Nice list of ideas, each of which has some merit - I know a lot of those. I would point people especially toward Armstrong World (ACK) - I don't know when it stops falling, but the stock is extremely cheap.
I know we don't do macro here, but this market is sick. We will probably get a bounce tomorrow, but I don't think it holds. The psychology has completely changed. I don't think we are in an atmosphere of total cataclysmic fear yet (which is my buy signal), so I am still parked happily in cash, but we're getting closer. At noon today the S&P broke through what looked like firm technical support at 1055 like a knife through butter. I normally don't do technical analysis, but this one was something everybody on Wall Street was watching carefully. You don't want to get on the other side of that. In my view, forget Russia - what happened today was two things:
1) The support on the S&P broke down decisively. Now institutional investors are looking at another 15% drop on the S&P before they see technical support. If that doesn't matter to you it should, only because it matters to the guys who are doing the buying and selling in big stocks.
2) The "buy the 10% dip" rule was shattered today. All the guys who followed that rule are looking at two things tonight: i) losses for the first time and ii) no more cash to buy the next dip.
So who buys that next dip? People with cash. Institutional value investors were raising cash today. What does that tell you about when they (we) are going to come in to rescue this market? In my view, if this accelerates tomorrow (or maybe even if it doesn't) I forget about the basket case businesses we've been calling value stocks and set my target on top quality companies at blackmail prices. That means start doing your homework on businesses you've only watched from afar up to now.
Anybody who has an account with Fidelity saw Peter Lynch's writeup in the brochure they sent yesterday. When Peter Lynch is calling for the Dow to fall to 7000...Houston, we've got a problem.
Jim |
