Year End!

This will be the last post of 2008 - a turbulent year for sure.  One wonders aloud what would be remembered from this year, especially in the world financial markets.  It would appear the number one story would have to be the real estate bubble and the financial market crisis.  We could argue over how, when, who, and why but the reality is we are neck deep in it and it will take a global effort to get us all out of it.

Consumer confidence it at some of the lowest levels ever.  Retailers are finding out real quick "that no Christmas is coming", as the final holiday sales are coming in - way down!  We should see a number of retailing bankruptcies in early 2009.  Malls are suffering along with individual retailers as shoppers are being more careful with the money they do have and are willing to spend.  Restaurants are also getting hit as more people can't afford (or chose not to) going out to eat, preferring to stay at home for meals.  This can help the grocery stores, but not the restaurants.

Commodity prices continue to be in the news as oil continues to hover just under $40 a barrel as global demand (or those who can afford it) declines.  Gold is around $870 an ounce while Silver maintains itself just under $11.

If you were not quite sure whether this was just the United States, looking at foreign financial news would set you straight.  This crisis is worldwide!  Unemployment is up in France.  The Nikkei 225 (Japan's version of a stock market index) was down 42% for the year.  Germany is suffering as well as others in Europe who would sell parts to China who would use it to produce products sold to the United States.  The United States is not buying - so China is not buying from Germany!  In Russia, they devalued the rubble!  This is a vicious cycle where everyone is waiting for the new administration to arrive on January 20th, in Washington, D.C.  Don't hold your breath!   There is a lot of work to do and I fear it is only going to get worse before it gets better!

Let's hope for a more prosperous 2009!

A week later and no auto bailout . . . yet!

Well we are still waiting for the White House to agree to forward money to the big three (since the Senate said no way!). President Bush returns from a surprise visit to Iraq to make an announcement which sounds like it could be more than the $14-15 billion from recent discussions.

The FED meets today and is expected to lower interest rates to 0.5% - can't really go much lower! The most recent industrial production numbers are down, as are the latest numbers on manufacturing output which show the recession not only is definitely here, but not showing any signs of getting better.

What type of stocks can one look at, for the long-term, that would be a safe bet right now??? Well, safe . . . is relative, but assuming a long-term time horizon, there is value is companies with a good balance sheet and a secure dividend in the 4.5 - 6.0% range (be careful of some in the 7-9% range in common stock as I am not sure those dividends will not get cut a bit). Also, look for companies with a good balance sheet and good cash flow (Johnson & Johnson, Nestle, Zurich Life, Proctor & Gamble, and Accor). These are long-term plays but I feel will have less volatility in the near term.

Markets waiting on Big3 bailout news

President-elect Obama has been busy putting his team together. This includes not only his cabinet but other various advisors as well. One interesting choice was former Fed Chairman Paul Volcker to head a new advisory panel whose purpose it is to offer advice, information, and strategy for the finacial markets and how to jump start and maintain a healthy U.S. economy.

The world continues to watch and wait on the U.S. govenrment finalizing a package in the form of a bridge loan to the Big 3 automakers. What started with the Big 3 asking for $25 billion, then told to go back and come up with a plan (do you remember seeing AIGs plan? surely the other financial institutions who received part of the $700 billion had to show a plan . . .?). They did and came back and asked for $34 billion! It appears the House and Senate are prepared to offer the Big 3 $15 billion, payable on December 15th, to give them the ability to hang in there until Barack Obama takes over and then his team can decide where to go from there.

Ideas for investments???? Well, this is really looking for a jewel in the trash - what are the best companies in defensive or cyclical industries that have been beat down unfairly and when do you take a chance? I am not convinced we are at the bottom but I do believe we are very close. The markets still move up for a few days and then have a big down (people take short-term profits after a nice move upwards) as the markets settle in. It doesn't take much news, positive or negative, to get movement - though the movement seems to be overblown in either direction. I still like infrastructure plays, but others such as cyclical/defensive stocks are a good way to go as well. There is still a lot of quality companies out there than you can buy on sale! Companies I like are Dean Foods, Kellogg's and General Mills in the food producer category. As always, you need to do your research and determine whether these or any investment alternatives are right for you!

My most recent trade was buying Citicorp in the upper $3 range; it is currently at mid-$8 range. Sure wish I would have bought a truckload of it!!!