JTech...re: airlines and stepping aside...
re: airlines
...I see opportunity and a potential homerun (ultimately) as the airlines can not and will not - "all" go out of business. There is probably no question that the sector gets cheaper, but they all won't (can't) go under. New winners will emerge - maybe LUV buys assets/routes/hubs out of Bankruptcy and greatly expands it's footprint... at some point the market will cease taking down the LUV's of the sector along with those that are heading toward BK - as they will pick up marketshare and pricing power via others failures etc.
There is perhaps opportunity for the foreign carriers like KLM, or Lufthanasa to add profitable routes, see less competition as some majors fold & go BK and they gain more pricing power on select Intnl routes etc - that's one potential play.
Another is for the "Regional" carriers to also gain some pricing power via less competition from failing long-haul carriers.
It's worth "averaging into" the likely survivors for a toe-dip imho...(especially the strong regionals) and ultimately should we emerge free from any further domestic terrorism, maybe we caputre Bin Laden soon and roll thru Iraq like we did Afghanistan... then the Airlines may be presenting us with another when, not if - historic LT entry opp for significant returns.
This is not an industry that will just go away, it's just a matter of who survives, how the inevitable Govm't bailouts will affect the playing field and to what degree the unworkable current business models with the present high-cost union contract structures will be re-worked via concessions.
Stepping aside is an act of patience... and opportunity will arrive to those that wait...patiently imho.
I still think PE's will continue to contract in a slow grind - primarially as we sort out the "quality of earnings" - via the cleaning up of aggressive accounting, addressing the expensing of options etc.
We aren't even close to historic valuation metrics yet - especially when factoring in the unquestionable still high remaining degree of aggressive accounting that is the rule and not the exception.
Dow 7,250 - 7,750 is "buyable" - certainly on an initial average in basis for the bears as the cover shorts; but even those levels are not historically cheap "value" levels given the bursting of a speculative bubble and the accounting/earnings clean up that is still on-going...
I'lll just sit on a 25% Gold/PM position here - waiting for a technical breakout to the upside, or some "event driven catalyst" to add on... along with a fairly timid 10% long position including a toe dip into the airlines, a little energy, some drug stocks and a couple of value plays.
I'd probably scale back into a 20% short position if we start rallying thru DOW 9200ish - as we simply don't have the earnings (quality thereof), economic activity, or the valuation metrics to suppport anything much above 9200 imho.
I think we're setting up for another round of misses and lower guidance off of Q3 earnings reporting and there won't be any significant economic numbers supporting a continued rally - so another Black October may be in the offing and things in Iraq could be heating up then as well.
I like 50%+ Cash for the ability to make a weighted move off of any unforseen Rogue Wave events... a 10-15 to 25% Gold/PM position seems reasonable as well.... TIPS may be interesting here as Greenie is getting pressure to cut rates as well & I do think we'll see .75bp in cuts... either a .50 followed by .25, or vice versa...
Energywise...I think this is a trading rally for OSX, XOI stocks... I did get some XOM, VPI, KMG, ESV...but will sell into the upside of the crude oil move on Iraq supply disruption fears and think the ultimate play will be going short the OSX/Energy at the peak of any Iraq/Energy Bull as it won't last as long as many think imho and the underlying global demand doesn't support anything here over the range of OSX 80-100.
OSX 100-110 is profit taking territory and OSX 110-120 (if seen) is short-city imo. |
