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Jim (cont'd):

So with that in mind…what do the charts say about FCX… according to this time we are using Dan Fitzpatrick, he is my colleague at TheStreet.com, where I am chairman… he is our go to guy for technical analysis who is both really smart… and he is not all that dogmatic… take a look at the weekly chart… according to Dan, FCX is oversold and in recovery… the stock is well below its 200 day moving average… that is a longer term piece of jargon.. meaning how close a stock has hugged its trajectory… in this case, FCX isn’t anywhere close to it, okay… it is much lower… according to Dan the maximum power of the sellers peaked in early December… when FCX was 80% below its 200 day moving average… the stock is still 65% below that average… so according to the charts… which remember we don’t necessarily believe in… there is still a lot of upside potential… so once again, stock bottomed here… it is still way off this 200 day moving average… they think it can go up closer to that… it is still way below it.

The December low marks the start of what is know as a base… this is considered to be a base by guys like Dan… it is a place to be able to have a launching pad to go higher… share holders are becoming value buyers… have been stepping in at these low prices… but they do not have to pay up because there has not been that much buying interest… so they buy a bit and then they back away if the price starts to rise too much.. the new buyers are very disciplined… they do not chase… then the stock declines and when it falls far enough… the value buyers come back in… see here… and here… they just keep coming back… now the technicians will be saying that the stock is being accumulated by the value buyers… all this stuff about the base is very important to people who like to go by the charts… because to them after a big down trend like FCX has seen… the prolonged period of base building… means that people who bought at higher levels have exited… these guys all topped out… or are willing to hold it for the long term.. they are the ones who won’t be panicking in the down turn… these guys… anybody who is left ain’t selling.

Now, lately FCX has seen higher highs and lower lows… again something that indicates to the technicians that buyers have become more aggressive than sellers… for chart watchers that is a very bullish sign… and according to Dan Fitzpatrick… because of the lack of near term selling pressure any break out in the stock has a chance of moving it much higher… so what he is saying that with that base you could have a sudden sharp movement up…. and I am going to give you a little more reason why the fundamentals say that could happen… the supply has been taken out… that is what the technicians are saying… the new share holder base who look to be in it for the long haul say that any new buyers need to reach higher to buy stock… cause these guys are not sellers… they are in it for the long haul… it is not being dumped on their heads and sold into rallies… so the technicals are positive.

Now, let’s talk about what I think caused this bottom… and the is Freeport’s fundamentals… I don’t know about the value buyers, and the buying pressure, and the selling pressure… I know about what happened.. do we agree with what the chart is supposed to be saying… I do… see FCX put the negatives behind it when it reported its fourth quarter earnings last week… and delivered a quarter that was no worse than the analysts expected… that is why I think the stock has had a little bit of a jump here… the company has taken aggressive action to strengthen its cash position… it did that when the stock was down here… eliminating its dividend that is when the stock was at $17... lowering its debt… and announced a $750 million shelf offering… FCX is now in a good position to weather the down turn… it wasn’t all the way down… it wasn’t until here that it got in good position… great management has been around for decades… has seen multiple boom and bust cycles… a month ago people were nervous about Freeport’s liquidity… now once again, when they were nervous it was right here… they were worried about potential debt covenant violations… but the companies pro active measures seems to have taken those concerns off the table… in other words, FCX bit the bullet down here… which is why we believe it bottomed… I don’t care what the chart says… that is why I think FCX is the single best way… right now… to play the copper market… and in an eventual recovery in global demand… several producers have shut down production… only representing 2% worldwide capacity… the price of copper I think has stabilized… it is not going up yet.. FCX has the best assets in the industry… something that I think is impossible for the competition to replicate… they have a lot of stuff in East Asia… and don’t forget China represents 30% of the demand here… so its aggressive stimulus program should lead to higher copper prices… that is one of the reasons why I think it is starting to go up… that will be terrific for FCX… I am also betting on China… you know that… it is the only major stock market up double digits in 2009... they are a huge importer of copper when things get hot… and they will be importing from Freeport.

After that bad quarter which included huge losses related to write downs for asset impairments, good will in inventory… that was all related to the big purchase of Phelps Dodge in 2007... that was anti competitive copper deal if ever there was one… the company is now taking steps to return to profitability… FCX lowered its net cash cost by 20%… its net… 71 cents a pound for 2009... that means they are making money right now with the price of copper all the way down to $1.50... it was at $4.08 right here… so you see why this thing went down… price of copper was at $4.08 and it went to $1.50... that is what happened… I don’t care about the chart… FCX marginal costs of production… the cost of mining each additional pound of copper is between $1.30 and $1.40 that is pretty tight with copper at $1.50... that is why the company is cutting back production by 5% in 2009... 7% in 2010... they are eliminating unprofitable production… but other companies have not been as bold… so I think more production cuts in the industry are coming… which should mean stronger pricing a real positive for FCX… and I think that is how we get back to there… FCX is in great shape financially… no major debt coming due until 2015... perfectly poised to benefit from recovery in copper prices… now 2009 is a trough year for the companies earnings… its only selling at 8.6 times earnings… it looks inexpensive compared to the multiple it had historically in trough years.

Here is the bottom line…