- the safety of staples,
- a lack of clarity, and
- the peril of owning stocks at all.
Posted at 11:02 a.m., Feb. 23, 2009 A return to the soft goods and staples? One look at your screen today shows that the market has lost faith in a host of sectors. Even in declining flows of cash into equities, the money has to go somewhere. I think it is flowing back to the staples. First, the case against the other large S&P areas. 1. The uncertainty in the common stock of the financials has turned portfolio managers on to the sell side endlessly. As you can tell from the misdirection in the financials that the government is offering, it is impossible to figure out the worth of the common stock. So, with the exception of Morgan Stanley (MS - Get Report), Goldman Sachs (GS - Get Report), Visa (V - Get Report) and MasterCard (MA - Get Report), there is no way a responsible portfolio manager can initiate new positions in the group, even if JPMorgan (JPM - Get Report) and Wells (WFC - Get Report) seem dirt cheap. This is all Geithner's fault, but there isn't much we can do about it. The destruction of the insurers -- Hartford (HIG - Get Report), MetLife (MET - Get Report), Prudential (PRU - Get Report), Lincoln National (LNC - Get Report), Manulife Financial (MFC - Get Report), Genworth (GNW - Get Report), Principal (PFG - Get Report) -- remains one of the most astoundingly horrible sectors of the market. 2. The early-cycle stocks have simply been demolished on the worries about unemployment and the lack of credit. The end of the auto industry as we know it has further damaged the group and the bogus infrastructure story from the stimulus bill is revealing the machinery stocks as companies without catalysts. Same goes for steel, which is in free fall today.