It sounds like you’re asking which beaten down stock to buy versus some of the standouts which I continue to hold including BRK and DE. I could see adding to BRK-b at this point as it’s currently oversold. Buffet has bet on the increase in commodity prices (specifically corn and wheat which needs to be tranported by rail) by buying railroads and his recent purchase of Marmon reinforces that long term trend so those kinds of companies are intriguing.
At some point homebuilders and financials are going to be enticing as well as retailers like HD, but it’s still too early IMO unless you have some insight into which homebuilders will survive and which financial has really fessed up in terms of their CDO exposure. I’m concerned that just about all the big financials except GS seem to be looking for more capital which leads me to believe they are worse off than anyone thinks. The only reason to raise funds when your stock is so depressed is because you must be desperate. Citi reports tomorrow and the rumor is that they are going to write down ANOTHER $24 Billion. The good thing about these guys having new CEO’s is that they should quickly write off everything so they can start from scratch. If C has a huge write off and the stock doesn’t budge then maybe financials are near bottom. I’ll still wait and catch the rise versus looking for an absolute bottom.
One thing that I haven’t seen discussed here is that the 10 year yield and LIBOR are both plummeting which at some point should translate into lower mortgage rates and easier resets for those with adjustables. Jumbos haven’t really budged, but I expect that to change once the credit crunch eases. Bill Gross says the FF rate is going to 3%.
