A great man once said the following:
“Now is not the time to be scared. Cowardice will get you nowhere. When in doubt, just do it. If you want to do it, do so with great tenacity and vigor.”
I smell the fear coming off of your burlap winter coat, panicked over “The Santa Claus Rally.” U.S. corporate balance sheets have never been better. As a matter of fact, non-financial firms are saddled with the most cash since 1959, 1.8 trillion dollars. There is no place to put the money. Look at THC and BEC this morning: buyouts. Look at the Carlyle Group: a private equity firm that is notorious for making conservative/solid deals. They are putting money to work.
Is the economy kick-ass?
Absolutely not.
Right now, at this moment in time, it’s all about following the cash horde. With rates so low and bonds posing as a potential credit risk, expect to see dividend, buyback and merger announcements to retain front page status. Going into the New Year, I will be compiling a list of companies, who have underperformed in 2010, that might be worth buying in 2011: classic bottom fishing. In addition to that, I will soon switch my focus away from small cap/hot money names to more traditional/stodgy stocks, in order to lower my beta. I’ve enjoyed my run, a great deal. Instead of playing sniper all the time, considering the fact that dividends, buybacks and mergers will continue into 2011, I really need to start structuring longer term portfolios, instead of taking degenerate swing trades. The truth of the matter is, my true strengths lie in my ability to select thesis trades.
2011 will be the year I get back to that: story stocks and catalyst driven investing.
[youtube:http://www.youtube.com/watch?v=aq0tMOpKmgs 616 500] Comments »