Yeah, its a bloodbath. Today the knives came down on financial stocks. Tomorrow, who knows? But the trend is pretty clear right now. This idiotic notion that we are not in a bear market until the Dow drops 20% has been laughable for two months now. The knives came down on Dell today, but that's just the start.
LaSalle Hotels - I pitched this idea a couple times on this thread, and am embarrassed to say that. I only hoped today when the bottom fell out that I was the only one who bought it. (When I liquidated my portfolio in July I held onto only 5 stocks. Why this one??? $%!) But unfortunately, that's not so. I have never lost big money on a real estate stock until this one. All I can say is this. I talked to the CEO today. He bought shares at 12 - he's not a bad guy, I find him completely trustworthy. The stock is not going down because of anything the company has done. So far the company has done nothing wrong - they are just in the worst place at the worst time. Their hotels are worth $16-20 a share by my estimate. They pay a dividend which now yields 17%. 17%! Could it get cut? Sure. Are we at all certain it is going to get cut tomorrow? No. Their earnings are not falling, and they are not seeing the warning signs they are looking for. Will they if we go into a recession? Yes. The stock is in a panic sell. I am a buyer, not a seller. This is one of those real tests for a value investor in a bear market. I have not been through one of these before like Paul. But when I saw the stock at 8 1/2 this afternoon, I felt like I had been punched in the stomach. I told my boss about how I felt, and he told me that is the best buy signal you are ever going to get, though it is the most difficult buy signal to act on. He was absolutely right - the stock closed 10% up from that level, and I never pulled the trigger.
PMA is another one you want to get to know. So is BT. Both have major problems (PMA's became known today, BT's are still unknown, which may be even worse. But you can get the same yield on Bankers Trust as you get from RJ Reynolds Tobacco. Are derivatives carcinogenic?) For Buffett type value investors, take a long look at Ambac (ABK), one of my core holdings which may be about to get annihilated. Ambac's earnings are absolutely untouchable for three years - you've got to know accounting to appreciate this beauty.
I haven't been posting much lately. Part shellshock, part busy, part - I'm just not interested in buying anything until the market indices are at least close to what I think they are worth. I posted this near the peak. Dow 6000, S&P 650. There are clearly a lot of cheap stocks out there, many very cheap. But they are going to get cheaper until Dell goes to 30, GE goes to 40-50 and MSFT goes to 60-75. This market is fighting and fighting, but it breaks a little more each day - today the Dow looked OK, but the carnage in individual names was one of the worst days I have ever seen. And its still early October. The best is yet to come.
JJC |
