re: financial stocks
they continue to drop like stones. virtually all of the large cap financials broke through major support levels today. I know I was the one who brought up MWD and MER and AXP, but I confess I just cannot figure out how to value them. As Buffett would say, these are outside my circle of competence, even though I work in the industry. I just don't understand the accounting. They may be cheap, they may not. I look to others to teach me what to do with these if they continue to drop.
I am much more comfortable with things I understand which also look like good long-term buy points. Nike in the low 30s looks great for the long-term, though it could certainly go lower. PPG is worth a long look. I still like a couple real estate sleepers - Clayton Homes (CMH) below 16 and Public Storage (PSA) in the low 20s. If you want to venture into smaller cap stocks, LaSalle Hotels is a perfectly healthy REIT with honest management yielding over 12%. And USEC, which we all know well, has performed very well considering the market's collapse. It is still one of the first stocks I would buy if I didn't already own it. Case (CSE) dropped another 4 points today and looks like a screaming buy if your horizon is 5 years or more.
And on the macro side, I still think the market has another 20-30% downside before it is reasonably valued. 5700 on the Dow, in other words. In early July when people in my family were asking "come on, how much could I lose, 10%? Big deal" I said no, more like half, and they laughed. They're not laughing any more. The market at today's level still prices in a long term return on equity of 17%. If you are comfortable with that, I've got some Dutch tulips to sell you at a 20% discount.
Jim |
