Monday, March 30, 2009
(Cont'd from above)...

Jim (cont'd):   

Did Tim Geithner, our Treasury Secretary say something over the weekend on the 52 talk shows that he was on that sent us down 254 points… I don’t know…as someone who listens to every word that the Treasury Secretary says… mostly because I have no social life whatsoever… and I am badly trying to burnish my image as a policy wonk… and not the second coming of Moe, Larry, Curly, Bozo, Soupy Sales, or Dumb and Dumber… I didn’t hear a darn thing that was different from last Monday’s speech… nothing new there… did anyone think that the banks didn’t need more money… no kidding…I told you to sell the group going into the meeting with the White House last week… remember, 5 families, I said don’t be there when the 5 families come to the White House… because the government doesn’t want the banks to return the TARP money yet… I said that you should wait until Tuesday to buy some bank stocks… I am sticking with that… that is tomorrow… no change… pick up some Bank of New York and State Street tomorrow… as I said last Thursday when I freed them from the sell block… I think we are going to get some good news about easier bank standards later in the week… so I wouldn’t wait past Tuesday.

Was it the news out of General Motors that caused the big sell off… Rick Wagner fired by the government… hey, what do people think… we are going to keep giving him the money even though he keeps pantsing the American people with his losses… who would truly believe that this companies common stock is anything but a losing lottery ticket… not finally, after years of sub performance… GM at last has a land speed record… $70b lost in two years… fast and furious… did investors believe that Rick Wagner was about to receive the Congressional Medal of Automobile Manufacturing… I don’t think so… nothing there to drive me to distraction, or selling…. honestly I would be perturbed if they left him in… they US government took the action that the do nothing board wouldn’t do… I think Obama showed the guts that corporate America sorely lacks.

Oil… shocker… oil off almost $4... the amazing thing was that it had run up to the low $50’s… do we really want to see oil go higher… does anyone realize how much of this move was because gasoline and natural gas are so cheap… the stocks still reflect $35 oil… so I am not worried… I say let it go down another $10 before we panic… oh, and I liked paying $1.79 for, this weekend, for regular… do we really need to buy that premium… I think that it is a ruse… some deal that the expensive car makers have with the gasoline companies… just kidding, somebody will write me up for that.

Sure, there is some bad news… you know, real news…. Lincoln National, an important insurance company withdrew its application for federal help…. worrisome given that it could really use some… that sent the whole group, Hartford, Metlife, Pru, Afflac, Principal Financial into a dizzy…we don’t want this group rolling over… but a statement from anyone in authority that simply says we will protect your insurance policies and pay off your claims, the same claims for instance that Goldman got from AIG… and I know that the worries will be over for all except the stock holders… my name for people who still own these stocks… I have had them in the sell block for most of the year… hey, I like a Linc… you know that is the stadium where my beloved Eagles play… I don’t like the company, which bought the name rights… I have a feeling another couple of 6 points down and they are going to be calling it the Crane.

Alright, I told you last week that I thought that you should take profits in the immortal words of my late mother, go buy a sweater… you should have that nice Cashmere by now… maybe you got this weekend when the stores were so empty… hopefully you have a little money left over from the gains you took in the rally last week because I need you to start putting it to work… what do I think… when… what insights do I have for you from my 3 decades of experience in the market… I think this is one of those times when we have to play… it is a little game that I used to play when I was running $500m… it is called bunker hill… you start putting your money back to work… right into the weakness… but you can’t do it until you see the whites of their eyes… and I think we either saw them today or we came very close… where are the whites of their eyes exactly… how about possibly 3% to 5% lower, no more… and maybe a whole lot less… in fact, one of the multiple voices in my head says we definitely saw the whites today in a number of groups… and in some cases we even got to bayonet them.

With the techs almost ready to be recharged… and the banks to be bought tomorrow… all of this brings us to the big issue… there is one thing that has changed after the 21% gain we had at one point in this market during the month of March… what has changed… the risk… the risk has changed… I think we are no longer in the unfathomable downside risk moment… we are in an equal risk mode where there is risk, get this, hear something that is newfound scary… what is the risk… missing the markets next rally… the gains were so great, so palpable that many money managers, including those who bad mouthed this market all day… are going to have to put money to work if they want to beat the averages… but they didn’t want to put it to work today… still I don’t think we are going to get under Dow 7000... or S&P under 750... 5% from here.

Now, the only other person who feels like this that I know of is my colleague Doug Cass, at RealMoney.com, where I am chairman… Cass is a bear who got bullish, and he got bullish, you can see it both in writing and RealMoney and the Larry Cutler show… when the Dow was at 6500... 1000 points lower than here… and he told you to take profits on Friday… pretty preshent… he and I talked all day today… we were blown away at how almost all of our newfound bull colleagues turned bear and ran to Jellystone National Park… with Yogi, BooBoo and Mr. Ranger… they didn’t believe until the end of last week… they bought high, and sold low… not Doug, he sold high and bought the heck out of the market today… I am backing the clear headed bull… and Doug has got that clairvoyant thing going.

Are we going to take the counsel of those who missed the move and are now bad mouthing the thing… perhaps because they want back in… or are we going to go with those who are right… I am going with the latter… I guess you can say that I am going with March madness, not March sadness… so here is what I want you to start thinking about… if we lose 10% from here… I have to tell you, that would be a complete and utter gift… which means that we are probably not going to get it… because then we would be able to ride in back again for triumphant gains… much of me thinks that we may have bottomed today in the last 20 minutes of trading… but in the worst case scenerio where that isn’t true, I don’t see us going much lower than 5%… which is why, it is too easy to wait for much lower prices… things just aren’t as bad as when we hit that level before… not enough bas has happened since… certainly not this weekend.

Here is the bottom line…

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The Bottom Line!:     The situation is now dicey for those who don’t put money to work… as we see the whites of their eyes… because if we don’t commit money from the sidelines… we could be run over by the bulls… new animal… just as painful to be at the bottom of its stampede.

Look for signs of weakness before you buy into this market, the bulls could be ready to stampeded...  Dow down 254 but you don’t want to wait until it goes down 10%… you will be overrun by the new stampede of the thundering herd… and the genus is not a bear.

[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 curious if you could give us some insight on how it is that the government can give money in the Tarp, but then say that you can’t pay it back.

Jim:    Okay, think about the situation where you have a couple of banks that can pay it back… what does it say about the banks that can’t… well they are then scarlet lettered… and that would mean that maybe they would have bank runs, it would mean that they wouldn’t get any business… let’s say that you are Goldman Sachs, and you give back the money, and then you would be able to poach every single employee in New York who was making a lot of money and now can’t make money… in other words, it creates an inequitable playing field… and not only that, let’s say the downturn does take another leg… in other words, we get an actual May, June, July downturn… we are going to be glad that they have the TARP money… I thought it was actually wise that the government discouraged it… even as much as I felt that much of the bank rally was because we were going to start seeing the return.

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Q:    Would Goldman Sachs and Morgan Stanley benefit from a change in mark to market accounting?

Jim:    No, Goldman Sachs is basically a hedge fund, uses hedge fund accounting, it is already mark to market, not a single thing in there is meant to be in inventory… Morgan Stanley has already sold a lot of its stuff and therefore, I think, that the reason that Morgan Stanley has had the most profound… Goldman and Morgan have had the most profound rallies since the year began is because they are least effected by mark to market… by the way, I don’t’ blame banks for not running themselves like hedge funds… Goldman Sachs is not trading mortgages on houses… Goldman Sachs is not giving you a mortgage on your house and then flipping it… that is not their business… Morgan Stanley is trying very much to be the broker to the stars, meaning people who have enough money still left to be able to own stocks… neither one of them is actually classic banks and that is why I like them so much and own them for AAPMCT.

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Q:    I have been looking at the automotive sector here for the last month. Big announcements for GM today, and I guess for Chrysler for well, what position do you feel that we should take here for the next 3 weeks looking at this market, specifically GM?

Jim:    Alright, I am a seller of almost everything GM… I don’t want to own the bonds either… cause we don’t really know what is going to happen… if I had my druthers about anything auto, I would probably buy some Ford bonds… but I don’t like the bond market right now… so I guess the answer is, I am staying away from the whole group… and again I reiterate that Ford and GM are too speculative for Mad Money.

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[verbatim recap]

[end of segment]

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