Comments on Fund My Mutual Fund: Market Erosion

Yes legendary Bill Miller was saying to buy financ...

2007-11-21T17:16:00.000-05:00

Yes legendary Bill Miller was saying to buy financials and housing stocks and other deep value stocks for a 5 year hold. I think its a bit early for such things

in terms of value the issue is 2008 estimates are still too high so its a value trap. And for financials in specific who knows what their true earnings are - even they don't know. They are due for a bounce but they are impossible to analyze because how much of their past earnings was due to trading what is now junk. That business is now gone. This is why they are called black boxes - you cannot look into their vault and see how they truly make money. So impossible to trend their future... further anything tied to the consumer will be in trouble in 2008-2009, so what looks cheap today could look expensive in 9 months as earnings degrade for these companies. Its a tough way to go. Eventually when things calm down money will flow back in but I would assume instead of chasing beaten down junk whose 08 profitability is seriously in question it will go to companies with no such issues, but thats my thesis only, we shall see.

I also noticed that so called "value" stocks have ...

2007-11-21T17:07:00.000-05:00

I also noticed that so called "value" stocks have taken a beating. I'm not sure how low the financial stocks could go but I expect a bounce here soon as many of the internals seems oversold.

true but not all bottoms are the samethere wasnt a...

2007-11-21T16:46:00.000-05:00

true but not all bottoms are the same
there wasnt a capitulation really in Feb 07 and the sell off in Feb was very different than Aug. So sometimes we look at the most recent event and think things must be like that time frame.

2002 was an entire year of grinding down,sparked by sporadic rallies. but not a lot of capitulation. Just desperation and giving up. So it can be very different every time. I would agree if they finally give up on Google, Apple, et al and those guys bust their 50 day moving averages we would probably be in capitulation but truth be told is we are starting to get some very good values. CF Industries is growing >50% in past year and next year and is trading at 12x 08 estimates. hah
I guess it could go to 8x earnings? or 10x? seems a bit outrageous but who knows.

What scares me is that many stocks are near August...

2007-11-21T16:36:00.000-05:00

What scares me is that many stocks are near August lows yet we have not seen the capitualtion that so often is needed for a bottom to be in place.