Monday, October 27, 2008
(Cont'd from above)...

Two things that seemed to have at least momentarily stemmed the more viciously negative tide of the U.S. bear market versus the Ursa majors of all the other nations...

First of all, these other countries were up a lot more over the last five years... in some cases, the last two or three years... and it's just much less painful to fall from a two-story building - which is what we're doing - than a five-story building - which is what's happening in India... or, how about this... a 10-story building, as in China...

Second, we have the strongest currency in the world... There's always a bull market somewhere and, right now, it's in this... It's in the U.S. dollar... and it does make our stocks more attractive as a commodity, than the stocks of other countries that are denominated in weaker currencies...

It's simple...

The Dow is down 38.3% year to date, which is a walk in the part, compared to the 70% hit the Shanghai Composite's taking... and the 75% hit that the Russian's RTS Index has endured...

We're not crashing like them, because we weren't up like them...

Over the last five years, the Dow Jones Average is down 11.5%... but the Shanghai Composite is still up 25.8%... India's SENSEX, which is down 57.4% for the year, is up 81.1% over the past five years... How about Brazil?... It tanked 52.8% this year... but, over the last five years, the Bovespa's up 72.8%.

Now, it's better not to fall at all, but all of these countries have much further to fall than we do...

Unlike us, they don't have the world's strongest currency... and, in fact, given that the Europeans, who've also outperformed over the last five years, are in for a round of rate cuts, although they are just being just like our guys here... "they know nothing!"... last year... Well, uh... the Central Bank's dragging its feet. Their currencies will get even weaker, making the dollar look even better.

Hey, how about Hong Kong?... Whoa!... It's been revealed as a bad capitalist suburb of communist China, with overpriced real estate and, no doubt... terrible Cantonese food...

We're not going to crash like they did, because the strong dollar's letting us decouple from their contagion...

Continued below...  

No... not every stock is a winner here... like, hardly... Anybody who relies on exports to make money comes out a loser with the strong dollar... a bull market for the dollar... But the healthier regional financials that don't need capital, but just keep getting capital from the government... the ones that lent out in weak dollars, and are now getting paid back in strong ones... I'm talking about a PNC Financial (PNC) or a Wells Fargo (WFC), after it does its equity deal... Those are strong-dollar plays, particularly because the U.S. is sending billions to them to make shareholders rich, even if they do nothing for the economy...

How about the fact that The New York Times this weekend talked about making shareholders rich, and actually thought that was a negative... Oh, of course, that wasn't what was supposed to be done with the money, but this is Cramerica... not America...

High yielders that are paying out their dividends in dollars, and don't have much overseas exposure, all work...

Think Altria (MO*)... It got rid of its overseas exposure...

BB & T Corp. (BBT)... it took the Fed's money...

Verizon (VZ)... Ivan Siedenburg, you rock, but still aren't on our show tonight, which makes me sad... V's got a monster yield, and today's decent quarter... well, I mean, these are perfect for foreigners. It's a way to get paid a decent yield while hiding in dollars... Consider them like high-yielding bonds, while backed by a strong currency... too good to miss out on even if you hate the market...

Hey, how about a company like Pepsico, Inc. (PEP*), upgraded today?... It can now take over the world, developing their overseas business - which is not as advanced as KO - on the cheap, because they've got strong dollars.

I like these names so much, I own two of them - Pepsi and Altria - for my charitable trust...

Here's the bottom line...


The bottom line!:     We're not crashing like the rest of the world, because we've got the strongest currency on earth, buoying many of our stocks, and our market has a lot less further to fall.  That's cold comfort fro those of you who've now lost 40% of your money this year, but at least it could help explain why Friday, we did better than the rest of the world... and, today at one point, we were up, when we were supposed to be laid to waste, like those other countries...  we were hot and cold... we were up and we were down... (making reference to the Katy Perry song that he played at the start of the show)... but, at least, at one point, we were up...  It felt so wrong... it felt so right... Oops, that's the other Katy Perry song, the "I Kissed A Girl" song...  not helpful, but just as confused as this market... 

[verbatim recap]

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