Tuesday, June 06, 2006


Yesterday, red ink flowed throughout wall street. The stock market took a beating. However, if you look at the numbers closely, you will see that the rotation is progressing just as expected. Here is a list of the sectors that were down 3% or more:

Russel 2000
Oil Services
South Korea

Taiwan was off an incredible 5.19%; incredible to those who are not members of the Myrtle Beach Investor Group. As this Group knows, the rotation is out of developing nation and small cap and into developed nation and big cap. Right now, value stocks are generally out performing growth stocks but that too will change as soon as the break out hits.

All the money managers who are trying to get out the same doors at the same time will later be trying to get back in through the big cap growth door. They will be buying stocks such as GSK. GSK is throwing off an earnings yield of about 6% and the company is growing revenues at better than 11%. Without PE expansion, the company should give a total return of 17% this year. However, in this great BULL Market (it started October 10, 2002) PE's are going to finally expand. GSK could easily be up 25% or more in the next year. BUY THE BULL