Thursday, October 20, 2005


The BIG BULL is pawing the ground and snorting up a storm. The last time the fundamentals were so powerful for stocks was in the summer of 1982! Folks, we have not seen these prices in 23 years!

On top of the tremendous relative values we have the majority running for cover. One fellows mother just sold all her stocks and put a half a million bucks in fannie mae notes! A broker friend reports that one of his clients just sold out to retreat to treasury bills! Perhaps the best indicator is that Robert Prector is talking about a market crash again.

Meanwhile, analyst such as Elaine Garzarrelli, who looks at fundimental relationships, says the market is undervalued by 30 to 40%! It is always interesting the way the market scares the most in the sectors that will do well for the next 5 years or more. Today, PFE reported good earnings but lowered next years forecast by a few pennies. The stock was hammered. Defensive stocks should do very well in the coming economic expansion. PFE is buy, buy, buy--no matter if Kramer likes it or not.

Right now, there is a rotation occuring. The oil price is in a topping out phase. New supplies will come on line to drop the price all the way below $40 per barrel. It may take two or three years but the time to buy energy stocks was 6 years ago in 1999. Large blocks of big energy stocks are being traded as the market rotates out of this sector. The sector is helping to pull down the whole market. Please note that the earnings for the energy stocks were at rock bottom in 1999 when it was time to buy those stocks. The earnings for the pharmas are near the bottom now and 5 years from now will be soaring. Buy now!