Paul
re: "Thread, how are you playing this market?"
I have a higher percentage of cash than I have ever had. I went to higher cash about 2 months ago and then went to even more cash on 7/15.
I don't believe this is a typical retrenchment, at least from the perspective of my lifetime. I believe this is the market getting sized for the economic realities of the US in 2002 and 2003. As such, I believe this drop in the market has a long way to go yet. I don't necessarily feel that the drop will be straight down to the appropriate levels, but I do suspect it will feel that way.
At the end of the drop cash will be king. I intend to have some left.
I reviewed 50 companies on Sunday, found 22 that had interesting enough Yahoo profile that I'd spend a little more time looking at them and did my quick cash flow analysis on them and found 4 that might warrant a detailed look. If the market were "right sized" after this drop, I would expect the final number to be at least 8 or 9, if the market had "overshot" to the downside, I would expect to find 10 or 12. IMO we have a long way to go.
I am not completely out of the market however. I still have decent sized positions in those companies I believe in: TUG, TRCI, CCL, ACK (although I've played this one with technical strategies because the chart started to look ugly at the $3.45ish range so I got out, am now back in at about $1.60), KSL, XNR (I've held this one and perhaps shouldn't have), ALPH, FRD, ORCL. Took profits in GVHR (although I let some of them slip away), LU (that was a technical play all the way, in at 2.00 out at 2.64), SGC (although I wonder whether I sold that too quickly), took losses in some others, but I haven't had enough coffee to spur the memory cells to fire correctly yet.
I've bought some bonds: F 7.25% non-callable due in 2010, F 7.00% due in 2012 (I think), some municipals here in Florida at 5.1%.
Looking at a TYC bond yielding 17.844 matures in 8/03 priced at 88.50.
I hear a lot of talking heads saying "This market is way oversold", but I don't believe it yet.
I see a lot of uncertainty, corporate accounting...we've seen the companies that were too close to the edge and have fallen off, but how many others were initially in better shape but no less fraudulent? What about changes in the Boards of Directors, their qualifications, their liabilities? Will anyone want to serve because of the fear of future lawsuits? Will they be able to afford liability insurance? If the company provides for it, what will be the cost?
How will the new corporate attention to GAAP affect earnings? How will expensing for options affect earnings? How will the dollar affect earnings? How will the trade war unfold and what impact will it have on earnings? How will the scrutiny of banks and the losses the banks are beginning to incur affect corporate ability to expand? How will the fear in the marketplace affect the alternate abilities to raise cash (selling debt or equity)? How will the Israel/Palestine conflict impact things? How will this administration's reported insistence on invading Iraq affect things? The burgeoning budget deficit? Deflation? Inflation? Consumer strength/weakness?
So many issues, so few clear directions from here.
I like cash until the Spring, at least.
Coffee, I need more coffee!
Timba |
