Vox Rationalis

Cramer's Mad Money - Paul Krugman Is Wrong (8/10/09)

On Aug 12 11:23 AM Fred Voetsch wrote:

> First of all most of the people who were bearish also missed losing
> 55% of their portfolio up until March (still being ahead by 35%)
> and most that I know, including me, caugh this rally early and only
> got out after a 20% or more runup.

Oh, really? On March 9, you held a double-short position in the market via SDS (seekingalpha.com/artic...). On May 3, you still held SDS (seekingalpha.com/artic...). On June 15, you STILL held SDS (seekingalpha.com/autho...).

Between March 9 and June 15, SDS lost 51% of its value, and the S&P 500 gained about 35.75%. When, precisely, did you "catch this rally"? I mean, you were short the market -- double-short the market -- on the day it reached 666 and apparently didn't sell, since you thought "the market is overbought and weakening" on May 3.

Perhaps the SDS was a market hedge and you made more on other holdings than you lost on SDS. But to characterize this as "catching the rally" is complete hogwash.

Coverage Ratios: What We Can Uncover in the S&P

"CF has been looking to buy Terra Industries, if the succeed my guess is that their balance sheet will probably tip and take them off of this list."

I don't think so - a glance at their recent financials indicates TRA would be close to making this list if it was bigger.

What this does show is they advantage these companies have in the current environment because of their solid balance sheets. Yes, their stocks have been hit just like everybody else's, but they are in a position where they can take advantage of lower asset values. CF is a perfect example, where it is trying to take advantage of the reduced value of a solid company. All of these companies are likely to be considering acquisitions - for us the trick is to get ahead of them.

Coverage Ratios: What We Can Uncover in the S&P

You need to go back to your data to include companies with zero debt. Apple and Google should clearly be on this list.