Shopping During Armageddon

by: Todd Sullivan September 30, 2008 | about stocks: DOW / GE    
Todd Sullivan

Todd Sullivan

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OK, let's ignore the politics. If Democrats want to pass the bailout bill they can, they have the majority. Period. Republicans are powerless and will not block another vote. Anything else is just games.

So, will it pass? Yes. As the market drops, Main St. will feel the pain and the public opinion polls will turn.

When that happens, everything lets loose and we rally. In the meantime you haveGE trading at decade lows yielding 5%, Dow Chemical (DOW) at 5 year lows yielding 5.5%, and the list goes on.

The point is, you have people panicking out there. Panic leads to selling en masse, and that means bargain basement prices.

Think about it. We have heard daily for two weeks now that something has to get done TODAY or we risk Armageddon. Yet, nothing has been done. Wachovia (WB) and Washington Mutual (WM) were absorbed by Citi (C) and JP Morgan (JPM), respectively, in a very orderly manner. No deposits were lost and there was no run on the bank when the news was announced. An 8% drop in the Dow ((.DJI)) today isn't even in the top 5 worst days.

There are deals out there for the patient investor. Pick strong companies with low debt and strong balance sheets. The yields alone out there have not been seen in a long time..

Something will get done; just pick at the bargains until it does ...

Disclosure: Long GE, Dow, C.

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This article has 14 comments:

  •  
    Sep 30 09:18 AM
    No one thought Freddie and Fannie would go down in flames....GE is largest company that could go down in flames due to their exposure..."and even the great shall fall". Wall street may love a bail out but money and talent will flee from the carpet baggers and head towards real wealth, despite the manipulators and necro-liers. Though the dead marry the dead (ie. city, WB, WM etc), they will not produce offspring. They will not have sex with each....rather they WILL EAT EACH OTHER.
    Reply | Link to Comment
  •  
    Sep 30 09:21 AM
    "Remain Calm!. Everything is OK."
    Guy on the street during riot scene in Animal House
    Reply | Link to Comment
  •  
    Sep 30 09:35 AM
    Oh, yeah- and didn't DOW, etc look good at 4.5% yield?
    Reply | Link to Comment
  •  
    Sep 30 09:50 AM
    On a somewhat different subject - my sense is that today, hedgies will be desperately trying to prop up (aka mark) thier long holdings (especially in less liquid stocks) to window-dress Q3 results. Might be a good day to off load whatever toxic waste you might have in your portoflio.......
    Reply | Link to Comment
  •  
    Sep 30 10:34 AM
    What happened to the link to your portfolio performance on your "valueplay" blog?!

    Can't find it anymore...

    Reply | Link to Comment
  •  
    Sep 30 12:45 PM

    First you start with "politics aside" then render the inaccurate story that the Dems "blocked" the vote when it was a Rep minority that didn't arrive at consensus...?
    Your premise is right though: there ARE deals out there. That's because like the fear-based way we got into the war we are now being told that we have to do what they say or else, the same people who got us in this. Does anyone remember that the Bush administration was told by the best minds in economics that this wouldn't work, by Nobel prize winners, by Soros and Buffet. Now the economically challenged politicians are asking for a financial "Patriot Act" and using fear to get it. Why should Main St. trust Wall St.? We didn't sell ourselves the mortgages. The sub prime loans didn't get us here. Selling them to shadow banking, vulture like short selling and hedge funds did. Trust who?
    Reply | Link to Comment
  •  
    Sep 30 01:50 PM
    Sorry.. I lost 10% of my portfolio value yesterday, for the simple reason that Congress did not pass a bill that doesn't really address the underlying problem anyway. That just means to me that there 'really is panic' out there and clearly, our administration does have to do something to calm the waters. As much as I don't like the idea of the bailout, I also didn't like my wife having to go through chemo. Sometimes, the only choice is unpalatable. It is time for our chemo!

    As to politics.... Lets see, we have a Republican President who's normal course of action is to sit on his thumbs until bodies are floating around the streets of New Orleans.. Then! He runs around flapping and screaming that we have to do something now! We don't have a 'lame duck President', we have 'Chicken Little' in the White House. Will someone please tell me why the CEO of our Country once again waited until we had a very ugly mess to clean up before laying it on our Congress?

    Also, in any bill, you will have defectors for the party line. George has veto power. It seemed that at this point (and once again, in desperation) he would have signed just about anything, but he could not round up his own party to vote the compromise bill. If I recall, it was 94 Dems against versus 135 GOPs... Sounds a little lopsided. Throw in the fact that even in this emergency, Pelosi and the Dems had a working compromise within days, only to have McCain call it 'dead in the water', I'd say that the anchor in this whole mess can be laid firmly on the Republican doorstep.

    The only positive that has come out of George's Presidency, and issues like this is that many people like myself, have finally realized that the Republican Party that I have voted for all my life, clearly has been a **very bad choice**.

    January 20th, 2009 will be a liberating moment for the USA. I do however feel a great sympathy for the next President, whether it is McCain or Obama, as like the guy that walks behind the Elephant with a scoop and a bag, they will be left the task of cleaning up some horrendously large smelly, unhealthy piles left by 'Dubya'.

    jegan
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  •  
    Sep 30 11:33 PM
    Margaret Kane: I hope your investing is better than your counting. 95 Democrats voted against the bill and 65 Republicans voted for it. Nancy Pelosi is politically tone deaf. She flat out insulted Republicans and then was sullen when not enough of them overcame opposition in her Own party. BTW, Chris Dodd,Barney Frank,Jimmy Carter, and Bill Clinton all have DEEP culpability for for this whole mortgage fiasco. Frank and Dodd both fought off Bush when he tried to rein in Fannie and Freddie when they were headed for the precipice back in 2003.
    Reply | Link to Comment
  •  
    Oct 01 08:05 AM
    Sorry liberal friends. The dems could have passed this on Monday but they didn't want to because their constituents won't vote them back in. If we weren't in an election year we would have had a bill by now. It's political just like why Fannie and Freddie were not investigated years ago and why mortgages were given to people that shouldn't have had them. It buys votes.
    Reply | Link to Comment
  •  
    Oct 01 08:06 AM
    indeed berloe it looked good with a yield of 4.5% but what he is saying is that it looks even better with a yield of 5.5%.You don t agree with that? well buy something else . We need more people like you so we can buy the likes of GE ,DOW at an even lower price which translates into an even higher yield. Thanks for your cooperation!
    Reply | Link to Comment
  •  
    Oct 01 08:52 AM
    formerhawk--the faciest right wing republicans voted AGAINST the measure by a better than two to one margin. You CAN NOT deny that ! On another matter ---Try to Buy some SILVER! You can't get it from the dealers they are in such short supply. If they have some, it costs several dollars above the spot price. Why isn't the mainstream press reporting on that?
    Reply | Link to Comment
  •  
    Oct 01 08:59 AM
    Ignore the politics? Of course the Democrats could pass it, but why should they? And have the Republicans beat them over the head with it? Nobody wants this on either side. It has to be a bipartisan vote of those in safe seats given the Election is upon us.

    Yes, GE and DOW among many others.
    Reply | Link to Comment
  •  
    Oct 01 09:20 AM
    My silver horde dropped by 8% yesterday but you still cannot buy except at 4-6$ over spot,strange days indeed :)
    Reply | Link to Comment
  •  
    Oct 01 01:52 PM
    6 degrees of kevin bacon...that was him in Animal House!

    - Signed, Facist Pig
    Reply | Link to Comment
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