If you woke up on Christmas morning and looked at your portfolio and smiled ... well, you probably aren't smiling now. The market has lost over 10% in the last three weeks, and is down over 8% for the year. That's not good, considering it's only January 17. They've got the market out behind the woodshed right now and are having their way with it.
So what to do? Consumer staples are doing well right now, but nothing else is. When people start getting panicky about their finances, they tend to focus on the basics (food, drinks, cigarettes, guns) and sell off everything else. Yes, guns are a consumer staple to some people. Some financial firms have been getting pummeled for too long and are worth a look. BB&T had little to no exposure to the sub-prime problems, got taken down with the others, but is now starting to stabilize as people realize that the write-downs won't happen there. Same with Goldman Sachs, which doesn't rely on the consumer nearly as much as most other financial firms. Take a look at MO and BUD, stocks that always do well when times appear to be rough. Hey, if you're going down in flames, might as well drink and smoke on the way down.
What are we doing? Well, I can't tell you exactly of course, but I will say that everything we do will be hedged. If we are wrong, we won't be very wrong. If we are right, we will do very well. Sort of what a hedge fund is supposed to do.
Johnson & Johnson (JNJ) is actually up since Christmas Day. Guess who makes Vaseline?
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