As we continue to wait on a possible 5-10% correction in the market, I wanted to follow up on some comments I made over the past few months.
As far as the market is concerned, I think that the first half of the year will bring some very rewarding trading opportunities. It痴 the last 6 months that worry me.
So, that being said, we will use any pullback of 5% or more to position ourselves on the long side for a tradable rally into the spring.
HEALTHSOUTH SCANDAL
A few weeks ago, I commented on how former Healthsouth CEO, Richard Scrushy saved his hind end by putting together a publicity campaign in Birmingham, Alabama that eventually allowed him to walk on some very serious charges.
A few people with whom I have spoken to say the evidence against Scrushy was massive and together with his attorneys, the defense in mounted a publicity campaign that fooled the jury and the public.
Now we have learned that a Birmingham News reporter, Audrey Lewis, who wrote stories sympathetic to Scrushy, was paid $11,000 from a public relations firm to write those articles.
See, if you have enough money, and power, you can manipulate anyone. The ballgame is not over however. The Feds will re-try Mr. Scrushy with some holdback evidence; the difference of course is the trial will probably be held in Atlanta.
GENERAL MOTORS
The company cut its dividend in half to $1 a share, and cut the salaries of its chairman and senior executives by 50%. Sometimes I wonder if these guys are reading my comments.
On January 23rd I said;
"The problem with Ford and GM is they have executives who are obviously intelligent, but have no common sense."
"To get labor on your side, at least attempt to show them you池e serious. A good first move would be this. If you want to cut labor costs by 50%, cut all executive pay by 50%."
Now lets see if they follow through on the rest of the equation.
CONSUMER STAPLES FOR THE SECOND HALF
A few Consumer Staples stocks are very cheap. One of the reasons these stocks have been week is the will remain out of favor until the second half of the year.
Two of my favorite stocks right now are Anheuser Busch (BUD) and Coca-Cola (KO). I realize how boring the staples stocks are, but in a few moths you're going to like boring stocks.
ANHEUSER BUSCH (BUD $40.30)
If you ever wanted an opportunity to buy at a better price than Warren Buffett, nows your chance. I have been building a position in BUD for a few months now.
As the economy pulls back, consumers will begin to worry and want to drink. Since wine and liquor are expensive, consumers will sit back and reach for a BUD. For dieters, the will ask for the low carb Michelob Ultra.
BUD is more than a beer company. In fact, the company is one of the largest theme park operators in the country. Some of its businesses include 3 Sea World parks, as well as Busch Gardens. In addition, the company does own some liquor brands as well.
COCA-COLA (KO)
Today KO announced a 28% drop in Q4 profits on higher marketing costs and taxes related to repatriate foreign earnings.
From current levels, I feel KO has nowhere to go but up. The expectations of analysts are low, and the company will not have much of a problem exceeding expectations going forward.
Insiders like accumulating the stock around the $40/ share level. There has been not been any insider selling in this stock since 2004.
