Tuesday, October 28, 2008

Direction Change or Relief Rally?

I hope that today is the start of a changing of direction---but I am not convinced. You can't make money on hope. I will say that I have not posted because I traveled to Dallas Texas this weekend. Let me tell you that the good folks in Dallas are still out spending money. There might be a slowdown---but there were a lot of people moving around in gasoline burning automobiles and there were long lines at the restaurants. As I have said over and over--this is a recession, but it is not the end of the world as we know it. I think we may retest the lows again, but I believe that we are in the bottoming process.

So who stands to benefit from the current situation? I have to add VLO to the top of my list. Even after an impressive jump today, it still trades at below 17. I can't see them getting hit much harder than they have already been hit---oh and with the price of oil going down most days---the crack spreads are going to increase which will help their margins. Yes, I know the argument is that demand is down, but I will take increasing margins in an improving marketplace any day.

I have mentioned FCX and I really like this one as a buy-and-forget-about-it. It may go down in the short run, but this one is well run and will deliver over time. It appears to have priced in virtual global collapse. I don't think it will stay this low for very long.

I hope we see some follow through tomorrow. Follow through has been tough to find lately and we so desperately need it. I think we get a rally after the election regardless of the winner.

The dollar is strong and that should help with consumer goods prices.

I am doing research fast and furious and will update as I find good ideas!


Dollar.Discipline said...

We are near the bottom. Investors will begin to see that real value is there now. All the rest is just knee jerk reactions. Get something that makes good business sense ans stay with it. It will recover.