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chk999longonly (97.67)

Ah, The Smell Of Bargains Is In The Air

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January 15, 2008 – Comments (4)

Stuff is starting to look cheap enough for me to think about buying with real money. The two areas I am eyeing are the blue chips and the retailers. While the blue chips aren't as beaten down as many sectors, they are still at PE ratios not seen in years. The retailers have been hammered recently and I think the game there is to find the strongest ones and buy them. No specific targets yet, but looking hard.

I am still staying away from the financials (except for AXP where I bought another tranch) because I can't tell who is only beaten down and who is mortally wounded. I expect there will be some bargains in the smaller banks that have strong balance sheets and no dodgy securitized loans, but again don't have anything in my sights quite yet.

Mr Market is throwing a blowout sale, and we should not be shy about buying quality goods at a discount. But shop carefully, some of the goods are tainted.

4 Comments – Post Your Own

#1) On January 15, 2008 at 1:33 PM, leohaas (30.15) wrote:

Don't catch a falling knife. You've got a point when it comes to blue chips, but retailers? With people cutting their spending due to the credit crisis and lots of economists now talking about a pending recession (or are we already in one?), you have to be a real good stock picker to find a retailer that will perform over the next year or so.

I assume that your venture into AXP is based on last Friday's haircut. You could be on to something for the long run, but I think you are a little early. 

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#2) On January 15, 2008 at 2:16 PM, joeykid13 wrote:

That's not what I smell.  CHK, may I suggest that you go for a 20 minute jog to open up your sinuses, then a shot of espresso to sharpen your senses.  I think then, you will be thinking more along the lines of...I don't know...maybe like...an egg salad sandwich.

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#3) On January 15, 2008 at 4:57 PM, DemonDoug (31.51) wrote:

SBUX is a bargain.  I'm still not seeing firesale prices on any other equity out there.  My only stupidness is I haven't transferred money into my brokerage to buy SBUX.

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#4) On January 15, 2008 at 5:21 PM, chk999longonly (97.67) wrote:

I may well be early, that has certainly happened before. And catching falling knives doesn't bother me much if I think there is a limit on how far the knife can fall and I'm not that far above it. Time will tell if this strategy works or shirks.

The AXP buy was exactly on the Friday haircut. This is a core holding, so if it takes a bit to recover I'm not getting my shorts in a twist. In 20 years this may look pretty good.

On the retailers, much more due dilligence is certainly indicated, but some may get hurt less than others. And since a lot of the forecasters are calling for a better economy late in the year, the pain may be bounded. Time will again tell.

On SBUX, I was in the local one today and there was certainly quite a crowd. My question would be, what is the value as a cash cow when the buildout is finished?

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