Economics
Recent Data
Politics
Domestic
More on the Obama/Ayers connection:
http://article.nationalreview.com/?q=MTViMGRmMmYxZTgwZTFjYmFjODU5YzM4Y2MwM2ViMjY=&w=MA==
International War Against Radical Islam
The Market
Technical
Bureaucrats! Now crawfishing on shorting:
http://dealbreaker.com/2008/09/no-shorting-well-except-for-yo.php
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Well, it didn’t take long for investors to decide to challenge the July/September lows. Stock prices got banged hard yesterday in some ways more viciously than we witnessed last week. Both indices (DJIA 11015, S&P 1207) remain above their July low (DJIA 11809, S&P 1198), though not by much; and I suspect that this morning could be equally as rough.
The volatility index remains at elevated levels which according to guys a lot smarter than me means that we are apt to see exaggerated moves in both directions over the near term--so keep your Tums handy.
Fundamental
After having the weekend to think the new Treasury plan over, investors clearly began to worry about whether or not it will work plus the impact the political class may have on the final version. To be sure, there is plenty about which to be concerned; and after what we have been through, it makes no sense to be a Pollyanna. That said, I am sticking with my ‘necessity is the mother of invention’ thesis, i.e. there is a crisis, it has to be fixed or else, there are a lot of smart guys working to do just that and so it will get fixed; maybe not perfectly, but sufficiently to keep the financial system functioning.
That doesn’t mean that equities are going to streak to Fair Value as calculated by our Valuation Model. I said last week that I didn’t think that it was time to be tip toeing through tulips yet; the worst may be behind us but that doesn’t mean that there aren’t problems, the most immediate being how the Treasury plan gets implemented; and beyond that there are the recession and the elections.
After checking all of the stocks we own after the Market close, our Portfolios ended the day relatively unscathed even the holdings in the financial sector. That said, I am a little concerned about the financial stocks’ performance until this stupid ‘no short’ rule expires. Guys that I talk to on the trading desks are telling me that a lot of institutions are avoiding any further purchases in this area because they can’t hedge their positions; so there is dearth of buyers. That I am told was a major contributing factor to the beating that the financial stocks took yesterday. So far our positions are OK; but if it gets ugly, we will start cutting back.
Nevertheless, with stocks down 3%+, I do want to continue to move our Portfolios’ cash position toward 17%.
Subscriber Alert
At the Market open this morning, our Portfolios will build the following positions back to a 2/3 to ¾ size position:
Dividend Growth Portfolio: Chevron (CVX) and ConocoPhillips (COP)
High Yield Portfolio: BP (BP)
Aggressive Growth Portfolio: Smith Int’l (SII) and Suncor Energy (SU)
The High Yield Buy List
Company Close 9/22
Dow Chemical $35.91 $32-37
Gannett 18.01 18-21
Pfizer 18.07 17-20
Reynolds American 48.67 45-52
RPM Int’l 20.68 19-22
WP Carey 27.00 25-29
News on Stocks in Our Portfolios
More Cash in Investors’ Hands
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