I say tide
things over for
what… the essence of
the banking problem
is the toxic asset
backed clog up…
mostly mortgage
backed stuff… and
the consumer is
hurting because he
sees his retirement
money evaporate… and
the value of his
home plummet… by
going after housing
directly… we could
have went after all
these problems…
until we do… nothing
is going to be
solved… we are going
to be stuck in this
one step forward,
one step back
market… and one step
and a half back for
banks… if we are not
creating jobs… and
we are not buying
distressed assets…
we are not going to
turn the economy
around… it is just
not going to turn…
what does this mean
for you… what should
you do with your
money while we wait
for Washington to
distinguish its
elbows from its
Gluteus Maximus.
Alright, remember
this is not an
entirely
unprecedented
situation… many ways
the beginning of
every year reminds
me of… the beginning
of this year reminds
me of all the other
years… where the
companies that are
economically
sensitive… so called
cyclical names… say
listen things are
bad… because the
economies health is
bad… they own up to
how bad things
really are… the
First National Bad
Bank out to take
some of these
companies assets…
not just the banks…
I mean, I am
thinking the
stimulus plan is not
going to help them…
right, I mean can’t
the First National
Bad Bank consider
buying Assesna from
Textron… that is a
troubled asset… how
about the First
National Bad Bank
cabinets for Fortune
Brands… I mean
nobody else is
buying them.
Obviously this year
is especially bad…
but it still fit’s
the pattern… while
the cyclicals are
throwing in the
towel… the
consistent growers
remind us why we
like them so much…
until we fix
housing… until we
stop persecuting the
bankers… or we get a
more serious
stimulus package…
then you need to
take shelter in the
foods like Kraft and
Kellogg’s… Kraft
moving up nicely
today… the beverage
companies… like
Coke… the soft good
plays like Colgate….
how about that
fabulous number
there today… the
tobacco companies
like Altra… which I
own for
ActionAlertsPlus.com, my
charitable trust…
another great
quarter today… the
drug companies Lily,
Bristol Meyers,
charitable trust
name, has a good
yield… these stocks
many of which were
actually up today…
despite the markets
pounding… are where
you have to go… you
know that... I give
the same stocks
because they are
right for this… they
are the recession
resistant holding
pen… the safe route
that works until
things get better…
consistency is the
name of the game
right now… and those
companies have them…
you can’t count on
Washington… and you
certainly can’t
count on all the
mythical money on
the sidelines I keep
hearing about… oh
the money on the
sidelines, you hear
these managers come
on T.V., oh there is
money on the
sidelines… let me
tell you something
about the sideline…
people are out of
money… and the
reason is stocks…
they are fleeing for
the sidelines.
Take a look at this…
I thought this was
an amazing article
today… this is page
D1 of today’s
Washington Post…
this is an article
about how much
longer people are
going to have to
work because of all
the money they have
lost in stocks… this
pretty much says it…
people now equate
owning stocks with
working longer and
having less money…
there is no
salvation from the
sideline.. the
sidelines were
obliterated.
Here is the bottom
line…
▼ ▼
▼ ▼
▼
The Bottom Line!:
Bad earnings, the
prospect of the Bad
Bank will be too
punitive, and a
really bad stimulus
package… set us back
big time.. until
things get better…
and that could be a
long time… I am
going to preach to
you again…
diversification…
defensive stocks… if
you can’t eat it,
smoke it, drink it
or wash with it….
sell it.
Consider companies
that make anything
you can eat, drink,
smoke or wash with
in this market.
[verbatim recap]
▼ ▼
▼ ▼
▼
Jim went on after
this segment to take
questions from
callers, and
responded with his
comments...
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Q:
Jim, I like some of
the others are
wondering what it is
going to take to get
us of this economic
debacle? Every day
is more bad news
from bank loans,
sticky credit
margins, stock
market, automobiles,
house foreclosures,
unemployment,
corporate earnings,
low consumer
confidence, all this
while the rest of
the worlds markets
are highly
correlated to our
own. Hence, throwing
everything we have
at this not the
least of which is
the much anticipated
stimulus package,
that we just can’t
seem to get our
footing. What has
got to happen for
this ship to right
itself?
Jim:
Alright, what has
got to happen for
this ship to right
itself… well, I
think that we have
to understand that I
am not a bull…
remember I am not
doing the land of
1000 bull dances… I
do not expect this
ship to right
itself… what I
expect to happen is
that you can hide in
a diversified
portfolio… and lose
less money until
things get better…
make a little money…
and then when things
get better… not if
but when… we will
look at it again…
but I have got to
tell you… I don’t
have… I had hoped
the stimulus… we
didn’t get it… I
have offered a
serious of plans for
bad bank… we haven’t
gotten them… I was
hoping that we would
find a bottom in
housing… with help
for the government…
it looks like it is
going to run it’s
course… none of the
things that I want
are happening… so
what we have to do
is focus on
preservation of
capital… and
diversification… I
am not a gunner… I
can’t see my way
through this problem
right now.
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Q:
I know you recommend
dividend payers, but
I am a little
puzzled. On the x
dividend date the
stock value drops by
the amount of the
dividend, a person
hasn’t gained
anything but a
taxable event. If
they wanted a
monthly check, it
would be cheaper to
sell some stock and
get a long term
capital gain or
loss. My question is
why the fascination
with dividends, and
what am I missing?
Jim:
Well, first about
half the performance
of the S&P 500 for
as long as I have
calculated is from
dividends… so we are
not going sneer at
that… second, the
power of compounding
dividends if you let
it run… is really a
beautiful thing… you
are right about the
given x date… but if
you take a look at
some of the
companies that I
follow that have
paid dividends year
after year… and you
reinvested them… you
are going to begin
to see the power…
the wonderful power
of compounding… how
much it can do for
you… I am a bull on
dividends as a place
to hide… I am a bull
on dividends because
they are taxably
advantage… but most
importantly they
have been a huge
part of the success
of the market over
the course of the
last 50 years… I
can’t back away from
them.
Dow down 226...
until things get
better… we are going
to preach the
mantra… eat it,
drink it, smoke it,
wash it, medicate
with it… buy it.
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[verbatim recap]
[end of segment]
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