Today we were likely saved by bargain hunting after the DJIA was down some 200 points right after the open, yet we barely closed down 30 points after having a brief moment of being positive. This is not characteristic of any sort of implosion in the market and it was very characteristic of what can happen after a 5 to 6 month rally. I also can’t keep from thinking how this brought the markets finally back on sale for the pullback everyone has been hoping for and the global economy doesn’t feel drastically different than it did last week. That takes the "Japanese Yen Carry-Trade" into consideration and it takes into consideration an emerging market economy stock market basket that still needs some more profit taking. My crystal ball is actually in the shop, so the future isn’t as clear as before I dropped it off for a tune-up.
Over the weekend I opined that record margin borrowing, a VERY low Volatility Index (the Vix), a drop in short selling, and the fact that we had run up so much in the markets would require everyone to be in Investor’s Nirvana. I had no idea that a pervasive pullback was coming that soon.
Right after the market closed on Tuesday, we posted our full list of 20 Defensive Stocks for a Crummy Market, and this was actually the "first line of defense stocks." On Wednesday we ran a second tier list of Defensive Stocks since the recovery that everyone was hoping for was not so robust. This was a list of 15, although some of these could have easily been on the first line of defensive stocks.
Shares of Dell (DELL) are down 2% in after-hours to $22.51 on its ongoing earnings and restructuring issues. This one is going to take time to turn around but Michael Dell didn’t come back 100% like he has just so he could be criticized for 18 to 24 months.
Berkshire Hathaway (BRK/A, BRK/B) showed profits up a massive 29% for 2006 as no major storms wiped away all the insurance and reinsurance profits. Interestingly enough, Mr. Buffett even noted that "atmospheric changes" could pose a threat to insurance returns. Some of his newer stock holdings listed were as follows: USG (USG), ConocoPhillips (COP), J&J (JNJ), and USBancorp (USB); but most of these were actually known (particularly USG, one of our BAIT SHOP members).
Tonight I am scheduled as a guest on CNBC’s "On The Money" segment between 7:40 PM and 8:00 PM EST along with Deal Breaker’s John Carney and Eddy Elfenbein of Crossing Wall Street.
Jon C. Ogg
March 1, 2007
Jon Ogg is a partner in 24/7 Wall St., LLC and can be reached at [email protected]; he does not own securities in the companies he covers.
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