Tuesday, September 9, 2008


Forced liquidation is the latest excuse for the sea of red that engulfed my screen today. Thanks for all of the emails about my recent bullishness. I can't believe that oil is just rolling over. We are now hearing more talk of $80 oil than we are $120. Federal Express was out after hours with positive comments based on the falling price of oil.

Some idiots in the blogosphere were trying to attribute all of today's negative action to the events with Lehman LEH. I don' buy that for a second. We are seeing a massive exodus of hedge funds and mutual funds. Oil is down over 30% in the past couple of months, as are other commodities and the market is still heading down. Not your normal correlations in the marketplace.

I am getting my shopping list ready. I gave you several stocks that I was watching in the energy space last night. I was content to let them fall again today. It was easy to see that today was not the time to buy. I am still watching those stocks and am going to add a few to the list, most notably Freeport McMoran FCX. I am adding CMP to the list as well. I started trading CMP back in the spring when Pat Dorsey was on our show. He liked them then because of their ability to generate excellent cash flows. I made good money trading this stock and I am certainly not calling the bottom, but when the FORCED LIQUIDATION is over---this one should start to climb. Look at the percentages down in some of the companies today and you will see that the selling has to be irrational. Nothing that drastic has happened on any front to justify the stocks of a cash cow like CMP falling this far this fast. I sure won't fight the market though. I will sit and wait an hope that it gets cheaper. I have said OVER AND OVER that I am willing to miss the first part of a move upward to try to make sure the bottom is in before I start spending my money.

I am going to be looking at some smaller stocks in the beaten up sectors--as they fall they might get gobbled up. My grandfather would tell me in times of market descents---find the piss ant company with the healthy balance sheet (these companies are very hard to find) and you will do well. This market action has created some new "Piss Ants" that should still have good balance sheets. I saw several stocks get ten percent haircuts today.

I have heard much speculation that all of this downward action in the energy space is due to the fact that America has finally realized that it must break its dependence on foreign oil and now our government will act. It might happen, but the energy companies will have time to spend their cash and diversify. No matter how we replace oil--with nat gas, solar, nuclear or some other unknown source--there will be money to be made and the current energy companies will be players.