New Picks

[Fish2006]

... its been awhile, but now that we have a downturn/buying opportunity, it is time for some new picks.

I am buying anything in financials right now... especially Goldman (GS). GS under $200 is a steal. The subprime problems are already baked in. Citi (C) is also good here under $50. In the case of Citi, you get a nice dividend, and the downside is rather limited.

Look for blood in the streets. Generally, companies like Lennar (LEN), Toll Bros, and others, are down several percent. While they look like falling knives, if we go down another percent or two, it might be a good time to start scaling into some positions in those names. Housing isn't going to zero, no matter how gloomy it may look right now.

I just got back from a 3 week stint in India. International isn't stopping anytime soon. There are entire countries (India included) - that are, basically, giant construction zones. Stay with infrastructure plays like GE and FLR. Use this pullback to add to positions.

[Q-Unit]

Originally Posted by Fish2006

Stay with infrastructure plays like GE and FLR. Use this pullback to add to positions.

in English or layman's terms for blokes like me por favor Fish?

LOL how the hell did I come off sounding like British and Mexican at the same time?

thanks Fish, still new at this, would like to learn as much as possible.

[Daws1089]

MER is a great buy now too if you are talking financials

[Fish2006]

Originally Posted by Q-Unit

in English or layman's terms for blokes like me por favor Fish?

LOL how the hell did I come off sounding like British and Mexican at the same time?

thanks Fish, still new at this, would like to learn as much as possible.

Sorry about that - sometimes - when I get around to posting, which aint near enough, I end up using the wall street jargon that mostly just irritates people.

As for the picks - I hope that people are picking up some GOOD financials during this subprime mess. The market rewards patience, and a company like Citigroup - the best capitalized bank stock in the world - meaning - they very stable compared to even the guys like Bear Stearns and the other broker stocks... if that goes away, you might as well start herding sheep, because the whole economy is blasted. If you see C going for anything close to 47 dollars a share, you can be sure someone threw a big fat baby out with the bathwater, and it is time to load up on your position.

[nd33]

looong term: MKL

[Kevin]

Originally Posted by Fish2006

I am buying anything in financials right now... especially Goldman (GS). GS under $200 is a steal. The subprime problems are already baked in. Citi (C) is also good here under $50. In the case of Citi, you get a nice dividend, and the downside is rather limited.

Nice call. Following the GS move would have banged ya out 8% over a few months time.

[NevadaJay]

I'm curious to know what you guys think of Ford. Do you think they'll ever turn things around? And if not, if they are bought out by one of the big guns, what happens to stock that a guy owns in them?

I'm tempted to buy in and just sit on it until I retire and see if I hit the lottery...what do you guys think?

[Daws1089]

i dont know the car industry very well, but i don't think ford is a good buy now. Seems like toyota and honda really got things figured out and those are the ones to own. If ford got bought out buy a bigger firm, you would most likely either be offerred stock in the new company for an equal amount of money you had in ford, OR you could get get tax free cash for your stock. It depends on the situation. Basically, there is probably a better buy out there, i just dont know enough about the industry to tell you what.

[Fish2006]

Originally Posted by Daws1089

i dont know the car industry very well, but i don't think ford is a good buy now. Seems like toyota and honda really got things figured out and those are the ones to own. If ford got bought out buy a bigger firm, you would most likely either be offerred stock in the new company for an equal amount of money you had in ford, OR you could get get tax free cash for your stock. It depends on the situation. Basically, there is probably a better buy out there, i just dont know enough about the industry to tell you what.

Personally, if you have to own a car company, stick with Toyota - even with the higher multiple. Ford or GM will never be agile enough to move with the market the way Toyota or Honda can. Even if F and GM get their healthcare costs under control - which the latest union deal helps with, the fact is that nearly ALL their profit comes from trucks and SUVs - they barely make money on fuel efficient vehicles, and their plants are simply not optimized to make anything on em.

BTW, the last couple months have been a clinic in the old maxim... "buy when there is blood in the streets".

[Fish2006]

Originally Posted by Kevin

Nice call. Following the GS move would have banged ya out 8% over a few months time.

lol - posted this when GS was at 190. Went as low as 170 or so during the subprime panic, and now we hover in the high 220s.

Not all financials are created equal though. GS is the only of the old-line brokers I would buy. Bear Stearns is another Enron waiting to happen. Morgan Stanley and Merril Lynch are not quite as bad, but close.

OTOH, I would buy any of the banks after they release earnings. They are "coming to jesus" last and this week - admitting to the losses they have from subprime. They will typically trade down a little bit after the announcement, but then announce operating earnings that still beat in coming weeks. I really like C and BAC at these levels.

Tech is always hot into the 4th quarter. GOOG, MSFT, AAPL - any of those 3 should give you a nice 5% pop or better going into year-end.

I also really like biotech. DNA is my preferred holding here - it is nicely diversified, having a better pipeline than most of it's competitors.

[Fish2006]

Originally Posted by Daws1089

i dont know the car industry very well, but i don't think ford is a good buy now. Seems like toyota and honda really got things figured out and those are the ones to own. If ford got bought out buy a bigger firm, you would most likely either be offerred stock in the new company for an equal amount of money you had in ford, OR you could get get tax free cash for your stock. It depends on the situation. Basically, there is probably a better buy out there, i just dont know enough about the industry to tell you what.

Exactly. Not sure who buys F, since commercial paper does not want to touch anything that risky, unless they are getting 13% or better interest (i.e. the buyouts of late are much harder to do since the subprime meltdown). Witness the recent Chrysler deal barely getting done - even at elevated rates.

If someone comes in to buy F or GM - someone is going to have to pony up about 10B in cash to do it, and in the course of doing so, will buy a broken company with a ton of big liabilities in the form of union contracts and nothing much more than some decent (arguably) brands in return. Personally, I think F and GM need to get to about 1/2 of their current values before they become viable takout targets.

[Daws1089]

good stuff fish.. Citi posts huge decrease in NI

I appreciate your knowledge on the car industry. I'm looking into DNA.