Yeah, we’ve been through a rough period here in the market but you know what we’ve made it through. Reminds me of the song you’re guaranteed to hear when you fly down to Jamaica, goes a little somethin’ like this: “I can see clearly now the rain is gone, I can see all obstacles in my way…” The only problem is the obstacle is still somewhat in our way. The experts on Wall Street for the longest time were telling us that subprime issues were an isolated problem. How about this song, “Don’t Worry Be Happy”, should have played everything one of those idiots tells us that the subprime credit woes won’t spillover into the economy. So what has happened, it did spillover into the economy and “You Don’t have To Be Smarter Than a 5th Grader” to realize it would spillover rather easily. Hmmm let’s see if I can think of a few sectors that would be affected and why:
Mortgage – The source of the problem
Homebuilders – The receipient of the problem
Financial Services (Banks) – They financed the problem
Financial Services (Other), Retail, Consumer Services, Restaurants – They are the spillover groups that are hurt by people with poor credit, less disposable income, and fear that the money in their pocket today won’t stretch as far.
What’s left:
NOT MUCH
Energy, Commercial Real Estate, Utilities, Defense, Consumer Staples, & Technology
So with my shopping bag in hand, I am gonna hook you up with a Wish List like its going out of style. This is a mix of plays that is gonna get you on track for the long road ahead. And I’ve included entry points…the one thing most analysts out there never tell you. They tell you the good stocks but never at what point to buy them:
My Personal Shopping List:
Best Buy (BBY)- $44.00; Near a 52 wk low you are getting a steal of a deal. This best in class stock is expanding into China, pummeling the competition (Circuit City, Radio Shack,etc), and expanding into other consumer goods like appliances.
Risk – Moderate, you have a RETAIL stock, ride out the bumps to Long Term gains
Time Horizon – Long Term (over 1 year)
Burlington Northern BNI - $79; All aboard this stock. Folks one thing I’ve learned is when the best and the brightest on the street are onto something, like Brandy’s old hit “I Wanna Be Down”…I do want to be down with what they are buying into. And the railroads are being accumulated by some of the biggest names it the biz. I am going with the biggest name WARREN BUFFET. Yes, my main man is pumping serious cash into this stock which will create a nice floor for the stock.
Risk – Moderate, Transportation was the hot thing at the beginning of the year, but with stock prices cooling it has given us a nice entry point.
Time Horizon – Very Long Term – Buffet buys for the long haul so accumulate and store this one in the freezer. Call me in a few years when Buffet makes you rich
Equity One (EQY) $25 or below, Capital Trust (CT) $30 or below, Jones Lang LaSalle (JLL) 101 or below, General Growth Properties (GGP) 49 or below – Remember the sector that I said may not be affected by the housing downturn, try Real Estate Investment Trusts (REITs) with exposure with COMMERCIAL property. GGP was my favorite in earlier posts until I saw the momemtum in EQY. I wanted this one at the lows of $23.75 but not happening ppl jumped all over it. And CT has the backing of Sam Zell purchasing mad shares, buy with smart ppl. JLL is on the move, check Zacks.com
Risk – Low; beaten down only because they have Real Estate in their names
Time Horizon – Short Term gains will exist, but these are Long Term Gems
Stay tuned for my next entry on Flight to Technology. Who would have ever thought when the market turns sour that we would turn to technology to lead the way. Well its happening.
Disclosures: I own Best Buy (BBY) and Burlington Northern at the prices disclosed. I will update you as I add REITs to the portfolio.
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