Don’t Buy Shit

I hear a lot of intelligent folk telling dumb ol’ country people to “buy the beaten down sectors,” in order to take advantage of the pending “January run.” First, I don’t believe the market will run in January. Second, for the sake of playing devil’s advocate, I need to get an opinion in edgewise—if I may interject into your foolish train of mind numbing thought.

Thank you.

If you take the advice of some of these “smart folk” you may end up with a bag of flaming shit on your front porch. Are you willing to stomp it out?

Check this out: instead of buying the worst stocks in the world and gambling, like a degenerate OTB guy on heroin, why not buy good stocks?

FUCKING SHOCKER.

That’s right. You heard it here first folks—an investment professional suggesting that you own good stocks, as opposed to the biggest fucking flaming barrel of garbage available.

Rule #1 for 2009:

Quit being so fucking greedy.

Rule #2 for 2009:

Quit being so fucking greedy.

You get my drift?

So, instead of trying to “monetize” your local lender or hope and pray for a bounce in crrr-ushed oil stocks, how about a little PFE? I know the stock is dead money. But it pays a big divi (7.5%) and can make you a quick 3-5% in the month of January, providing we rip. That may sound like shit on a spindle for you gambling types; but if you can bang out 4% per month, you will be banking 48% per annum. That may not be “TIM-like,” however good— nonetheless.

Easy does it.

If you choose to go against this advice and get long beaten down names, without looking at the fundamentals, you may find yourself in a very quick “wiped out” situation, should the market swan dive in January. Remember, stocks go down big because their underlying businesses are underperforming. Due to market conditions, everything got taken to the woodshed in 2008, with the exception of a few names.

Now is the time to roll up your sleeves and find some value, instead of just throwing darts at 2008’s bounce plays. Get to work, you lazy double upside/downside etf trading monkey.

If you are looking for some names, take a look at the following stocks, by sector, courtesy of The PPT:

Basic Materials:

CVX, ABX, CEO

Consumer Goods:

ADM, TAP, PC

Financial:

TRV, AON, PBCT

Healthcare:

NVS, PFE, AZN

Industrial Goods:

ABB, PH, ITW

Services:

APOL, RCI, MCD

Technology:

DCM, NTT, HPQ

Utilities:

CWT, SJI, WTR

Tomorrow I will post an organized set of potential short sales, broken down by sector, courtesy of the ever mysterious, yet Godly, PPT.

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I’m not this great ol’ grizzly bearshitter that I make myself out to be. Deep down, I want to turn on my fellow bears and “give them the bayonet.” However, if I did so, I’d be sure to wear a handsome mustache, while holding a musket.

My year is pretty much over. My gains will be north of 60%, down from 80%+. Sometime tonight or tomorrow I will write a year end review.

Not too deep down, I am tempted to allocate cash into beaten down sectors, like oil/gas and banks. Shit, for the love of fried rice and chicken grease, I could buy a shit load of “cheap” stocks here and seemingly set myself up for a a monstrous January run.

Presently, market participants are dying to jack prices higher, since most of them are obsessed with “market miracles” and finding “good values.”

But, I have held back from buying anything, for fear of a sharp January surprise to the downside, based upon dismal retail sales data and weak jobs data. Also, I am very afraid to get long stocks ahead of any economic data.

Also, Obama’s stimulus plan will not add to the economy. It will simply fill the holes left on a loca/state level, with regards to infrastructure.

Today’s action was neutral. The bears took it to the bulls early on, but lost the late day battle.

In closing, I have hardly any long positions left, less than 10%. I still hold an enormous amount of inverse etf bullshit and a variety of scattered shorts. Over the next two days, I will reduce my inverse etf exposure by 10% and look to add one or two long ideas, in order to hedge my shorts—going into the new year.

Top picks: short KIM, short VNO

Poof. This late day rally shit is over.

-Merlin

The tone for the markets will be set in early 2009. There are two train of thoughts now.

1. Everything is priced in. Large pools of cash are dying to buy equities.

2. This is just the beginning of the economic slide. Large pools of cash are on the sidelines because stocks are for asshats.

Personally, I feel, as always, stocks are for asshats. Going into 2009, I have a short/sweet list of potential short sale set ups worth perusing.

Here they are:

AIV, AXP, LM, BAM, KIM, VNO, CMA, HK, XOM, RIG and PACW.

In the event the market shows early strength, quickly, I will buy the following for trades:

GG, AMZN, NFLX, TEF, CNI, ENR, ACLI, BG, ABB, SY, INT, AET, NUE and GTY.

Without a doubt, there are a lot of good values, if looking at stocks from a traditional point of view. However, we are not in traditional times.

While you sit there, in your bullsiht pleather chair from Staples, the government is stealing from you. They are taking your money and giving it away, in order to “save the economy.” Moreover, on a local level, they will be raising your taxes and reducing services. Quality of life is on the decline—no doubt.

Like I said before, commercial real estate is doomed to be fucked every which way but loose. If you are in the camp of thought that commercial Re will undergo a mere “shallow pullback,” like “The Field Clown Doug Kass,” you are in for a very, very rude awakening.

Sit there and wait for the vacancies and dividend cuts to happen; then get back to me and say “KIM is a great fucking buy.”

Finally, at the present, I am long SMN, REW, FAZ, SRS and DUG. In an effort to reduce my inverse etf positions, I will swap out of them, in exchange for direct short positions against select names.

Here are some swap ideas:

SMN for short MON or MOS.

REW for short AAPL or MSFT.

FAZ for short WFC or BAC.

SRS for short KIM or VNO.

DUG for short XOM or RIG.

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Late year pick me up.

Before you read this post, go read Mr. Mortgage’s take on the great big refinance hoax. He nailed it.

Now that rates are low, everyone with a series 7 thinks we will undergo some massive refinance boom, similar to 2002-2004. The only problem: no one is going to get approved.

Hear me out. Anyone who bought a house, in a high interest rate environment, refinanced between 2002-2004—when Greenie dropped rates to 1%. Anyone who needed to lock in low rates did so back then.

Now if you were unlucky enough to buy a house from 2005-2007, odds are you are deeply underwater. What exactly are you refinancing? Your fucking house is a worthless piece of shit.

Naturally, refi applications are going to sky rocket over the coming months. However, the only people who will make money off of this development are the appraisers. Most people have no idea how fucked they are in their Mcmansion, circa 2006. Once the appraisers are dispatched by the refi broker, people will find out, in a very egregious way.

You fuckers will get declined in a very “upside down” way. In my opinion, this will lead to a whole new round of underwater mortgage owners turning in their keys to banks. And, it will result in home values getting marked the fuck down, across the board, as the appraisers run around, delivering bad news.

Let’s not even talk about the condition of credit scores.

Bottom line: the talk of a “refinance boom” is a fucking fraud. Anyone promoting this fairy tale should be shot and burned at a stake.

With regards to the market:

It’s time to consider the fact that there is no oil in Israel. Just an idea: you may want to sell your fucking oil/gas stocks here. As a matter of fact, do it twice.

With my money, I shorted more KIM and will work diligently to build my cash position up to 60%, so that I may get drunk on New Year’s eve, with peace of mind.

NOTE: DT has a cool round up of idiot bloggers (excluded your truly) and their favorite posts for 2008.

UPDATE: With some of my cash reserves, I shorted a little more LFC @ $44.80 and VNO @ $55.90.

The euro will continue to collapse, calling into question its viability.

The dollar will remain a safe harbor, crushing many dollar bears along the way.

Oil prices will decrease in volatility, settling in around $30 per barrel.

Gold will collapse in the second half of 2009, under $500 per ounce.

Natural gas prices will trade in a range of $3.50-$6 for the entire year.

The price of corn, wheat and other agricultural products will collapse, making life very difficult for farmers.

Residential home prices will fall by another 15%.

Commercial real estate will feel the full brunt of the credit crisis, with vacancies sky rocketing to record levels.

AAPL will trade down to $50, before recovering.

GOOG will trade down to $250.

Rumors of a CHK bankruptcy will run rampant.

Most oil/gas stocks will fall by as much as 50%.

Hynix Semiconductor will file for bankruptcy protection.

AMD will file for bankruptcy protection.

MU will file for bankruptcy protection.

GE will fall into the single digits.

Several high profile homebuilders will fold.

The bubble in t-bills will continue until late 2009, sending yields to ridiculously low levels.

Obama’s stimulus program will disappoint.

50% of solar stocks will go away or melt into oblivion.

Taxes will rise, drastically.

Numerous states will request emergency funding from the Federal Government.

The unemployment rate will climb to 12%.

Bank stocks will fall by another 50% before recovering.

Water Utilities will outperform in 2009.

Russia will continue to devalue its currency.

Emerging markets will outperform Western stock markets.

The Dow will fall by 15%.

The Nasdaq will fall by 25%.

The S&P 500 will fall by 10%.

However, mid year, all indexes will drop by half, setting up a 2nd half rally.

Cash rich Japanese stocks will outperform.

China’s economy will continue to weaken, hurt by the U.S. consumer.

3 big name retailers will file for bankruptcy protection.

Chrysler will be liquidated.

F and GM will merge.

iBankCoin’s popularity will grow much faster than anyone could have predicted.

iBankCoin will makes its first acquisition in 2009.

Finally, The PPT will be a huge success, much to the chagrin of all “The Fly’s” enemies.

NOTE: Here were my ’08 predictions.

NOTE II: Here are Danny’s predictions.

NOTE III: Here are Alpha’s predictions.

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Fuck this market and everything it represents. I have decided to make no big moves, for the rest of 2008 (unreal discipline, I know). As I discussed before, end of year tapes are riddled with assclowns who enjoy whipsawing each other out of field cannons. At the present, my cash position is about 50%. I will make a sincere effort to up it to 60%, early next week.

My top holdings are shorts in oil and banks. However, I respect the power of men in idiot boxes and will deploy capital to the long side, if needed.

One way or another, the market gets raped in January. The question is: will it happen right out of the gates or after Obama’s inauguration?

In the event that I am wrong and we go straight up, I am prepared to eat a healthy serving of humble pie and join the Fucktard Festival, dressed up as a CNBC anchor.

Bottom line: this shit is for the birds; I’m out of here.