Blue Chips becoming Value Plays?

[DemonD]

Been a while since I've posted, but I'm lurking now and again. Been blogging on another website (more attuned to stock investing specifics), and rest assured I'm preaching the itulip reality. EJ's piece on the inflation/deflation argument is unfortunately still alive and well; some people just don't understand the influence of debt, money supply, deficits, and trade imbalances. All they see is prices of houses and equities going down and it's "deflation." Hah. I did a quick calculation on the cost of oil which is up about 100% yoy - deflation, really?

Anyway while I've seen a lot of dreck that can be shorted, I'm starting to dip back into the market on the long side. here's a little article from tradingmarkets to whet your appetite if you are at all interested:

http://www.tradingmarkets.com/.site/...ors/-77407.cfm

When times get tough, it is often the smaller stocks, the stocks that investors are counting on for growth, that are most likely to disappoint. When growth slows, not only do investors turn to so-called "recession beater" stocks, stocks that come from companies that provide goods and/or services that consumers will need and pay for regardless of the state of the economy. Investors also tend toward the larger, most established companies that are believed to be better able to withstand the pressures of a weak stock market and a less vigorous economy.

For the record, MMM share price rose 35% in the 2000-2003 bear market (total, not annualized, and before dividends). Of course things like gold, oil, energy, etc. way outperformed your steady blue chippers, but I've come to believe that owning well-run dividend paying multinational companies can at least protect your money and potentially grow it if you find the right situation.

Also a lot of the water and water infrastructure stocks have dropped; my post on itulip select on that should still be alive and well for subscribers.

And finally, I'm too lazy to go look it up but I'm going to toot my own horn when I was ringing the bell for being bullish on oil over the past year.

(PS - the biggest thing that itulip has really helped me with is positioning my 401k, which is my largest source of savings. Since there is no way to go short the market or play commodities in my 401k, I'm looking to basically break even in 2008 which I'm on schedule to do. I believe the market has dropped enough where I'm adding new money to mutual funds to buy on the way down.)

How is everyone doing with their investments these days?

[Jay]

Re: Blue Chips becoming Value Plays?

My Fidelity 403b is entirely in their energy, energy services, natural gas and gold funds. It has been crushing the market for 5 years and as I don't see a change in the way things are, I'm going to continue to allocate this way until the landscape alters. It has been labile at times, but I'm averaging over 25%.

My Roth is in GLD and SLV for tax purposes.

I am long energy, some gold miners, have a large position in SKF and SRS and the Yen in my other accounts.

I still have a dollar position that I wrestle with myself on and really want to diversify into other currencies, but don't feel like I know enough yet.

I also rent and save a ton this way. When I get back in the real estate market, I think I have my wife convinced to buy a large multifamily I can fix up.

Thanks itulip community, a lot.

Oh, I haven't bought any blue chips.

[Basil]

Re: Blue Chips becoming Value Plays?

Others have been calling for a rise in the blue chips for the last eight months. I especially like the one's who said that Citi and AIG were great buys back in December. I also remember many touting the auto industry. So I would tread in very carefully here. The one value play I am thinking of making now is NLY. With a 14% dividend at the current price it looks very good. It is well managed and appears to be positioned to feed on the carnage.