Tuesday, June 23, 2009
(Cont'd from above)...

Jim (cont'd):   

Or how about the housing statistics out this morning... where we heard, once again, how homes have become incredibly cheap year-over-year... in the key, once overheated markets of California, Florida, Arizona, and Nevada which, by the way, represents about 50% of the housing market... homes are down 40% year-over-year! The National Association of Realtors, in its release this morning, reminded us that the cost of money is down 20% year-over-year.

How about the cost of food?...

Again, let's go back to the Kroger call... The supermarket king said it saw a double-digit growth in store brands year-over-year, and store brands are fully 50% cheaper than name brands...

Cheaper is better!...

How about the cost of heat?... Remember that fella last night who called in, asked if he should lock in fuel pricing... He was using oil, and almost no one uses oil in this country anymore... I heard a bunch of guys slash earnings estimates today for natural gas stocks. Why? Because the fuel that heats 63% of America is down 70% year-over-year...

How about car prices?...

When you read about these dealer closings, you think about the people laid off... and that's right... But what about the price of cars? Posted price? It's become meaningless. My guys are saying prices are down 20% on cars where there have been no deals. But who knows what kind of deals you can cut with GM and Chrysler, especially with their dealers who are being sacrificed. I don't know about you... I actually have friends buying cars just to take advantage of the lower prices, even when they own one...

Check out clothes...

Listen to the retail calls! I do. Inventory overload caused prices to be cut 30%, 40%, 50% at some stores. Just today, in a terrific story in Bloomberg, Saks was telling people about the desire to cut back on ordering of expensive clothing, because they've had to give stuff away, year-over-year... That's right, they've had to give huge cuts in the price of merchandise.

Why bring all this "year-over-year" stuff up?... Because, amid all the endless gloom that surrounds us, with the pessimism that weighs on the market endlessly... I read your email... we have to remember that we've had tremendous deflation year over year... and that's a positive, not a negative.

If you have kept your job... and I know that's a gigantic issue for 10% of the population... which is up big from two years ago... then you're looking at real bargains right now... bargains that we never seem to factor into the gloom, and that's wrong... cheaper is better.

I want to point this out now, because what has occurred to me is that what's happened in this country is that essentially we've endured a dramatic one-time sale... a gigantic sale on everything, and it should embraced saluted as positive, not dismissed as negative... In fact, the only thing that I follow that's up year-over-year... that costs more... is healthcare... and, if you heard the President talk today, you know we've seen the peak in these costs, and you know he's right.

All of these declines matter, because we've heard repeatedly how precarious this recovery is, with gasoline about to spike... and mortgage rates about to spike... food costs spiking... everything spiking...

I look at the world more positively. I think that, while things have not gotten better for many of the companies that I follow, or for many consumers... certainly for the people who have lost their jobs... but for the people who have kept their jobs, for the people who are looking for a home, looking for a car, looking to buy clothes... looking to fill up for a vacation... things are actually improving.

Perhaps the stock market that's down 32% year-over-year isn't down enough to be cheap versus the improvement, but there are plenty of stocks that are so cheap compared to where they were last year, that I think it's worth pointing out these bargains too...

They weren't on a conference call, but I'll give them to you...

Bank of America (BAC*), down 52% year-over-year. That seems cheap to me. I've been buying it for my charitable trust, ActionAlertsPlus.com...

How about CSX Corp. (CSX), the best run railroad in the country, down 49% year-over-year. It seems a little harsh to me...

BP plc (BP*), down 31%... That's a sale, no question... one I would like to pick up for ActionAlertsPlus.com, my charitable trust, but I can't, because I keep talking about it so, therefore, I'm frozen...

Look, I am not being a Pollyanna... I know we have severe problems. I am simply pointing out that, compared to how much cheaper just about every kind of merchandise has become, the things that are allegedly threatening the recovery are miniscule. They're just something to talk about daily, because we've got to talk about something...

Rates are still down huge, and we got a great bond sale today. Housing prices are down huge, food prices are down huge, fuel prices are down huge... and, yes, stock prices are down huge. And yet, we never hear about the sale. No one ever says that cheaper is better...

If this place were a shopping mall, we'd all be buzzing about the sale...

But no one's listening to the conference calls. I know, I can't blame you. Was the Kroger call exciting? In my world, yes. But my world is populated by the 57 people in my head. No one's reading the press releases, but I can't blame you. I'm the only one that ever reads the press releases.

Only on these calls and through the press releases can you figure out the cost of the stuff that regular people buy. I've been saying that we need stock prices lowered in order to stir up more interest, but we just had a pretty classic decline in the last 7 sessions. I've been telling you to wait for the decline to run its course...

I can't give you a good catalyst right now, although Oracle Corp. (ORCL)'s got a good number it reported after the close in the market. That could trigger a tech rally...

I understand those who says that stocks overall are still too high. Nevertheless, the litany of lower prices should at least make you consider that, while the prowling bears might be cognizant of real problems, they are totally oblivious to the fact that almost everything, including stocks, is dramatically cheaper year-over-year. That's good. Cheaper is better.

And, in light of the across-the-board, nationwide sales, some of the negatives you hear bandied about by armchair investors are absurd... The idea that inflation is an issue? Fanciful. The idea that rates are going to be shooting up in this environment? Totally unrealistic. And, while the idea that the recovery won't happen because of rising prices everywhere, makes a ton of sense if you look at where those prices were three months ago... If you look at where they were year-over-year, like they were on the Kroger conference call, you've got to be thinking, I sure would love to lock in those low prices for something, because they're so darn cheap compare to where they were... You can't lock them in for fuel... you can't lock them in for food. It's hard to lock them in for housing, unless you're buying.

Well, wait a second... guess what? I know one place you can lock in these incredible fire sale prices... You can buy some stocks with accidentally-high yields like Verizon (VZ), which is at last on the move... or a stock like Bank of America (BAC*), or a stock like CSX Corp. (CSX)... cut in half... something that makes no sense with easier comparisons coming, and with a consumer who can't be as strapped (for cash) as the headlines say, simply because the bills the consumer pays aren't nearly as staggering as they were a year ago.

Here's the bottom line...

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The Bottom Line!:     Don't ignore the fact that virtually everything you can buy is amazingly cheaper compared to where it was a year ago. That's great for the consumer, even though you never hear about it... and those sales extend to stocks too. Don't let the bears frighten you away from these bargains... because this market will eventually turn into Century 21, a store in downtown New York, where you have to fight off the other customers to get at the best, low-priced merchandise... and, as you can tell from this tie, I usually win.

[verbatim recap]

[end of segment]

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