Friday, February 20, 2009
(Cont'd from above)...

Jim:       This is from a guru that I don’t talk much about… cause you know she doesn’t get her due… this is from Gloria Gainer… I want you to think I will survive, I will survive, hey, hey… alright, here are the names that you should circle the wagons around to make a lager, which is africanner for wagon fort for the un-initiated.

#1.
First, I think you should take a look at Verizon (VZ)… today Golden Slacks came out… no, Brass Slacks came out and said that Verizon is a survivor… they actually used the Gloria Gainer term… I guess they are pretty, they are rooted in the ‘70’s music no doubt… I mean if they knew TI, they think that is Texas Instruments… losers… well anyway, this is a stock that is definitely making it off the island… it just raised its dividend, giving you a notoriously B.I.G. juicy 6.3% yield at these levels… the company has years of growth, confidently growing earnings at a 7% clip… I am going to use a word that, two words that are the most dangerous words in the English language… it sounds like a Blue Chip…. remember that, the term Blue Chip… I think Verizon is tremendously undervalued and truly like it here because of its wireless business… because of phios… can I just say something, Ivan, why would I rent those movies when it breaks up on all of the key lines… anyway, that is just personal… and the synergies from the Alltell acquisition… now as long as tail gunner Ivan Siedenberg is in charge, I like the stock… and unlike Cramer fave tail gunner Joe McCarthey, Ivan was for real… I would bolt if he left the company though and swap right over to Randall Stephenson at AT&T (T), which Goldman also blessed.

#2.
Second, I would also take a look at Wal-Mart (WMT*), another ActionAlertsPlus.com name… because we are still going to eat and still going to shop no matter how bad things get… but we are going to do it cheaply and intelligently… Wal-Mart is the retailer of last resort… it is where you go when you feel poor… it has the balance sheet and the flexibility to last… I really think that Wal-Mart will be the global place to shop… it is going to kind of like a monopoly when this year is over… kind of like Gum, that was the old Soviet Union… but better looking… if you have been to one recently, lots of brands, pleasant… I shop there… I own the stock for the charitable trust.

#3.
Third, another charitable trust name and we are beating the market by far because of this… BP plc (BP*)… the old British Pete, this is the best yield of the integrated oils at 8.3%… the highest production growth of 6%… and 100% reserve replacement… not to mention a strong balance sheet… BP has said that its huge dividend is good as long as oil stays around $40, which it is… and that it would cut back on capital expenditures before it cut its dividend… so here is one that you can really relay on for income, even if the stock goes nowhere… oil is going higher… the supply is diminishing, and the demand, measured by the price that you are now paying at the gas pump is increasing… the China globe trotting all the way to Brazil to lock up supplies for the coming expansion tells you that.

#4.
Fourth, you need a bank… no not a deposit bank… but a food bank, and not a community food bank… you need General Mills Inc. (GIS*)… I call it Generous Mills in the charitable trust… this one is a stable grower… its dividend is lower than I like but it is going to keep raising it… that is fine… the stock is very cheap right now by historical standards… trading at 13 times forward earnings… the stock is barely above its 52 week low… General Mills has less exposure to the dollar than any of the other food companies so it is not getting killed by exchange rates… and let’s talk candidly about your breakfast table, where you are not going to eat General Tso's Cheerios… pork fried corn flakes, forget about it… General Mills is a stable and it will stay that way… this is a big eat at home play too including Gold Medal Flour, lots of soups, pastas, and veggies… and it is also like a fallout shelter play I mean I don’t know how deep your fallout shelter is, I only have about 6 months of canned goods in there, I am getting there… we aren’t going out like we used to… instead we are eating the stuff that General Mills makes.

#5.
Fifth, I have said this since the beginning of the show, you want gold… people keep talking about a gold bubble… that is absurd… now with a lot of ETF buying, it is moving up gold… and 60% of the worlds gold is made for jewelry… but I think gold is going higher with all this talk of bank nationalization… with Tim Geithner hiding under his bed… probably a Ducsiana given how little taxes he pays… with the Euro totally falling apart… and the enormous over all level of financial chaos… you could buy the SPDR Gold ETF (GLD), which tracks the price of the actual commodity… which is moving up just in lock step… but if I were you I would buy Agnico-Eagle Mines Ltd. (AEM)… this stock was at $83 the last time gold was at these levels… now it is at $54... the company has had some problems with cost over runs on a crash program to develop five mines… the projects are now finished… and now their cash costs are less than half of the price of gold, we heard that from Sean Boyd earlier this week… AEM has a multi year run ahead of it because it predicated the ramp in gold prices and spent a lot of money before it got out of control… it is one of the very few stocks that has true visibility… even if gold goes down 20%.

Let’s give you a final position… perhaps the most important position in the portfolio… and that is cash… that is right… a CD… look even a checking account at this point… we need cash because we want to add to these positions on the way down… here is my recommendation… you keep 25% to 30% of your portfolio in cash right now, depending on your worry level… so you can deploy the capital at lower levels.

Here is the bottom line…

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