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Picking Some Stocks to Survive This Market

You may want to consider changing your overall strategy for the time being. For now it may be best to focus on short term gains to make up part of what you lost over the past six weeks.

Once there is more visibility or stability (as in a lower VIX), then going back to a long term horizon would seem to be more sustainable. However, if you really do intend to stick with your previous strategy, then perhaps you should be looking at companies that have already taken advantage of this mess and are doing so with a longer time horizon in mind.

A good example would be comparing BAC with JPM. BAC has taken a long term approach, whereas JPM has taken the quick return approach. Not saying that banks are up your alley, just pointing how two companies seem to be taking advantage of the current situation and the different ways they do so.

Should you decide to be more short term focused, as we believe is currently advisable, then an attempt to find the short term winners of the 'national bailout' should prove very lucrative. One possibility is some of the Monolines. Perhaps some energy stocks that have been beaten down so much that their future earnings at - shall we say - $50 a barrel are going to eventually force a 30% PPS increase. Be careful though as not all will jump after reporting earnings.

Besides, there is a very good chance that oil will be up 20% sometime in 2009. The logic is simple. If the 'national' and now 'global' bailout succeeds to stabilize the markets and world economy, then as evident throughout the downturn, every time there was a hint of a recovery, oil started to regain lost ground. On the other hand if the bailout fails, then no stock on the stock market is safe. In other words, if your buying anything, you are betting on the success of the bailout. If such is the case, then why not bet on the stocks that have already proven that they go up when the future is promising?

Notice how the term 'bet' is used and not 'invest'. Reflecting current market conditions is a contagious 'healthy' approach!

As an aside, you must find it ironic that Mr. Buffett advises to buy stocks now (or miss the spring as he put it) as he himself is doing. Now if only Merkel and every other investor could buy preferred with a guaranteed 10% coupon...we would all probably say the same!

Good luck.
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