You Should Be Buying Stocks

No, that's not Crammer on his daily whine but your new President, Barack Obama, stating quite the opposite of the obvious. Translation-We're screwed, and if I have any shot at a second term I need the market to go up and fast! For our President to be making such statements is really unethical, calling on us to burn through even more of our hard earned money. If the last 18 months have not taught us that our leaders, both financial and political, have not a clue, then we haven't learned a single thing.

Show me one chart that led to this conclusion, a 55% drop in the Dow. Look at the headline numbers on Marketwatch comparing stock prices from just a year ago. GE at $38, GM at $22, BAC and Citi in the $20s. And now, literally penny stocks. I steered this ship astray when I recommended giving Citi a go at $8 as a hedge against a fally. It's only a matter of time before nationalization takes what's left of shareholder value and I apologize.

But at the same time I foresaw continued destruction. Just last week the bet of the day said Dow 6,500 before 9K and, uh, here we are. Gannett has fallen to $2 from $7.50. MCRI, as Tiger Coach and I both held our breath for expiring puts, has fallen from $10 to $4 in just 2 weeks, sending our March puts from 50% negative territory to triple-digit gain territory in that time. We have both recommended going again given MGM's nightmare and shorting MCRI to 0 with a June time frame. SKS under $2, NYT under $4.....and European index funds have been destroyed. I first recommended shorting the DJ Euro 50 via the VGK when it was at $64 a few months ago, now, $27.

And yet everyday, a call for the bottom. And where will that come from? Nobody can qualify to refinance their mortgage. Layoffs tomorrow might be the worst in 60 years. The government is pushing stimulus to encourage more spending of all things, but, as John Markman points out, if the savings rate hits 10%, earnings could be cut 50%, leaving the Dow in Itulipville around 5300 (and gold through the roof not coincidentally).

So where does that leave us? I'm thinking about cars and oil. Cars bad. What's left at the top should be shorted. That means Toyota and Honda, possibly Daimler (but puts are very expensive). No market for these things. I've read several articles talking about how Toyota has had to lease cargo and empty lot space just to store all of their unsold cars. Even if a GM bankruptcy is imminent, I don't think the resulting collapse of suppliers and jobs will be good for business. Oil? Only a matter of time. Perhaps time, that is, to roll the dice with DXO and a 2-5 year time frame. If oil hits $60, you win. If it hits $100, you really win. If it hits $200, jackpot. Also, I'm pretty sure it can't go to 0, so with the DXO trading at $2, it's worth a thought.

http://www.bloomberg.com/apps/news?pid=20601213&sid=a8ta_MEhUZ9E&refer=home

http://www.marketwatch.com/

http://articles.moneycentral.msn.com/Investing/SuperModels/shoppers-pass-on-passe-name-brands.aspx