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AT&T ( T) ($41.95, $27.75, $32.00): Fell below investment value. A good pick for a forced choice. Boeing ( BA) ($93.90, $55.46, $21.75): Started downward, as predicted, but only about halfway to a bottom. Caterpillar ( CAT) ($73.57, $59.89, $26.00): Started downward, as predicted, but far from a bottom. Citigroup ( C) ($42.36, $17.75, $46.75): Fell well below its former investment value because neither dividend nor book value was secure. Where is the new investment value? Your guess is as good as mine. Coca-Cola ( KO) ($58.76, $51.03, $22.00): Started downward, as predicted, but far from a bottom. Disney ( DIS) ($34.27, $29.75, $19.50): Still expensive. Du Pont ( DD) ($47.16, $39.48, $26.00): Started downward, as predicted, but far from a bottom. ExxonMobil ( XOM) ($92.14, $75.80, $35.50): My earlier remark stands: "Often traded at a discount to investment value in the 20th century, and that's a long way down." General Electric ( GE) ($40.04, $23.10, $22.50). It became "a 20-something, not a 30-something stock," as predicted, and it's very close to investment value. General Motors ( GM) ($37.60, $8.51, $2.25): The dividend went down the tubes, as predicted. The company may well follow.
Hewlett-Packard ( HPQ) ($51.40, $44.90, $18.20): Started downward, as predicted, but far from a bottom. Home Depot ( HD) ($30.76, $24.99, $22.75): My former comment still applies: "Home may be where the heart is, but it's no longer an ATM, nor is the company that serves it." IBM ( IBM) ($112.28, $114.46, $28.50): See Hewlett-Packard. Intel ( INTC) ($26.30, $17.27, $11.00): Started downward, as predicted, but only about halfway to a bottom. Johnson & Johnson ( JNJ) ($64.23, $66.90, $32.00): "Flight to quality" boost now makes the stock expensive. It is no longer "less risky" than Merck ( MRK), given the decline of the latter. JPMorgan Chase ( JPM) ($45.02, $41.00 $51.50): Looks cheap, but is it really? McDonald's ( MCD) ($56.42, $60.16, $25.00): "Flight to quality" boost now makes it expensive. Merck ($53.11, $30.34, $24.50): It has lost most of its former premium to investment value. Microsoft ( MSFT) ($30.17, $25.01, $8.60): See Hewlett-Packard. Pfizer ( PFE) ($24.07, $17.65, $22.75): Trading below investment value. It may have found a bottom in the high teens.
Proctor & Gamble ( PG) ($70.80, $66.75, $35.00): Former comment still applies: "As safe as they come, and for that reason, a stock that is likely to trade at a premium to investment value. Probable downside is only to about $50." 3M ( MMM) ($86.62, $68.33 $34.00): Former comment still applies: "Basically a cyclical company that does a good job at hiding the fact. As such, the stock deserves a premium to investment value, though not nearly as large as the current one." United Technologies ( UTX) ($72.78, $56.66, $33.50): See Boeing. Verizon ( VZ) ($40.96, $30.62, $33.00): Notes on the "other half" (AT&T) apply here. Wal-Mart ( WMT) ($43.82, $58.45, $25.00): "Flight to quality" boost now makes it expensive. Of the 27 stocks under consideration, my investment value model rates only five as both fairly valued and of reasonable quality: Alcoa, AT&T, General Electric, Pfizer and Verizon. A second group includes statistically cheap stocks of questionable quality -- Citigroup, Home Depot and JPMorgan Chase -- that might be close to bottoms if there are no more "black holes" -- a big "if." A third group consists of expensive, but relatively high-quality stocks that I believe have "only" 25% downside in a Dow 7000 scenario (which is to say that they'll outperform a market that declines by one-third) -- Coke, Disney, Johnson & Johnson, Merck and P&G. The fourth and largest group (over half the total) consists of overly expensive, mostly cyclical stocks: American Express, Boeing, Caterpillar, Du Pont, ExxonMobil, General Motors, Hewlett-Packard, IBM, Intel, Microsoft, McDonald's, 3M, United Tech and Wal-Mart. Of the six stocks that were in the index for only part of the stretch between last October and now, AIG and Bank of America are cheap but of questionable quality, Kraft represents expensive quality, and Chevron and Honeywell are expensive cyclicals. Altria may be fairly valued.