JANUARY STOCK TALK PART II

Koaj,

If I can look at a balance sheet and feel confident in the business, and I dont margin my position, I can wait a few yrs knowing that the alternative is a 5% money market or treasury, and if I wait 3 yrs I need to beat a 20% return in that time to be successful.

My dad is even more of a bear than I am and has been for 30 yrs..never invested in the market because it was too risky, now he has very little in retirement..its his own fault.

I could take a big hit, or hit it big and if my experience in the markets is right, most of this BK fear is overblown and will never come to pass.

I have lived through a housing implosion before. In the late 90s, the builders went up huge from 95 to 98, then got cut in half..then bottomed and rallied.

I feel the same way about the group and financials. You could take that list I made and some financials we have discussed), spend 5k in each stock, hold for 5 yrs and even if ONE or TWO go under (which I dont see) and you will beat the S&P easily..no doubt in my mind.

You remember the .com crash and the dump after the rally in 2002..they were talking about JNPR, CSCO etc going under. In late 2002, JNPR was under FIVE bucks, my HLIT was under 2 bucks, CSCO was under 11 bucks..talk about many going under and the death of tech.

Well if you took the risk back then and did homework, bot the stocks that WILL make it, you could retire 5 yrs after the fact.

HLIT went from 1.10 to 12 bucks in 5 yrs..thats a 10 bagger if you took the risk.

Find the companies with enough cash to survive..maybe buy if one in the group calls it quits (homebuilders) and you will be very happy in another 3-5 yrs.

 If I recall correctly, that is exactly the type of strategy that got John Templeton started.In fact, ,I know it is: from his foundation page:

Standard stock-buying advice is "buy low, sell high." But Templeton took the strategy to an extreme — picking nations, industries and companies hitting rock-bottom "points of maximum pessimism," as he put it. When war began in Europe in 1939, he borrowed money to buy 100 shares in each of 104 companies selling at $1 a share or less, including 34 companies that were in bankruptcy. Only four turned out to be worthless, and he turned large profits on the others after holding each for an average of four years.

  could not agree more,,this is the time when the real heavy hitter savy rich mother fffeerrsss get richer,,,to step in while chaos is all around and everyone is running to the hills,,,buy all companiies beaten down?...no...take the best that u think will make it and load up,,5 years down the road u will laugh at where some of these were,,u have to grab ur balls at some point,,to be completely on the sidelines hewre is assinine,,if u dont have the stomach for some choppy sideways trading for a while well then put in all in a mm account at 5% and sleep good..............vermeer,,great point about history repeating itself,,and what always happens during and after these events,they create superb buying situations, to be able to buy companies ,good ones, at a huge  huge discount,,,,u have to ask urself,is citi ,merril etc..[pick any name], going out of buisness?.....no fffffiiiinnn way,,,will it be tough in the near term?,,sure,,,,if u see a company in this environment that has a good buisness that will survive ,go for it

Nothing that we did not know already today, but a summary of a weird day that does nor feel like the Dow went up almost 150 points...one question:why does anyone place any regard on these ratings companies, given that they are seriously responsible for helping create the present mess? That is one completely bogus industry if there ever was one...

Following that release, the NYSE Financial Sector Index lurched in and out of the red, then remained down for most of the day before recently managing to climb 0.2% to 7,717.94. But the KBW Bank Index continued to struggle, lately losing 0.7% to around 80, and the Amex Securities Broker-Dealer Index hovered near the flat line. Component MBIA (MBI) a battered bond insurer, was sliding another 5.5% after scrambling to raise capital by chopping down its dividend to 13 cents a share from the prior 34 cents, as well as setting plans to offer $1 billion worth of surplus bonds to institutional buyers. The bonds are planned to mature in 2033, though they will be callable every five years after they're issued. MBIA said these moves will ensure maintenance of its crucial triple-A ratings at Moody's, Fitch, and Standard & Poor's. Last month, the firm shocked investors and analysts alike by revealing heavy exposure to collateralized debt obligations (CDOs) backed by other CDOs, or CDOs-squared. Shares of the Armonk, N.Y.-based company were falling 78 cents to $13.20 to extend yesterday's dive, which came on the heels of slashed 2008 bottom-line estimates at Morgan Stanley. Fellow bond insurer Ambac (ABK) , whose estimates were also cut at Morgan Stanley yesterday, lost another 9.6%, and Security Capital Assurance (SCA) was off another 17% at $2. Mortgage lender Countrywide (CFC) also continued hurting on some grim December results. Foreclosures for the month, as a ratio of its total mortgage loans, more than doubled year over year to 1.44%, and delinquencies as a percentage of unpaid principal balance climbed by more than half to 7.2%. Following yesterday's plunge on hastily denied bankruptcy rumors, Countrywide shares were shedding another 55 cents, or 10.1%, to $4.92 in frenzied trading.

 PS

 Anyone have a real pair and already determined which companies are worth making a bet on as not only surviving, but prospering in the coming years?

  CC

  Not meant so much as a challenge, more as a considered (however briefly) idea list. As you know I do think C is going to come out of this (with its ass handed to it, but still emerging)...like you say, however, has it truly reached bottom?

 I think anyone who was 100 per cent cash was perceptive.I had positions I took despite my own thought process.That unfortunately is an oddity of human behaviour, at least my own

After all, we have all been writing about how bad this stuff could and even should get. The mortgage meltdown is one of the great fiascos of our time, (and there have been plenty of them).

 However, for those with a wad of cash, and a long term outlook, this could be an opportune time to gather up some stocks that will be viewed as bargains 3 to 5 years out. Is C one of them? I don't know (like you, I think it goes lower). But as weary as I was yesterday, I wanted to start thinking seriously of selected issues to nibble on, once I do have more liquidity.

 

because the get rich quick scheme mindset never changes or learns...just figures out new ways to do it

fyi COF cut estimates for next year

down 7% premarket...kind of wish my buddy was still short this thing when it was at 68

what comes next after the consumer...student loans? car loans?

short Mastercard

buy puts...whatever

MA puts are real cheap

and this thing has a way to fall

on second thought...MA doesnt really lend money out like COF does/did

    woa woa woa,,hold on,,im not callin anybody names here,,,,,,all i was trying to illustrate is the  point wall brought up that buying situation present themselves at times like these,,,if u want to be out of the market completely  verm than thats ok ,thats your choice,,people have different time frames and different levels of risk tolerance that makes them more or less likely to be involved with this type of market,,, i used c as an example, take any company,,if u can get good solid names  on the cheap it is MY belief u do it,,,i can withstand the short term pain,,,will some of these go lower ,then higher?,,yes,,,,but i m not smart enough to call out bottoms on some of these,,,,as for specific names,,i will post them by 2 morrow,,,i may have more of an agresssive style,, i think my money can be invested in all types of markets,,whether shorts, commodities,whatever, in all types of markets there is money to be made,,,,,,,,,,i did not mean to degrade anyones style of investing, but it is my belief that  having 100% of money in any one place ,whether it is stocks, bonds cash etc...etc...is not the wway to go, that being said it is obvious u have no confidence in this market and choose to not be involved,, i respect that,,however i think even in this market i can make better than the 5% a mm would give me,,,,but maybe thats why i drink heavily and my hair has fallen out alredy and im only 36.......but the point i was trying to make i think is still true,,u can get good companies at a discount at times like these,,thats all

 CC sorry delayed response, had a collegial meeting with our friends in the Virginia state tax department....I overlooked filing since errrr...2003...happily they owe me money so my liquidity is looking slightly up!!!

  I think this market remains exceedingly volatile, but the overall trend will be down.It may be a wash today, with a lot of back and forth, but the angst created by the subprime problems is not going anywhere. The housing market is going to be very very poor for at least 18 months to me...

  As for MA, they do NOT lend,as you pointed out Koaj. They are just taking in transaction fees...

  I remain seriously cautious here and am just hoping for relief from continued losses on established positions. I have added MO to holdings however, for many reasons.

  In truth, think 2008 will be a very very  year for the market, so when I do take new positions it will be looking toward the short side, not the upside.

 

What did you mean to say there vermeer?

  i think the word bad should be inserted

I think the market drifts a little higher in the afternoon and closes just slightly in the black today.  Dow up 30-40; Naz up 2-4; S&P up 1-2

Well that was a thin phony rally.

The shorts tore though that with ease..