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Tuesday,
November 4, 2008
(Cont'd from
above)...
Now, I expect the
market to open up
tomorrow, and that's
when I would start
letting some things
go... sell, sell,
sell... some of our
favorites that we
have recommended
since the bottom...
the
recession-resistants,
the at-one-time
higher yielders, and
those companies, at
one time, selling
near their cash
(value per share).
They're obviously
not anymore, after
today.
Now, I am not saying
sell because I am
worried... No... It
couldn't be further
from the truth. It's
time to do some
selling, because we
have rallied so hard
from last month's
low, and I think the
market has become
overbought, and
because greed,
unlike in the movie,
"Wall Street," is
actually bad...
Bulls make money,
bears make money,
hogs get
slaughtered... and
we've been hogs on
this...
Now, understand...
talk about the Great
Depression is now
off the table...
it's completely
misplaced... It made
sense when the Dow
was at 11,000,
heading down... and
I told you to take
20% of your
portfolio off the
table... and put it
in cash, because the
Fed was, at that
point, oblivious to
the damage being
done... (they know
nothing! sound)...
It still made sense
to fret about the
Great Depression
when I reiterated my
sell call at Dow
10,000, as
governments
worldwide were still
too passive... they
were still
thinking... (house
of
pleasure...sound)...
regarding economic
calamity...
Well, wait a
second...
Now we've reached a
point where we no
longer have to worry
about the Great
Depression scenario
that the USA Today
talks about, and
that Dan DiMicco is
buzzing about,
because every
finance minister and
central banker, and
his or her brother,
around the globe has
decided to get,
joyously, into the
banking business.
We are seeing direct
intervention all
over the place. The
Fed has essentially
become one of the
biggest banks on
earth. The Treasury
is buying up stakes
in even undeserving
banks... and all of
this is the exact
opposite of what
happened before the
Great Depression...
That's bullish...
that's bullish... as
all get out, because
they have saved us
from Armageddon...
However, that
doesn't mean you
need to be a buyer
all the way up here
as we approach Dow
10,000, which we
will... When the Dow
was at 8,000, I said
to start buying
three companies...
ones were stocks
that were trading at
or near their cash
(value) per share...
ones with
recession-resistant
businesses, and I
did one of those
every single
night... and ones
that had become
accidentally-high
yielders, after
enormous declines in
their share prices.
After this marvelous
rally, though, the
stocks were yielding
5% then, that we
liked, were then
shot up and, now, a
lot of them yield
like 2.5% and 3%.
Nucor (NUE)...
irony alert... whose
CEO (i.e., Dan
DiMicco) is worried
about another Great
Depression, is one
of those stocks that
had a beautiful
yield, and has since
seen its yield
shrink... George
Costanza-like... as
its stock has gone
higher.
United States Steel Corp.
(X),
which we liked at
$27, because it was
down almost as much
as it was on a
percentage basis,
peak to trough, as
the Great
Depression... it
just rallied 12
straight points.
Now, wait a
second... I think
both of these can go
higher... they're
not expensive...
but, as we told you
that, once they
rallied hard, we're
going to have to
start taking money
off the table...
We have now hit
those levels where
you have to start,
so it is time to
trim, as the gains
off the bottom are
now too big, and the
yields too small...
Now, if we get
another selloff,
we're going to be
ready to buy, buy,
buy... and, if we
don't, we'll still
have lots of ammo to
unload higher.
When people are
really negative, we
recommend buying,
like we did 1500
points ago... But,
now, I don't know a
soul who's
negative...
everyone's on board.
Everyone's in... So
we have to start
scaling out...
Now I hate to rain
on the parade but,
unless your stock
has about a 4%
dividend yield, it's
going to get hit
with some
profit-taking, and I
want you to join the
profit-takers...
they are being
prudent... they are
not being pigs.
I know how hard it
is to sell when the
Treasury department
is picking
winners... more on
that later... but
we've got to be
disciplined... and
we're now back to
where we should be
worried again about
a severe recession,
although the Great
Depression is taken
off the table,
courtesy of the
government
giveaways, depsite
all those negative
headlines.
Also, the idea of
being up 2,000
points from the low,
ahead of the
democrats taking
over the White
House?... Too nutty
for this nut... And
last I looked, by
the way, this
particular democrat
with this particular
congressional
majority, is no
longer going to be
favoring repacious
capitalism... He
seems to be
saying... holy
cow... like this
administration may
actually be favoring
the little guy...
labor over
capital... perish
the thought! And
we're thinking that
the fat cats on Wall
Street... they're
going to be spitting
up hairballs!... Oh,
and I expect big
Wall Street "show
trials" which are
not as bullish as
big Wall Street
bonuses...
Obviously, this
feel-good election,
which is based on
both Obama and
McCain winning,
can't last...
I'm not being
facetious. Look at
what happened
today... About half
the stocks moving up
today will become
candidates for
selling, as soon as
we find out the
winner... And my
guess is (given an
Obama win), they'll
be the ones that are
coal, defense,
deep-water drillers,
big oil... so don't
hesitate to take the
profits here, as we
recognize the animal
spirits behind the
buying, and the
pressure money
managers feel to
play in the great
blowoff...
● ● ●
● ●
Here's the bottom
line...
The bottom line!:
Shocking,
shocking... but only
one guy's going to
win... and that
means some stocks
are going to have to
come down. The
market's rallied
hard enough from
last month's lows
that we now know
that we're being
hogs. It's time to
change our bias.
It's time to start
to start taking
profits, before the
profits disappear.
Now, election day...
a 305-point rally...
I say be careful...
I also say start
ringing the register
tomorrow morning.
[verbatim recap]
Read Jim's next Segment
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