|
Wednesday,
March 25, 2009
(Cont'd from
above)...
Jim (cont'd):
First, most of the
time stocks don’t
react to news, they
anticipate it… the
fact that we closed
up doesn’t
necessarily have
anything to do with
what happened today…
and if we closed
down at the lows
that we saw earlier,
the takeaway would
be the same… we are
still way ahead for
the month… and we
have hardly gave
back an inch from
that beautiful 500+
day on Monday…
stocks look forward
not back… their
prices are
predictions of what
is to come… we call
that discounting, it
is a confusing piece
of Wall Street
jibberish, it means
that they built in,
bake in, good or bad
news before it
happens… I think
that the markets
predictions
skills are so good
that it often
predicts the turn in
the major fortunes
of the economy one
month before it
happens… that is how
it works, one month…
we accept this with
individual stocks… I
mean how often have
you heard Squawk Box
say, and you heard,
such and such a
company just
reported a better
than expected
quarter, but
forecasted bad
earnings in the
future… what does
that stock do… you
know what it does…
the vast majority of
the time it goes
down, not up… you
understand that when
it comes to an
individual stock
that investors don’t
care about what
happened, they are
more concerned with
what is going to
happen… I need you
to think about the
whole stock market
like that… a market
that is pretty darn
smart, because the
people that
determine the prices
are the big
institutional buyers
and sellers… not you
an me… they are
pretty smart
themselves… they are
good observers of
the future…
collectively.
So consider this
fact, if this were
the last day of this
month this would be
the first month that
the market would
have rallied since
August of last year…
and with more days
that end well like
today, we may very
well get to that
point anyway… now,
we don’t know what
will happen in the
future do we… but we
can look past into
the past and figure
out how the market
works and how right
the market is when
it comes to
predicting what is
about to come… so
let’s do that.
What did the market
forecast when it had
that last good month
in August… a month
where the market
peaked… let’s even
be more precise… the
market peaked right
here, August 11th,
2008.… what happened
one month later… how
about this… one
month later almost
to the exact day…
Lehman Brothers
collapsed… pretty
amazing… then AIG
and Merrill Lynch…
one month to the
peak of the day of
the last good month
the western
financial world
basically came to a
stop… that is pretty
good forecasting… I
tell you it is a lot
better than the
weatherman.
Alright, let’s fast
forward… this market
bottomed about 3
weeks ago… 3 weeks
ago it bottomed…
now, what did it
see… what did the
market see right
there… remember the
market is a
prediction machine…
what did it foresee
when it bottomed…
how about the exact
opposite of what it
saw when things
stopped going up… a
possible bottom in
housing with a
beginning of a lift
in existing and new
home sales… the
market saw the turn
in durable goods
that we say today…
it saw a bottoming
out of
manufacturing… we
are getting those
numbers from the
different federal
reserve offices… it
saw the beginning of
the profitability
for banks… we heard
from Credit Suites,
and Deutsche Bank,
and Citigroup… we
heard from Bank of
America and Wells
Fargo, all the same
thing that things
are better… and JP
Morgan too… most
important I think it
saw the end of the
possibility of a
Depression… and the
potential for a new
recovery phase… you
can’t take a
pullback like we had
earlier today as
evidence that things
have gone off track.
To understand why, I
need you to switch
to a sports analogy
now… it is almost
baseball season,
let’s talk about,
actually baseball
season starts in 10
days… this is one of
the greatest, let’s
talk about one of
the greatest hitters
of all time…. let’s
talk about Joe
DiMaggio… Joltin’
Joe, 3 time MVP, 13
time All-Star for
the Yankees… he
holds one of the
most amazing records
in the world from
May 15th till July
16th of 1942 he did
not fail to get on
base… he hit in
every game… 56
straight… you know
what, there was a
57th game… and you
know what he did
that day… he choked…
he did not get a
hit… I mean he
actually had a
couple of games that
he didn’t get a hit…
was he washed up,
did you want to sell
or trade DiMaggio
after that streak
broke… of course
not… in the same way
that it would have
been ridiculous had
you panicked and
sold when we were
down today… instead
we recognized how
close the good
things are… this
March bottom since
it hit bottom 1300
Dow Jones points
ago… has been Joltin’
Joe on that hitting
streak… today it
gave you more proof
of its all star
status… I can’t
stress how different
this is from now
things were a month
ago… or the month
before that, all the
way back to August…
when we would ramp
and then go down and
get crushed… and
every rally was a
chance to sell… now,
every sell off is a
chance to buy… this
market has
resilience.
Here is the bottom
line…
▼ ▼
▼ ▼
▼
 The Bottom Line!:
The stock market is
a great economic
weatherman… and it
is now saying the
forecast is no
longer for snow, and
freezing rain, and
destruction… things
are getting better…
we won’t always go
higher in a straight
line… and things
aren’t going to
necessarily ramp up…
and the economy is
not in good shape…
it is just not in a
depression, or it
came out of a
depression… so when
the profit takers
sell, when they
decide to dump Joe
DiMaggio… I would be
buying him… because
we are much better
off… and he is a
much better player
than the market may
say on a given sell
off day.
The market is
forecasting clear
skies ahead, but
don’t jump too far
ahead of it...
Where have you gone
Joe DiMaggio… you
are still right
here… and this is
the market, we must
remember… on the
57th game we did not
sell Joe DiMaggio
short… we bought
him.
[verbatim recap]
▼ ▼
▼ ▼
▼
Jim went on after
this segment to take
questions from
callers, and
responded with his
comments...
```````````````````````````````````````````````````````````````````````````````````
Q:
I am looking at
General Mills Inc. (GIS*),
you talked about it
late February. And
with the dollar
going weaker, what
do you think about
it now? Should I
pull the trigger?...
Jim:
Alright, General
Mills is not the
true weak dollar
play in the food
basket, it has got
less exposure say
than
Kellogg Co. (K) or
Heinz (HNZ)… I was not
happy with the
quarter… the
company, like many
other companies,
hedged incorrectly
so you did not get
the benefit of the
big commodity
decline… I know that
Ken Pall is a
terrific CEO, but I
thought that this
quarter was just
plain bad… I felt
that when he said
that it was better
than expected, that
that was something
that just actually
fooled people… I
wasn’t happy with
it… I know that he
came on Aaron
Burnett show, and he
talked a good game…
I like Ken pal very
much, but I think it
was a bad quarter…
that said, I think
it was the last bad
quarter… and I
bought some for
ActionAlertsPlus.com, my
charitable trust
when it $45, $46
because it was just
too cheap… and
yielded about 3
1.2%… the answer is,
you are dead right…
General Mills is
right here… not
because of the weak
dollar… but because
of the commodities
roll off… I think it
is a good situation
for long term value…
but we are going to
stay close, because
I don’t want to see
another bad quarter
from Ken Pal and
General Mills.
```````````````````````````````````````````````````````````````````````````````````
Q:
I work in a
General Motors
(GM)
assembly plant here
and we have a coal
burning powerhouse
on the plant site. I
am concerned that
the cap-n-trade
proposal for CO2
emissions is going
to be a major cost
for us, and I was
wondering if you
could offer any
insight on how these
proposals might
impact our
situation. And when
anything remotely
resembling an
industrial scale
carbon scrubber
might be
available?...
Jim:
Alright, here is my
take… over the last
3 weeks, ever since
we have first heard
cap-n-trade, we have
had an aggressive
parade of utilities
executives come on
here and tell us
that absolutely
without a doubt that
the middle class tax
cut would be more
than undone by
higher cap-n-trade
expenses… so you are
dead right… I also
thought that the
President last
night, I thought
that he gave a
little… I think that
they are not going
to be able to put
their aggressive
cap-n-trade in… I
think that he shot
high… he aimed high
and he is going to
end up low… I am not
as concerned as you
are… I know that
coal is an
endangered species
in this country… but
I think it has been
for 25 years and not
just the 5... I
think that
cap-n-trade is the
first thing the
President gives on.
```````````````````````````````````````````````````````````````````````````````````
Q:
When wheat was at
$15 a bushel last
year
Panera Bread Co.
(PNRA)
hedged a lot
of it at $10, and
now that wheat is
less than $6, I am
sure that they are
going to be able to
buy or hedge at
lower prices. So,
when will this
happen? And impact
earnings?...
Jim:
Remember, you
are dealing with a
stock… and how many
stocks can we say…
and you know we like
Ron Shape very much…
and let me just say
this company is up
23% year over year…
so I would say is
one that he is
executing very well…
two, the raw costs
are going to be much
better… a lot of
what he has done is
be able to
economize… he has
the best balance
sheet of any
restaurant chain in
the industry, you
know I like the
restaurants… you
know I called the
bottom in the
restaurants, people
have to give me that
because I was out
here saying that
Darden Restaurants (DRI)
and
Brinker's (EAT)...
were at the bottom…
I stuck by Panera
Bread throughout the
whole sell off… and
I like it even more
right now.
```````````````````````````````````````````````````````````````````````````````````
[verbatim recap]
[end of segment]
Read Jim's next Segment
here
Read Jim's next Segment
here
|
