Leadership? What Leadership?

I’ve been mentioned here and on the radio that in a bear market, the last things to go down in a bear market are the best performers.  That’s because up until today, there have been places to hide.  Yeah, financials and retail and tech may be going down, but you could count on energy, coal, steel, and fertilizer stocks.  Not today. 

The new quarter has brought some intense selling in these names.  All these groups are down about 10% just today alone!  Most fund managers want to show you in their quarterly reports that they own the best stuff.  So at the end of the quarter, they buy coal, steel, fertilizer, etc.  Or, the ones that have owned sure aren’t going to take profits at the end of the quarter only to show you they don’t own it.  So, once the new quarter begins, profit taking hits and you’re seeing the selling pressure come in here big time.  That’s hurting the market.  But, on the bright side, that means we’re getting closer to a bottom.  I haven’t made any moves today.  I’m up about .3% today on the overall portfolio.  Capitulation may be around the corner.

I think these areas selling off hard today will be a good buy real soon.  You’ll get your chance in metals & mining, agribusiness, etc.  If you want to start dipping your toe, I won’t argue with that.  The volatility is certainly picking up.  But, the bad news is that the fear isn’t spiking up.  We’re just simply not there yet.  But, new stocks are going to be on sale….finally.  The stocks you and I wished we had are falling into our bread basket and we’re going to use our cash and shorts and take advantage of it very soon.

Also, I like PBR here.  With a P/E less than the S&P 500, give me a break.


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July 2008
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