Monday, April 20, 2009
(Cont'd from above)...

Jim (cont'd):   

So what should you own… what can you feel confident about buying into a truly ugly and scary downturn… first, China is on fire… it is the Communist engine that is pulling the train of global capitalism out of the station… there are a lot of ways to play China… if only MAO was a stock, I would be recommending that… however, there is the China 25, the China Xinhua 25 iShares Index (FXI)… which my charitable trust owns.... it is up huge… that needs a pullback.. so you might want to look elsewhere to play China… like all of the natural resource stories that really got clobbered today… they feed the Chinese economy… I prefer the oils as a China play, because their stocks have done nothing… and I want you to think of any big mama oil that yields more than 4%… especially after today’s almost 10% decline in crude oil, the futures… the mineral companies also work as Chinese food… and I defy anyone to say that copper, which has led us thru the roof, is not as tasty as pork fried rice… (eats rice with pennies sprinkled on top).

Anyway, I like any of the big miners here… never eat with your mouth full… it is a pick-em situation… the other way to play China is with the dry bulk shippers… the companies that move things like iron ore… now, I also like the oil tankers, I like Nordic American Tanker (NAT)… even the industrials are back thanks to China… although they again need a pullback… I am emphasizing the pullback because we are in the middle of it… and I do not want you to miss it… the show is done after the pullback today, but by the time that you see the show tomorrow we might be where I want you to buy… so pay attention… China is just one aspect of what is working now.

There are a lot of winners in banking… I do not want you to wait for the Professor and Mary Ann types to call a non-nationalization bottom… you will be waiting forever… just do like my charitable trust, ActionAlertsPlus.com, and buy JPMorgan (JPM*)… it had a monster good quarter… I went thru the quarterly conference call, it was fabulous… Dimond is so funny, he is the CEO, he is obviously so in control.. it reads like a great novel… they can repay TARP…

Or how about going with Cramer fave, Goldman Sachs (GS*)… which everyone gave up on before the quarter, or thinks represents a vast international conspiracy… I often hear Goldman Sachs accused of being like the Bavarian Illuminatie, or the Tri-lateral Commission, or the secret part of the Council of Foreign Relations… or in our worst nightmares, chaos of Maxwell Smart fame… or ultimately for the demographically challenged, Thrush… which from its hidden location on the 13th floor of the Empire State Building, furiously battled the United Network Command for Law Enforcement, also known as UNCLE…

JPM or GS should be fine… neither will end up with the government as shareholders… which will matter given as President Obama inherently seemed to imply this weekend… that the Fed’s need to take stakes in banks that are in trouble… I say merge them, break them up, or shut up.

Now, third I also want a large conglomerate… because business is getting better globally… I can’t voice an opinion on General Electric (parent company of this network) but you should try to find something that looks like General Electric (GE) to play the improvement in the worldwide economy… how about Emerson Electric (EMR), with an accidentally high yield that has lowered expectations to depression levels… and remember we are coming out of a depression, not going into one… that is why I have been buying it for the trust.

Fourth, you have got to look at housing… do not buy homebuilders though… homebuilders are coalescing.. but I think that you want to go this one with a retailer that has home exposure… the rest of you guys can play it with Sears (SHLD), because it also has this kind of automotive component… I am playing it with Home Death Spot (i.e., Home Depot (HD), for my charitable trust… although, Lowe's (LOW) will do just fine too… no need to start here… I suspect by Wednesday you will be getting much better prices… why a retailer instead and not a homebuilder… because one the homebuilders have really run… and two, more of the need to merge instead of just Pulte Homes (PHM) and Centex Corporation (CTX)… and three, never buy when desperate companies are issuing equity… and that is what Lennar Corp. (LEN) is doing…  These are crummy stocks all.

Tech… tech…

Research In Motion (RIMM) is still hot, still very right… Apple (AAPL) does not need Steve Jobs, there is like 40,000 other people who have turned out to be doing something… I prefer a pull back… I like QualComm Inc. (QCOM*) because cell phones are now getting strong, inventory is done… remember that inventory story that I just told you… Hewlett-Packard (HPQ*), and Intel (INTC) called a bottom in the PC food chain, done… I like Amazon.com (AMZN) here, anytime you hear a story which says that they are going to tax nationally and Amazon still does well… stock is probably going higher… tech is the most exciting sector out there… and lots of portfolio managers are going to be piling into the Nasdaq, cause it is up for the year… that is how the big boys play it… I can tell you that because I have made a career out of gaming what the mutual funds, which moves colossal sums of money, would do… and then I want you in ahead of them… this group turns first… tech… so monitor… it is really hard to try to catch an investable bottom from this sell off… but Apple and RIMM will tell you.

Now, you get the benefit of all my insights from my hedge fund days and since well this is one of them, we have been with Apple and RIMM the whole way since the show began… 1003 shows ago… the first show I recommended RIMM, it is up 195%… on April 11th, 2005, I recommended Apple… it is up 187%… who said that this show is just a trading show… oh and on the side, I have got a new idea for a TV show… someone call the BRAVO network, I would like to create a show called “The Real Mutual Fund Managers of Boston”, and it would show them being really catty and back biting… but also buyers of semi-conductors and software’s… watch what happens, if you can handle the suspense.

Finally, for those of you are squeamish and believe that we can’t be up for 7 weeks in a row… and want something that has been beaten down… something that has been really crushed and whipped… well, and if the economy sputters… may I draw your attention to the single most double digit growers that I have ever seen… some of the exciting healthcare stocks… although they are so despised that I hesitate to even point them out…

Last week, Abbott Laboratories (ABT*) reported a great number, and everyone hated it… if you want to play it safe, substitute this one for an industrial name… since Abbott has now become an accidental high yielder… I never thought that that would happen.

Please do not forget Pepsico, Inc. (PEP*), which reported fantastic numbers today… and is trying to bottle its profits from its bottlers for your benefit… nobody noticed of course with all of the selling… but my charitable trust bought a little some today… we schnitzeled… knowing that growth is accelerating even if the stock is ridiculously out of favor… by the way, the price war between Pepsi and Knock Out, the street sign for Coca-Cola (KO) because of its symbol KO, seems to have abated… I debated why that could be… must be those NATO piece keepers, no, they are pro pirate… they seem to at last be happy with the soda duopoly with no more price costs.

Here is the bottom line…

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