Tuesday, December 9, 2008
(Cont'd from above)...

Jim (cont'd):    There's almost no bank willing to lend money to anyone actually needs it... Who's getting the loans?... the loans are going to companies that are either so cash rich, as to be sure bets... although those companies still have to pay a lot of money... Or, to those that are so cash poor that they need to refinance, and the banks are willing to lend to them, because they don't want to show losses... they don't want to throw companies into bankruptcy. In other words, the credit markets, those who lend money... they are thinking we are going to have more and more Tribune Corp.'s... companies that go under, and throw the bondholders under the bus...

Meanwhile, the stock guys... they've already decided that things are going to get better... and they're going to get better right now... they've already priced in that things are going to get better... yesterday! They were busy today buying companies that reported terrible numbers...

Last night, for heaven's sake... last night... we got a bunch of tech companies... National Semiconductor, Texas Instruments, Broadcom... they bought those... You should sell those!... Oh, they wanted to buy the infrastructure stocks again... even though Obama's infrastructure program is miles away... I told you to sell those yesterday...

And what did the stock guys throw away?...

All the stuff that does best when the credit markets evaporate, which is what I'm telling you they're going to do... and the economy is in the dumps, which is what I'm telling you it's going to be... and that's the companies that make the stuff that's in the supermarkets, and the drugstores... all sorts of things that get bought up... exactly the kind of market that the bond buyers foresee... Colgate, Kimberly-Clark, Clorox... Look out below, the hedge funds are selling them...

So, who's right?...

I do think that all the measures by the government will do wonders to take the Great Depression, part two, off the table... But they haven't taken the recession off the table, which is just the beginning... not one bit. Just the opposite in fact... It's going to be a long slog... with commodities unlikely to rally just because were going to build some new bridges, and the Chinese are going to burn more coal...

So, what would I do right now?...

Well, here's an interesting thing from a guy who runs a show called Mad Money... I would do nothing... I would do nothing, except sell the companies that had accidentally high yields at lower prices, and no longer have them, because they've climbed too much... The companies I like, but their stocks have moved up to much... I like Nucor, the company, but not the stock up here... I like Caterpillar, the company, but not the stock up here... these were accidentally high yielders that are no longer the case...

Sell them... sit on the sidelines... until they get closer to our buy levels... There will be another accidentally high yielder that we will come up with... If they don't get there, take a pass... You just had some great trades...

Oh, if you have an itchy finger... then keep an eye on all the soaps and foods and companies that make toothpaste and cereal, as their stocks are under tremendous pressure now, down as if they all are going to all have shortfalls... some of them down 5% today, as the stock guys think that they are no longer any good now, as the economy is about to roar...

Dream on...

The soft goods companies, as we call them on Wall Street, will have very easy comparisons here, because I believe the dollar is about to come back down... as they sell a lot of things overseas... and, most importantly, these companies are huge consumers of plummeting oil and gas... In many cases, it's their biggest raw cost... and, a year from now, they will be annualizing $147 per barrel oil with $42 per barrel oil...

I think that is what the market will return to when this "love the Obama boom, before it happens" market comes to its senses... I figure that these stocks, at this pace, the foods in the drugs... the Clorox and the Colgate... I figured that there hated about another 48 hours more... Consider it like they have the three-day flu... and then, you get them at prices that were unimaginable just a few weeks ago...

That will be when you pull the trigger... hey, maybe multiple times...

Here's the bottom line...

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The Bottom Line!:     Unless you have some accidentally high yielders that are now not so accidentally high... that you can sell... you should wait. Wait for even lower prices... I wasn't one of those guys who said, listen, as soon as we go down, we buy... I want you to wait, and I never once you to chase what's hot... because it's probably not... I think the sidelines are looking mighty tempting to this fan of the game... I am not playing... I'm watching in high def, with a bowl of Cheetos... and a couple of brewskis... Why don't you join me?...

[verbatim recap]

Read Jim's next Segment here