Thursday, September 13, 2007


It may be too soon to go "all in" but I am virtually all in right now. The numbers show that I could be off by weeks or even months but it's not likely. In prior times of financial stress, such as 1974, 1980, 1982 and 1987, when the short term t-bill dropped like a rock even though the LIBOR rate stayed high, it was time to BUY, BUY, BUY! (A hat tip to Mark Dodson for the historical perspective.)

Insiders are buying. They too can be early. Indeed, the first reduction in the Fed Funds rate has sometimes been early (2001 for example), but it does not pay to try to time the market precisely. It will be hard to climb on board after the first surge in prices because there is still a lot of bad news to come from Congress, from Iran and from the credit markets.


Two or three days ago, I wrote about how the consensus earnings estimates for CAL had been increased from $4.24 to $4.38 to $4.45 and about how the 2008 estimate was raised to $4.96. Guess what? Others have climbed on board. Tuesday the consensus moved to $4.51 and today it moved to $4.57. The 2008 estimate is now up to $5.11. The forward PE is 6 times!

The number of buy ratings is now up to 11 and the number of strong buy ratings is up to 3.

My palms are sweaty and I am trying to keep a solid poker face while I wait for the "river card". The good news is that I still have time on my side. If the FOMC decision next Tuesday does not spark the fire, I can wait for Congress to end its budget fight in October. Sooner or later, with the dollar at all time lows, the FOMC must do what ever it takes to goose the economy. GO FED GO!