RealMoney Silver - Tech's Still Tempting, and a New Rail Name

Tech's Still Tempting, and a New Rail Name
By Cody Willard
RealMoney.com Contributor
8/24/2007 6:48 PM EDT

The bulls are rightly breathing a big sigh of relief after the stock markets rallied most of this week. We saw big moves in most indices and especially in many individual names, from Apple (AAPL) to Crocs (CROX) , as the markets came back big time from last Thursday's crash-ette.

Here's what this trader's gears will be cranking on this weekend:

I still like SanDisk (SNDK) and Level 3 (LVLT) as trades. Not long any Microsoft (MSFT) right now. I was again wrong and am again gone on the JDSU (JDSU) trade.
What's that saying about wondering why your head always hurts after banging it against the wall but not learning the lesson? Look forward to a couple of tech columns from me next week.

I've started building a long-term investment position in Kansas City Southern (KSU) . I've loved the idea of the company bringing the Mexican economy into the developed world by helping build ports and railroads for distributing goods into the U.S. since interviewing the CEO on CNBC last summer. The stock's come off a bunch in the downturn and I'm starting to build. Thinking this one's a five-, 10-year, perhaps lifelong investment.

I think this hard-core capitalist is going to have to do a whole populist-flavored column on this subject of CEOs calling for the Fed to redistribute billions of your taxpayer money into the banking system in hopes of keeping this mass repricing of assets to a more realistic, fair value so as not to destroy their franchises.
Bad things happen, guys, to all of us. Most of us persevere through the bad times. My businesses all have had to persevere through the horrible times that always come as a result of both my own bad judgments and bad luck.
The economy will be fine without Bear Stearns (BSC) . Google (GOOG) , Foster Wheeler (FWLT) and Goldman (GS) will be OK regardless of whether or not Alan Mulally is the latest CEO to fail to turn Ford (F) around.

And here's where the real populist flavor comes in: Take a look at the last five years' worth of compensation for some of these guys who are now calling explicitly or implicitly for bailouts, courtesy of Forbes.com:

Richard Fuld, Lehman (LEH) : $311 million
Angelo Mozilo, Countrywide (CFC) : $296 million
James Cayne, Bear Stearns: $155 million

I'm all for big pay for performance. But maybe, just maybe, shouldn't these companies have been bolstering their own balance sheets and saving money for the proverbial rainy day that is now pouring down on them instead of paying out billions of dollars per year to individual managers who looked smart in the boom times, and who now are asking the taxpayers who did prudently save to bail them out?

New-home sales numbers are going to be horrid the next few months. When you have a total freezing of the capital markets like we did, even being only the hiccup it's so far remained, you're going to see a real impact on the marketplace. Those anecdotes of how hard it was to get mortgages even for credit-worthy borrowers a few weeks ago impacted demand (even if only temporarily). But that temporary blip, coming in a market that's still seeing inventories climb, is going to be a catalyst for more volatility when the market place freaks out about the backward-looking data that are sure to show that blip in coming weeks and months. Reflexivity lives.

Is it time to short China when The Wall Street Journal features socialist princes on its front page? I mean, you can't make up top-signalers this good, can you? How a Gulf Petro-State Invests Its Oil Riches. Kuwait's new chief has begun pursuing more modern investments, putting the oil-rich nation's "sovereign-wealth fund" at the forefront of far-reaching change in how the oil wealth of the Persian Gulf is deployed.
I'm sorry, but I have zero confidence in the ability of socialist investors and their always politically motivated ways to be successful capitalists in the long run. I'm happy to bet on American capitalism in the long run, not on Kuwaiti princes' investment savvy.
Investing is hard enough when you're striving first and foremost for profits. If I'm right about how badly funds of funds will perform in the long run because of their groupthink and inflexible ways, you can imagine what I think of these quasi-political-tyrannical-socialist empires ability to successfully navigate the wilds of the market. Shorted to you, Your Excellency! (P.S. to Steve Birenberg: Sorry I missed that discussion from your citation of my column from last year on the FoF groupthink movement. I think most FoFs will die a slow and painful death over the next few years or decade.)