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Well, I'm up late doing research on a Friday...



August 02, 2008 – Comments (0) | RELATED TICKERS: GOOGL , XOM , C I thought I'd post and be a little more informative than I usually am.  I've been studying some charts and history, and applying some very serious screens to the valuations of the overall market.  Right now we have a forward P/E on the S&P 500 of around 18.  That's mainly because of lowered profit projections.  These profit projections aren't particularly low, merely historically average, give or take.  So, there is little reason to expect a sustained rally until P/E gets to about 15 (or less likely given the tight credit markets that are likely to persist for another couple years).  In short since I'm tired, it's pretty apparent that we are in for at least another 15% or so on the downside from here, possibly another 30%.  Not sure how we'll get there, I suspect a little mini-rally at some point then a wicked downturn.  Not sure when it'll happen, though I suspect soon, within 5 quarters.  So, I won't be taking off my shorts as soon as I had thought just a few weeks ago (and if we get a rally, I'll find every ultrashort etf I can and put it in the CAPs portfolio to offset my watchlist stocks).

With regard to the CAPs portfolio I'm showing, as I've mentioned it's a watchlist as far as the stocks go.  My criteria are fairly simple cash flow analysis, balance sheet strength and sustainable growth screens.  When things gets cheap, I take a look at the business and figure out if I want to be in that type of business. 

Anybody can build a few good screens using Business Week or copying that guy from The Kirk Report (not me, really).  The ETFs I actually trade a few, but most listed on CAPs are just to improve score here since I don't screw around with taking stocks off of my watch list for score purposes.  Again, I'm using Caps as a tool, not a game.  I suggest you do that too.  

Re my "real" portfolio, I only own few stocks right now as I've been selling anything that isn't an outright buy now, and only in small percentages of overall real portfolio.  I own agriculture (RJA), senior secured notes (PFL), foriegn currency, a pair of short ETFs (I'll let you figure out which two from my list), and a couple of mutual funds that make up about 25% of my holdings (which are offset about half with my shorts).  I sold all my non-ag commodities over the spring.

Good luck and hold tight.  My advice, sell into strength, get ye some agriculture & senior secured notes that have some backing and hold a lot of cash- much of it in NOT dollars (which has one more good whack coming).  I'll reread this later as I suspect it's lumpy and too brief, but I'm tired, so goodnight.

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