David White

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431 Comments

    • Thu Sep 25th 13:29 PM | Rating: 0 0
      Commented on:
      The Perfect Storm: Even with Bailout, Economy Is Hurting
      User 118015: The bailout is a good act by the Bush administration. It may be costly to the taxpayers. However, if it is not don't the severe constrictions on the credit markets would lead to a severe downward spiral in business health (and in consequence to individual jobs). Once you're a quadriplegic, it's hard to recover. If you only break an arm, you usually mend fairly quickly. Bush et al are doing there best to limit the damage to a broken arm. Kudos to them. I hope they are successful.
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    • Thu Sep 25th 13:13 PM | Rating: 0 0
      Commented on:
      The Perfect Storm: Even with Bailout, Economy Is Hurting
      The Volatility Index is going down today. It recently hit a near term high of around 42. It has a long way to go down to get to the 20 area. It's at about 32 now. The question really seems to be, is it going to continue down nicely as the market rebounds from the current low of 113.80. Or will it try to make a run at numbers in the 50's as it did in the 2000-2001 crash. This seems one of the worst situations that I can remember. The market may recover in the near term, but the VIX history indicates it will likely reach the 50's at some time in the near future (the capitualtion phase of a bear market). Is this going to be soon, or will it perhaps be in late January next year? It certainly seems likely the Christmas season will bring a lot of coal to the markets this year.
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    • Thu Sep 25th 12:55 PM | Rating: 0 0
      Commented on:
      The Perfect Storm: Even with Bailout, Economy Is Hurting
      Hotel stocks seem like a good bet for stocks to short. Both individual and corporate travel should get hit by the current credit crisis. Earnings for these stocks seem likely to be very bad for the next year or so.
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    • Thu Sep 25th 12:27 PM | Rating: 0 0
      Commented on:
      The Perfect Storm: Even with Bailout, Economy Is Hurting
      Good article. The old Wall Street adage, "Buy on rumor. Sell on fact.", may be in play right now. The rumor of the bailout is certainly lifting the markets. However, the SPY put in an intraday double top today just after Nancy Pelosi and the White House issued statements about a bailout deal being near. This is probably a bad intraday sign. However, it is also probably a bad longer term sign. The failure to take out the high intraday after that news indicates a definite downward trending bias. Then too the durable goods orders and the unemployment data were terrrible today. They were much worse than the market expected. Yet the market is still up. One has to wonder how long this situation can last. The GE news was atrocious also. They scaled back their earnings estimates, and they announced there will be no dividend for the first time in over 30 years. When the bell weathers start worrying about their cash positions, you really have to wonder about the less stable companies. Certainly there is not much corporate credit out there. What are all those struggling companies going to do? I don't think the bailout addresses the commercial paper market to any great degree. It seems likely the M&A activity will be affected also. Without a lot of credit, many companies will have trouble buying others. Probably most acquisitions will be with stock. A few companies could benefit. Cisco Systems is relatively cash rich. Their business will be hurt. However, they may be able to acquire a lot of smaller companies on the cheap for stock during thsi time. This may help them grow. Still they lost their best acquisition strategist in Charlie Giancarlo. Are their acquisitions going to make sense? Are they going to implode with bad strategic decisions? Are they going fail to act due to bureaucratic inability to make decisions? This is certainly Cisco's big opportunity. Will they make anything of it? How about IBM? They are another that could may hay while others falter. Will they?
      As I write this the SPY is hitting its top again. It will try to take it out. Will it be a triple top (a worse omen than a double top)? Or will the market continue upward? From what I am seeing (and the news I am hearing), the longer term trend seems likely to be down for the near term, even with the bailout. Even if enacted, the bailout will take time to take effect. There will be more bad news in the meantime, and that is assuming the bailout works fairly well. Cash doesn't sound so bad at the moment. A few puts on specific stocks might be appropriate. PPC has gotten killed recently. There have to be other companies in roughly the same boat. It might be a good idea to look for them.
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    • Mon Sep 15th 15:00 PM | Rating: 0 0
      Commented on:
      Commodity Sector Companies Fight Back With Buybacks
      POT and MOS: The USDA's crop estimates came out last Friday. The USDA decrease its corn estimates by 216 million bushels. It decreased it soy bean estimates by 39 million bushels. Both of these decreases are from the Aug. estimates reported a month earlier. Apparently the growing conditions have not been optimum. The grain futures went up after this announcement as did the Ag stocks. Today in a down commodities market, corn is about even. Oats and Wheat are up. Only Soy Beans are down. This likely means that the Ag stocks are going to go up in the near term. They have been looking for a reason. This could be it. If the market doesn't completely tank, stock such as MOS and POT should do well in the near term. Also oil is down today, but there has been significant disruption of refinery capacity in the Gulf. This seems likely to prevent oil from falling very far from its current levels. Further Soleil upgraded both POT and MOS to buy today.
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    • Thu Sep 11th 13:05 PM | Rating: 0 0
      Commented on:
      Why Don't Earnings Matter Anymore?
      The renewed talk about Lehman today may put a damper on upside. Lehman lost a large percentage of its value today. Also Brad Hintz put Merrill Lynch in the same boat as Lehman. Merrill also was down substantially, but still far from Lehman's percentage fall. However, it does seem that Merrill may be the next big target???
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    • Thu Sep 11th 11:40 AM | Rating: 0 0
      Commented on:
      Why Don't Earnings Matter Anymore?
      Actually the Gulf will likely be shut in for much of next week too as it takes quite a while to bring everything back online. This is especially true if there is storm damage. Even have no electricity (common in these kinds of storms) can significantly impact the ability of the oil companies to get their assets back online.

      There was further good news today that the mortgage rates have decline to under 6% this week. This is great news for the real estate market and actually for the banking system. It generally means that it is easier to sell houses. This in turn would mean that there would be fewer foreclosures. This is good news for the banking industry. Hence it is good news for the equities markets.
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    • Thu Sep 11th 11:21 AM | Rating: 0 0
      Commented on:
      Why Don't Earnings Matter Anymore?
      Also whether or not Ike does any damage (and it might do extensive damage), the Gulf oil and gas infrastructure will remain shut in through the weekend. That probably means that the oil stock data next week and the week after will show draw downs. This should be bullish for oil (and by extension Ag stocks).
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    • Thu Sep 11th 11:18 AM | Rating: 0 0
      Commented on:
      Why Don't Earnings Matter Anymore?
      Most people think that oil will stop falling in the $90 to $100 range. Total (a major oil company) said yesterday that they thought $100/barrel is likely a stable price in this market. When it becomes clear that oil has stopped falling, the Ag stocks should really start to rally. There are starting to be comments along that line now (for instance Total's above cited comment).
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    • Thu Sep 11th 11:16 AM | Rating: 0 0
      Commented on:
      Why Don't Earnings Matter Anymore?
      I think most people noticed that food prices were the most notable price that went up in this morning's reported data. Food is a staple. Grain prices have gone down recently in sympathy with other commodities. However, they probably have a limited downside even in recessionnary times. People still want to eat. That is what makes staples a safe haven in recessions.
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    • Thu Sep 11th 11:12 AM | Rating: 0 0
      Commented on:
      Why Don't Earnings Matter Anymore?
      As a reference TRA's recent high at the end of July was $57.64. It carries a current PE of 9.6 and a FPE of 5.8. It has a one year target price of $62.75.
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    • Thu Sep 11th 11:08 AM | Rating: 0 0
      Commented on:
      Why Don't Earnings Matter Anymore?
      I should also have mentioned TRA, which has been hammered lately. However, it is both a good growth play and a good value play. It has overhead resistance at 40, 44, and 47. It could easily reach 44 by sometime Friday, if the market continues in an upward or sideways movement.
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    • Thu Sep 11th 10:26 AM | Rating: 0 0
      Commented on:
      Why Don't Earnings Matter Anymore?
      I specifically mentioned LDK because that company has signed several new wafer supply agreements recently, but it has gotten no joy from them as the market has dropped. It also trounced its earnings estimated for Q2, and it raised its guidance for the full year. It is due for a rally.
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    • Thu Sep 11th 10:22 AM | Rating: 0 0
      Commented on:
      Why Don't Earnings Matter Anymore?
      Today the SPY hit its July low (approx. 121.60), then it bounced up. Barring any more negative news, it seems likely this bounce should extend upward at least for today, possibly also for tomorrow. If this happens, battered growth stocks such as MOS, POT, CF, LDK (which has rallied today already) should perform well for the duration of this rally. This is likely a short term buying opportunity. Perhaps it may turn out to be a long term buying opportunity?
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    • Wed Sep 10th 09:14 AM | Rating: 0 0
      Commented on:
      Lehman Hangover - Fast Money Recap (9/9/08)
      Cramer has said commodities stock may still have farther to tumble, especially because China has dried up. He was hedging his comment by saying that you have to believe all of these stocks growth was due to high commodities prices to believe that this will happen. I actually don't believe that. I know for certian that the figures with regard to China were skewed due to the Olympics. The government kept 1.5 million cars off the road in Beijing during the Olympics. It also effectively shut down many polluting factories during the Olympics. This curbed demand for coal, iron ore, etc. during this time. Further 2 earthquakes have left China with a lot of repair work. They will need commodity resources for this. I am looking for the numbers on China to bounce back soon. I do believe they are being hurt by the slow down to some extent, just not to the extent some analysts (such as Cramer) are now claiming.

      I do believe the inflated valuations of commoditiy related stocks were due to high commodities prices to a large extent. However, these valuations are no longer inflated for many stocks. The food related stocks are a good example of this. Food is a staple. There will be high demand even in recessionary times. After Q3 results are reported, POT will have a PE of about 15 and MOS one of about 12. These are both substantially below their historic average values. Further after Q4 results these PE's will be substantially lower than that. Longer term the FPE of MOS is 4.5 and POT's FPE is 6.6 (yahoo finance). They both have very strong cash positions. In fact POT has been buying back stock to cancel it. Further CHK's CEO has been buying a lot of that stock, even though many have been predicting natural gas prices to go down. At the very least it would seem that POT and MOS are in for a short term bounce upward. TRA and CF have also been hit hard recently. They look like good values too.
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