Bad News is Often Good News

One of the things that always fascinates me about the market is how seemingly bad news can often spark a rally.

This morning it was announced that US GDP declined in the third quarter. If we get another decline in the fourth quarter we will officially be in a recession.

We will find out if we got that second quarterly decline sometime toward the end of February 2009, or maybe the beginning of March.

As I've been telling you all, we've been in a recession for at least 9 months now.

Today's news signals to the market that we are already starting to come out of the recession.

That is why the market spiked up on seemingly bad news.

And this highlights the problem of getting your investment advice from the news media. The news media focuses on the current news, the stock market focuses on the predicted news in the future.

History says that stocks begin to rally 60% of the way through the recession. Are we there yet? I'm not sure, but we are close and likely to be there when the news media and the economists are ready to offically announce that we have been in a recession. Again, look for that announcement in late February or Early March of next year.

We still think this current rally will carry us to 10,500 - 11,500 by mid-January.

Stand Fast!

Oh, What a Day!

I was in one play in my life. I was a senior in High School and I auditioned for a Role in the “Mad Woman of Chaillot.” Frankly, I tried out because I was trying to get a date with a girl named Pam. I got the part, but not the date. It was a nice Cameo. I played the role of the “Stockbroker.”

I don’t remember my lines exactly, but it was something about the market going up, up, up and then down, down, down, and then up, up, up and then down, down, down….and then finally up, up, up!

My opening line when I walked stage was “Oh, what a day!”

For obvious reasons, I have been thinking about that speech a lot recently. I guess that this is an example of life imitating art.

Today I began going through each and every account individually and buying stocks that I thought were appropriate for your account.

The market is low; we built this large cash position for a reason and I think now is what we have been waiting for.

Depending on what you owned already and what you didn’t own I bought you some stock today.

I don’t think I ever bought this much stock in one day in my life.

Don’t get too scared, we still have plenty of cash.

The following is non-complete list of what we bought:

Colgate
Proctor&Gamble
Johnson&Johnson
Intel …….$15!
Citigroup (We sold this on Monday at $18.70 and bought it back today at $15.)
Bank of America
Coca-Cola
3M
Progress Energy
Bristol Myers
Pfizer
Sysco Foods
Kraft
Duke Power

We also bought a block of Caterpillar. The stock is at $41 down from a high of $96 earlier this year.

AND, a block of Yum brands.