Financials lead us down and they just might do so again. Below is a chart and my predictions. Feel free to go back in the archives and read what I wrote back in March 2009. The DOW has held up a little better than these financials have the last few months, but that changed the past few days. It could be a sign of things to come. Back in March of 2009, I was talking about the overall market and the economy, but since financials lead us down before, this looks like the canary in the coal mine. Notice the last drop of the past few days right at the tail end of this chart. These financials could be opening act for the DOW correction. If only any of our leaders saw this coming as clearly as I did. Remember, they are geniuses (according to themselves and the media,) and we are just mere ignorant commoners. I hope you made money on it!

For whatever reason, I have good instincts when it comes to the stock market, economy, and investments. I always look at the numbers, but even if the numbers are as good as can be, if my instincts tell me to stay away then that is what I will do.

I often watch TV and see an “expert” on the economy bombard the viewer with data points that back up whatever his or her forecast is. Lets take commercial real estate as an example. The trendy forecast lately seems to be that commercial real estate has bottomed or is in a nascent recovery already. I have seen this forecast made countless times over the last month or two. Had I been on the show when this “expert” gave this forecast I would have replied with this little story.

For the past 12 months I have been driving past a newly constructed strip mall. It looks very nice and has ZERO tenants. For the past 9 months, there has been a huge sign out front saying they will give you 12 months free rent if you sign a lease there. Today, there are ZERO tenants. They are literally giving away free retail space for a year and can’t get one tenant! This is a good neighborhood with good average income and a below average crime rate. Does this square with a commercial real estate recovery?

Inevitably, the “expert” would tell me that while there certainly are still some areas struggling, my ANECDOTE is just that and does not represent the overall commercial real estate market as the “data” clearly shows.

Let me tell ya something…If it ever comes down to my instincts and anecdotes vs. “expert” data or government (BLS) statistics; I’ll take my instincts and anecdotes EVERY SINGLE TIME.

Don’t be afraid to trust your instincts, especially when you have the track record to back it up.

(By the way, be on the lookout for the possibility of a LUDICROUS seasonal adjustment to the unemployment report upcoming. The government can and will make the jobless rate literally ANYTHING IT WANTS.)

Here is a very bearish case for the economy being made by Martin Hutchinson at prudentbear. You can read the whole piece here.

Here is the part where he lowers the boom…

At some point, probably before the end of 2010, the bubble will burst. The deflationary effect on the U.S. economy of $150 plus oil will overwhelm the modest forces of genuine economic expansion. The Treasury bond market will collapse, overwhelmed by the weight of deficit financing. Once again, the banking system will be in deep trouble. The industrial sector, beyond the largest and most liquid companies and the extractive industries, will in any case have remained in recession – it is notable that, in spite of the Fed’s frenzy of activity, bank lending has fallen $600 billion in the last year. Unemployment, which will probably enter the second downturn at around current levels, will spike further upwards. The dollar will probably not collapse, but only because it will have been declining inexorably in the intervening year, to give a euro value of $2 and a yen value of 60 to 65 yen to the dollar.

In the next downturn, the Fed will not be able to cut interest rates, because inflation will be spiraling, as in 1980. Instead it will need to raise them while dealing with a profound crisis in the bond markets. Capital in the U.S. will become still more difficult to come by, and unemployment will approach 15%. The U.S.’s only saving graces will be that the inflation will have prevented much further decline in the nominal prices of houses, while the decline in the dollar will have finally swung the payments deficit towards balance. U.S. real wages will be forced downwards by high unemployment, while banks’ relief on the home mortgage front will be balanced by a tsunami of collapsed credit card debt and other consumer debt.

2011 and 2012 will be very unpleasant years, as the Obama administration struggles to get closer to budget balance without pushing up taxes so far as to cause yet a third recession. Stock prices will be at or below their March 2009 lows, and will stay there even as earnings of export-oriented companies will be robust. (Conversely, retailers dealing in cheap imported goods, such as Wal-Mart, will be devastated.)  Wages will be generally declining relative to prices, although may show some growth in nominal terms as inflation will be considerable. Foreign goods and services will be inordinately expensive in dollar terms.

If he is right, and he certainly could be, then this is bad, real bad. Even if he is close, it is still incredibly bad. If true, it will also mean that Obama will be in deep trouble come 2012. Even the media might not be able to save him if this scenario plays out.

I bet you hear on TV how the market “looks forward.” When it is going down the market is telling us that tough times in the economy are coming, and when it is going up it tells us that things for the economy are looking up.

This is a myth.

Here is the proof. What was the market telling us at 14,000 on the DOW? It was hitting all time highs so by the pundits logic it would mean that the economy was looking good going forward. Uh Oh!

What happened next was a precipitous drop to well below 7,000 on the DOW and the worst recession (depression) than most have seen in their lifetimes. So, how prescient was the market at 14,000 exactly?  

There are many examples of this, but this is the latest that everyone saw.

Here is the truth. In the short to medium term, the stock market has almost nothing to do with the real economy at all. It can go up and down violently with no real correlation to REAL economic strength or weakness. There are countless reasons why this happens and of course you can pick out individual stocks that have their own unique story.

Sometimes the market is accurate in forecasting the future and sometimes it isn’t. It all depends on a variety of factors so each case has to be looked at separately. Just know that the market as a forward looking indicator is not always a good barometer of current or future economic strength.

Expect some good GDP numbers for the next 3-6 months due to an inventory build. The media will then tell you how everything is great now.

After you stop laughing, you can expect slow growth to return after the inventory build loses steam. As discussed here for months, slow growth and negligible net job creation is the scenario for the foreseeable future.

Here is a quick chart I got from CNBC. It is the last 6 months and shows how the DOW has risen while the US Dollar has fallen. So, your stocks have gone up but your purchasing power with the dollars you hopefully earned has gone down.

Here is Rick Santelli today laying the smack down on Steve “command and control” Liesman. Rick is one of the few reasons to watch CNBC these days. Santelli has always been rightfully upset about all the bailouts. Also, notice how he admonishes the corrupt press for not covering the several hundred thousand (at least) that marched on Washington on Saturday to protest debt, spending, and health care.

Last week the White House claimed their stimulus package has already “saved or created 1 million jobs.”

If you believe that statement, then you are too dumb to read this blog and you should not waste your time here. Saved or created is the new term used since net new jobs are not being created. In fact, we are losing jobs every month. The media should challenge this laughable assertion, but sadly they barely challenge anything coming from the White House these days.

The White House says their plan will “save or create” 3.5 million jobs. Well, even if we believe this saved or created nonsense (which I don’t) then $787 billion divided by 1 million jobs created so far equals $787,000 per job! If we take their big number of 3.5 million jobs then it equals $224,857 per job! Only an imbecile or a liar would think this is a good return on investment.

As you can see, I have no ads or anything on this blog. I do not write here to make money. I do not need money from this blog. I do it because many people ask me what I think about the economy and how to invest and believe it or not, I like to help people. People have emailed me and thanked me for my writing as they have made good money the past few months as well as avoided big losses. So, if people don’t want to read what I have to say, that is fine with me. I couldn’t care less.

Now, back in March I was a mere few days off calling the market bottom when I told you I was getting back in. I also predicted the snap back rally and gave you the range amount of DOW points it would be. I also told you then that unemployment would reach 10% plus when the White House said it would be 8%. I also told you to make some easy money by shorting the long treasury bond until the 10 year hit 4% where it would rally again sending the yield lower. Finally, I told you the White House debt forecast would be way off as they underestimated the debt they are causing.

So, if you do believe the White House and their 1 million jobs saved or created nonsense over me then I must ask why you would believe them when they have been wrong, and I have been right? They said if they passed their $787 billion stimulus (1 trillion with interest) we would peak at 8% unemployment. Now it is 9.7% and rising. They said their debt forecast would be one thing, and then had to admit it was off by $2 trillion.

Why in the world would you believe this “saved or created” jobs nonsense? If you don’t want to believe me that it is nonsense, fine. I don’t care. However, what have they done to make you believe them?

Just a quick update since I posted “Look Out Below” on July 22. The S&P 500 was 954.07. Today it closed at 997.08.

As I said, I still think the rally could have more to go, but I am not worried about it either way because I said I have kept my core dividend paying holdings. This way, I take advantage of the rally while protecting myself with cash on the sidelines.

I said then that I was taking off my trading positions, so I did miss out on 5% or so of positive market action but that is really small potatoes after I said I was getting back in on march 13 in the post “What I’m Doing Now.”

I am perfectly fine to wait til the fall with my core holdings taking advantage of any market move up. I have made good money from March 13 with my trading positions so I am ready to buy if there’s another drop in the fall.

I DO NOT CHASE STOCKS. If I miss a big run, then I sit and say “damn,” then I move on to the next thing. Prior to having the ability to do that, I was undisciplined. I made and lost a fortune many times, but now I never lose big because I never make the same mistakes twice.

If you want to latch on to try and get another 10%-15% out of this rally then go for it, but I am not doing it. I am not doing it because I already made my money on the 50% run from the March lows that I told you about here at the Solitude Blog.

If you missed the run, do not feel bad! I have missed countless runs that I still snicker about to this day, so do not worry. Remember, the market can stay irrational a hell of alot longer then you can stay solvent!

Here are some interesting tidbits before the weekend.

The more I look at it, the more I think this rally in the market has been about businesses cutting costs rather than growing revenue, thus keeping earnings respectable. However, they cant keep cutting costs forever. They cant keep laying off people forever. After all, they have cut deep and laid off millions already.

Until revenue grows which then facilitates even higher profits, which then brings new jobs, how can anyone say we have a strong recovery?

It also appears to me that there has been a massive reduction in short interest, meaning shorts have covered thus pushing the market higher. This could suggest the rally is not being fueled by an influx of new money and new investors.

Also, President Obama’s two big issues sans the failed stimulus (waste) package are cap and trade (tax) and health care reform (destruction.)

As cap and trade could be in trouble in the senate, and health care facing trouble just getting out of the house, maybe the market likes the idea of two bills that would do terrible economic damage dying a slow miserable death. I know I do.

As I wrote late last night I believe the downside risk now is far greater then the upside potential which in the short term I see as around 15%. It was late, so this is a little more of my thinking.

I am not selling any of my core holdings. However, today I sold off some of my trading positions into the strength of today’s rally. I am not buying anything new right now. I am in cash and my safe core holdings, so I am ready if we see a correction or a major move to the downside due to the continued weak economy.

All it would take for this drop to occur would be a change in investor sentiment. If investors wake up one morning and say they would rather pay 10x forward earnings instead of 15x due to the lack of growth in the economy, you could see a retest of the march 9 lows. I am not predicting this, since I only predict things when I am 99% or more sure as I was when I said 10 year treasuries would hit 4% and then sell off, which they did.

I cannot say whether we will retest the march lows. Perhaps in the future I will able to say, but not now. Therefore, I am well positioned and prepared for anything.

Today the S&P 500 closed at 954.07. A 15% move up would take us to about 1100, and though I think that is really pushing the envelope, it would not surprise me. Today, the downside risk looks far worse to me and it is not impossible that we revisit the march lows which would mean a 30% correction from here. There are some very dire predictions out there about breaking down below these levels and I think it is very possible. No matter what the market does though, the real economy will be very weak for a long time even when it stops contracting as the recovery won’t be robust. The term jobless recovery will be an understatement. This is my warning to you. Be careful.

The strength in the stock market since March 9 when I posted I was jumping back in despite a weak economy has been incredible, but there is no corresponding strength in the real economy today and the government is making it worse. Industrial output as plummeted. We have to understand that we just lost about 467k jobs last month. The peak of losses so far per month was around 651k, so the pace of job losses has fallen but there is a problem. This means that literally millions more will lose their jobs before this is over. 467k multiplied by the remaining 6 months of the year alone equals about 2.8 million more jobs lost. Sure, the rate of decline should slowly improve so we won’t lose 467k every month, but job losses could easily last longer then 6 months anyway. I will say it is a guarantee that at least 2 million more people will lose their jobs and that is my optimistic scenario.

Now, you should know that I will not sell all my stocks. I am not the type to say sell everything and get back in later except in the rarest of circumstances like last year. I have a core group of holdings that pay safe dividends. I also have holdings that I trade. I take advantage when the market begins to sell off because I always have a huge amount of cash sitting on the sidelines ready to jump in at depressed prices. This has grown my safe core holdings and given me huge profits on my trading opportunities. It is a discipline I have learned, and I apply it ruthlessly.

Here is an example. Goldman Sachs fell to below 50 after falling from 150. Today, it is right back to around 150. MGM Mirage fell to below 3 and then bounced to 13.  Now, if you had put all your money into the market, you would never have been able to take advantage of these huge drops even if you knew they were great buys which they were. This is very frustrating when you know you are correct in your call but don’t have the money to act on it. So, always have cash on the sidelines!

This is a chart I quickly took from Yahoo! Finance and then added some things. It is the S&P 500 from about 1949 to today 2009. I approximated the years due to the large time frame covered and I could easily alter the years a little to be more precise, but for this discussion that is not necessary. It represents something known as cycle theory. If I had made the chart larger you would see another bear market prior to this chart, and yet another bull market before that. As you can see, there is a clear pattern of long bull markets and long bear markets.

Analysts, economists, and market watchers always disagree over the market so I can only give you my take on why this occurs. I think two factors are mainly responsible. The first is human nature. Inevitably, we over indulge, thus pushing our economies to the brink based on too much debt and over consumption. Eventually, the bill comes due and then we bust. The second reason is government incompetence. You should know that these long bear markets coincide perfectly with terrible government economic policies. While the government could never stop a bust from occurring, they can and do prolong the bear markets by interfering with the economy. Currently, we have an out of control government that is firing CEO’s, nationalizing huge companies, bailing out others, borrowing unprecedented amounts of money, and then spending it irresponsibly. Hmmmm, sounds like this fits perfectly doesn’t it?

Here comes the problem. If this holds true, then we could have another 6-8 years of an essentially flat market. From here, it could be down a little, or up a little , but it won’t make new highs if this cycle theory chart holds true.

While I disdain about 90% of the media as they are corrupt to the core, I do think Investors Business Daily is worth a read. Their polls have been very accurate, their financial news right to the point, and their editorials are sharp and interesting. Their new editorial is on George Washington, Sarah Palin, and the media reaction to her. You can find it here.

The editorial points out that George Washington quit the Virginia militia. So then according to all the “experts” in the press and punditry, George Washington was a “quitter.” Well, if their logic is correct then we might as well take him off the one dollar bill. Think about what would have happened if the media of today existed back then? The editorial pokes fun at this idea and the absurdity of it. The media would have attacked the man that we know today as arguably our greatest president. By the way, if the pundits and “experts” are right about Palin being a “quitter”, and therefore Washington was a “quitter” too, why would we want a quitter representing us on our currency? I assume then they want him removed from it.

Of course, that is lunacy. Neither Washington or Palin are quitters. Were their decisions unorthodox? Sure. Were their decisions bad? Well, Washington is on the one dollar bill so it doesn’t seem to have hurt his career or legacy and Palin’s final chapters have decades to still be written.

Orthodox thinkers rarely make history and rarely get rich. I could go into great detail about Sarah Palin’s reasons for her resignation and why she was correct to do it, but that is not the point of this post. The point is, “experts” and elites in the political and media classes should not be seen as the fonts of all knowledge. If they are so smart, why are we over 11 trillion dollars in debt with 10 trillion more to come at least? Why were their predictions so very wrong about our economy? Yet, you can read right here at this blog what I wrote months ago and it has all come true.

Most people who want to be investing professionals go to top ivy league schools for finance or business. They work at financial firms. I went to an all commuter college in Chicago and majored in English. I am not a super genius, but I think out of the box and never follow the herd. I lead the herd in my investing. I get out ahead of others. I see things before others do. That’s why I succeed. Palin sees something too.

So the next time you see an “expert” on TV making predictions or trashing someone, keep in mind what their agenda is. What credibility do they have? Do they have an axe to grind? The other day I actually saw Bob Beckel trashing Sarah Palin. You should know that Bob Beckel was the campaign manager for Walter Mondale. You should also know that the Mondale Campaign lost to Ronald Reagan by a margin of biblical proportions.

Reagan 525 electoral votes and 49 states.      

Mondale 13 electoral votes and 1 state.

So why the hell would anyone listen to anything Bob Beckel says? The guy is a loser who had no success at all. I could have won 1 state and so could you! Yet, he is put up as some kind of political “expert.” Shocking. I research these things before I take investing advice to heart, and you should do the same whether investing or voting.

Don’t be afraid to be unorthodox. History is full of people who do their own thing, so do yours. Next time the pundits are making proclamations, say “thanks, but no thanks.” However, you could take the more diplomatic approach I use.

“Shut the **** up.”

Barack Obama promised during the campaign that you would only pay higher taxes if you made over $250,000.

Today the United States House of Representatives voted and passed by a vote of 219-212 a massive climate change bill. This bill will tax energy producers and green house gasses. Hopefully, this bill will die in the Senate. If it does not, this country will suffer more then you can possibly imagine.

By the way, not one member of the House read this bill that is around 1200 pages long.

Now, what does this bill do? In short, this bill will increase taxes, and by extension the cost of energy for everyone in America. As the energy producers costs rise, so will your costs as an energy consumer. This is basic economics. Energy costs are factored into every product you buy. The people who championed this bill are Barack Obama, Nancy Pelosi, Steny Hoyer, and Joe Biden among many others who are too many to list here. If you voted for any of these people, then I hope you enjoy paying more for gas, electricity, and food. You have only yourself to blame. When its harder to feed your kids, don’t come crying to me. If I were you I would call the White House and ask them to cover your monthly shortfall.

After all, Barack Obama promised you would only pay higher taxes if you made over $250,000. Well, today that lie was exposed yet again with his support of this cap and tax bill. Barack Obama lied to you, and if you still do not realize that then there is no hope for you at all. Sadly, this lie was spread throughout the media during the last campaign and was never strongly challenged. People like Sarah Palin predicted it, but the media will never acknowledge that.

This is where investing comes in. If you do not understand the simple fact that you were lied to, then becoming a successful investor is virtually impossible. What gives me an edge when I invest is that I know the truth, or I am as close to the truth as anyone can be. Without the truth, getting rich through investing is nearly impossible and not much fun, unless of course you enjoy losing money.

So, we have a congress that doesn’t read a bill that will raise your cost of living and then votes for it! Do you think that is OK?

I make my living as an investor and therefore I have to be somewhat good at it or I don’t eat. I am more then ready to invest and make money off this stupidity, and I hope you are too. If not, then you have only yourself to blame if you voted for these people. Hey, I’ve made mistakes in my life and each time I suffered because of them. Maybe this is your time to learn.

We will see what happens in the Senate.

The misery index is the unemployment rate added to the inflation rate.  Currently the unemployment rate is 8.9% and inflation is essentially zero. This makes sense given the wealth destruction we have seen. However, the money supply has exploded and the government is spending trillions of dollars they currently don’t have. High unemployment will be a fact of life for a while sadly as I do not believe the governments actions will create jobs, so the only question now is whether the trillions will trigger inflation. What makes this so amazingly bad is that we could very well go from a deflationary spiral right to an inflationary one. This is truly a unique period. I think more inflation is a safe bet as is higher unemployment which means a higher misery index. It isn’t hard to see the misery index back at 15 or higher. All we need is unemployment at 10%-11% and inflation and 4%-6%. That is doable in the next few years.

I am buying commodity based stocks. That is, stocks that react positively to rising commodities prices which will happen as the dollar is devalued. Stocks like John Deere (DE) and Transocean (RIG) will benefit as agriculture and oil increase in price due to the weak dollar and demand increases as well. I would not be surprised if either missed earnings short term, but would use that as an opportunity to get in cheaper. I am also buying gold (GLD) on dips. I view my gold as an insurance policy. If I am wrong, it will drop some or stay flat but I will be able to sleep better knowing I have it. If I am right, it could be a huge gain as the misery increases.

If inflation does return in a big way, we better pray those trillions we spent at least reduce the unemployment rate. If not, the misery index could return to 1970′s levels. I am glad I was born in 1982 so I missed that debacle.  Ronald Reagan rescued us and crushed the misery index from 20 that he inherited to 9 using real tax cuts, sound monetary policy, sound fiscal policy, sound trade policy, and spending money on things that worked. Winning the cold war didn’t hurt either. 

No one in power today at the federal level has the intelligence to deal with this misery that is barreling towards us. Incredibly, we still have time to stop it, but these people won’t. They will thrive on this misery and use it as further justification to grow government, but they won’t tell you that’s what caused it in the first place.

If you hope to make money long term as an investor it is vital you understand how the United States economy can be most effective. A book that I feel is a must read is “The End of Prosperity” by Arthur Laffer, Stephen Moore, and Peter Tanous.

This book provides a spirited straight forward explanation as to why low taxes and less government is the path to prosperity and why high taxes and big government are the noxious fumes that suffocate our economic growth.

It is extremely relevant given the “Tea Parties” that occurred a couple days ago that among other things protested out of control government spending. If you want to know what will happen to your state, your hometown, and your country if our Reagan capitalist boom model is jettisoned then take a good hard look at how messed up California is right now. This is discussed in the book, and clearly outlines how millionaires have left California at an alarming rate for several years to escape oppressive taxes. Once they left, the state lost major tax revenue so the government raised taxes even more thus facilitating an exodus that would make Moses proud. Now they have deficits that rival some countries total GDP!

Anyway, if you want to be educated on some basic economics or want to read why low taxes are the solution, pick this book up.

Treasury bond yields will have to go up alot given the reckless spending our government is engaged in. The Obama budget is insane and will lead to higher yields as we finance our deficits with more treasuries then ever before. This will continue for several years to come. Be alert for this and do not get burned as treasuries fall and yields skyrocket. I would short the long treasuries by buying (TBT) which is a short ETF that goes up when treasuries fall and yields go up as I am predicting will happen. You can hold this long if you would like, but I would get out when the yield on the 10 year gets around 4%. This is because the economy will still be very weak and people will demand bonds. Then as it comes off the 4% level you can get back in, after you made some easy money.

Northrop Grumman (NOC) closed Friday, March 13th 2009 at $36.57, almost 60% below its intraday high of 85.21 on November 7th 2007. Is this the result of something ominous on the horizon for the defense giant, or is it just one of many victims of the broad market sell off that has occurred over the last 12 months? I lean heavily toward the latter. I can find no massive loss of revenue or scandal that warrants such a price correction. It is true that Northrop has been involved in the circus that is United States politics in regards to the Air Force tanker refueling contract. In fact, Northrop and EADS winning the original contract was seen a huge surprise and was a bonus. Had Boeing won the contract as was widely predicted, Northrop would not have seen a major long term sell off. Now that is still in limbo, but I do not see significant downside no matter how it turns out.

While boasting a 3.40% dividend yield and trading 60% below its high, Northrop seems quite attractive to me. There is some risk of a new administration scaling back weapons purchases, but no president is getting rid of nuclear powered aircraft carriers anytime soon and when it comes to that, Northrop Grumman is the only game in town. To be clear, I fully expect the Obama administration to make big defense cuts but I believe they have already been factored into the price. They will also replace some cuts with purchases in other areas. Simply put, the world is a dangerous place and investors need to protect themselves. Looking back at some historical prices from years ago, I discovered that one of the greatest days this stock ever had came on one of the worst days for the market and our great country.

On September 10th 2001 the DOW closed at 9,605.51. After the horrific events of September 11th the market reopened on September 17th and closed at 8,920.70. This drop of 684.81 was enough to scare the most seasoned investors. About a year later the market fell to well below 8,000. As we always do though, America and the stock market roared back from 2003 to 2007. The question remains though, how do we protect our portfolios from such a jarring terrorist attack in the future?

While the DOW was diving almost 700 points on the day the market reopened after the attack, one stock soared over 15% and went even higher in the coming weeks. That stock was Northrop Grumman. They build aircraft carriers and other things that go boom and have been a good long term performer. With hindsight it is easy to see why this huge pop happened on a day when almost everything else tanked. Looking for a safe haven, investors concluded that the USA was going to make someone pay for killing our citizens no matter what the cost and Northrop Grumman was as likely a candidate as any to benefit. While it will almost always be a decent long term performer, any type of national terrorist attack or global instability in the future will benefit companies like Northrop Grumman in a big way.

This might seem a bit unethical to some people by essentially profiting off tragedy. I do not follow that logic as I must point out that this is the harsh reality with which investors are faced, and there is nothing wrong with protecting yourself. If I had to trade a 15% increase in a day for the World Trade Center and 3000 American lives, I would forfeit my capital gains in a heartbeat, but since none of us can predict the future or control events we should be prepared for any and all eventualities. If you want to sleep well at night knowing your portfolio is safe, do what I do. Get some defense stocks like Northrop Grumman, and pray that nothing bad happens.

I am heavily invested in the defense sector and it will remain a stalwart in my portfolio.
I own shares in…

Northrop Grumman (NOC)
General Dynamics (GD)
Boeing (BA)
Lockheed Martin (LMT)
Raytheon (RTN)

Though I am pessimistic about our current economic prospects due to inept government policy, I remain a long term investor because I still have hope that we (America) will come to our senses eventually and that the market will heal itself in time. How much pain we face in the meantime is up to us though.

It would not surprise me at all if the market fell another 20%, so I am keeping some cash in reserve to take advantage if prices fall. However, I believe picking a bottom is almost always a fruitless endeavor so I have begun initiating positions in commodities and equities. I have been entirely in Cash and Short Term Government Bonds for the past 6 months which was highly unusual for me. I recently liquidated my Bond positions.

I am now keeping an eye on Gold (GLD) and Agriculture for possible entry points.
I have bought positions in…
MO,BP,NOC,LVS,MGM,T,NTGR,CHK,RIG,DE,UA,INTC,COP,DHIL,GD,BA,LMT,RTN,GROW