Thursday, April 1, 2010

Insurance Stocks Among Largest Benefactors From Fed's Largesse

I continue to look at my watch lists and scratch my head at this rally... the type of "growthy" stocks I normally stick to are not doing much the past 3-4 weeks [excluding of course the "go to" momentum stocks for institutions like Apple, Priceline, Baidu et al] but the market keeps stair stepping up.  This is because most of the action in the cyclical areas - we've mentioned consumer discretionary, industrials, and financials as the "playbook" for recovery.  [Mar 7, 2010: CBSMarketwatch - Riding the Rally, How to Money in the Bull Market's 2nd Year]  Lately, I've highlighed staffing companies, airliner production companies, and today we can sneak a peek at the insurance sector - all have shown great moves, but certainly are not our standard fare.  I haven't even touched on autos - who knew I'd be wishing for an Automobile ETF. Outside of REITs, the insurance group might be the most awe inspiring turnaround in a year.*   The debate at the time was if insurance companies would be the next bailout recepient as balance sheets full of stock holdings and commercial real estate exposure threatened to send these firms into death spirals. [Mar 12, 2009: WSJ - The Next Bailout Choice: Insurers]

*I am excluding financials which by government decree have been protected by the full faith of the US taxpayer.

And then... then... He arrived.  He came to us with green shoots... and printing presses....and all the ills of the world were solved.  The first 'recovery' (nominal) in history not solved by the base economy but by financial innovation of the highest sort!  P-cubed was here.... it's amazing what (more than) a few trillion can do.  [Jun 3, 2009: A Country that Cannot Function Without Easy Money] [May 19, 2009: Paper Printing Prosperity Defined]

Insurance Sector ETF - KIE

Almost a year ago I was shorting Prudential (PRU) ... in the mid $22s.  Whose laughing now?

In March 2009 Lincoln National (LNC) was imploding... Principal Financial (PFG) was making outright salary cuts. 

Hartford Financial (HIG) a year ago? Fughetaboutit!

Even the most solid of insurance companies - Metlife (MET) - who never was at threat in 2009, is now acting like a Chinese solar stock circa 2007.

As Mr. Cramer says, there is always a bull market somewhere almost everywhere.  Just imagine what prosperity Ben could create if he handed us another $2-3 Trillion... why not $10 Trillion at this point.  Cmon Ben... feed us.
No positions unfortunately

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