correction is getting meaningful: some bargains are popping up
May 06, 2010
– Comments (12)
Well we are correcting again after some violent chop. The VIX is up, fear abounds over greece and eurozone contagion, the markets were overdue for a correction, and overall things are creeping up towards nasty!
Bargains are starting to pop up, but not to the extent that we saw them in February... I think we probably have a ways left to go down, however, as... fear isn't rampant yet. February saw rampant fear. Cramer and all the fellows at Real Money Silver, except Doug Kass, afraid and not recommending buying. Fear on the airwaves, fear here, fear there.
We don't have widespread panic yet here, in my view. So thats bearish. But I don't generally try to time markets, in general I just try to buy what I think is clearly cheap.
Some things I like: goog at 510, thinking about buying calls
GS in the mid 140's
I am back long GNW, covering all of my hedges, making it once again a sizeable position. That thing goes significantly lower I'll add to my stake.
I have covered hedges on CENX, TCK, GCI, and more.
I did not add to RJET on the big dip yesterday as I'm sticking to my "I have enough of it" theory. The quarter was dissapointing. For now I'll stick to it, i'm basically even on the stock.
If we dip significantly lower I have massive piles of lly, vz, mo, t, and more to sell to buy battered up stocks. If they dip significantly I will unhedge my residual casino shares and go long those buggers again.
I bought ATPG today, raising my stake by 50% in the low 15s
I am thinking about buying TCK calls, long dated, and in the money. And selling TCK puts. This company is worth 60 bucks fullness of time.
I am buying OTE. Its 30% owned by DT and not affected directly by a greek default, it is of course affected by a greek recession and by drops in the greek market. However, the yield is good and the stock is cheap here.
I am not buying more NBG today. I am still not comfortable that I have a 100% solid handle on NBGs situation.
I am liking HIG here also, and I am thinking about selling puts against some insurers like GNW, HIG, and stuff.
I like BP and BP long dated in the money calls.
Remember, each dip we have seen since the march bottoms has not, when viewed from the indexes, been all that dramatic. A couple near 10%, most smaller. But each dip has unveiled stocks that are massively beaten up.
I will deploy funds rapidly if we sink lower. At around S&P 1100-1120 there should be sufficient bargains to justify me abandoning my low beta dividend positions and deploying all the funds into "best ideas". like the ones above.
This is how the game has worked since the march bottoms. The big dip in July made me massive bank, I wasn't as aggressive or successful in the February dip. I will increase my aggression level this time the lower we go...
Do I know we don't crash far lower? No. But do I think its likely we go, say, to the February lows again? No. My reason for that is thats a long way down, almost far enough to qualify as its own bear market on historical charts. And I don't think such a dramatic dip has occured so soon after a major meltdown in the past.
Also, the economy is progressing, the ECRI says no double dip, earnings are good and if the economy keeps picking up they will get better due to severely lean companies having lower overhead than any time in recent past.
etc.
Anyway... happy hunting, and get ready to buy!
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