- the stocks that will benefit from year-end buying;
- why the market hasn't topped out yet; and
- why the banks at last have clear skies.
Expect Year-End Buying in These Stocks
Posted at 4:47 p.m. EST, Friday, Dec. 10 People are gonna wake up Monday morning and try to figure out how they can put some money into this market. Believe me, the investor psychology when they hear new highs and see the runs in some of these stocks will cause money to flow in, not flow out. In the meantime, those who wanted to sell because of the prospective tax law changes are now trying to figure out how to get back in. What will they buy? I am sure much of the money will be indexed, people who want exposure to everything. But I believe a lot of it is going to go into the winners, the stocks perceived as great gainers that are also household names. > > Bull or Bear? Vote in Our Poll Here's a couple that I think will get money thrown at them:
- Ford (F - Get Report) and General Motors (GM). Both are regarded as bedrock names that can be bought with lots of faith that the future is brighter than the past and that dividends will be coming.
- General Electric (GE - Get Report) here is the quintessential old-line name that has just boosted the dividend, and people love that these days.
- Citigroup (C): Is there a person who doesn't know that the government is at last finished selling? The $4 price will be too juicy to ignore.
- Amazon (AMZN - Get Report): There's a lot of "Buy where you shop," and I sense that Amazon is going to be in incredible demand right about now. It's not an easy name to buy a lot of shares of it, but it makes too much sense for the public not to pile into it.
- Verizon (VZ - Get Report): People know that Verizon Wireless is going to get the Apple (AAPL) iPhone. They like the yield. They like the price action. They want something that is good and solid and can boost the dividend.
We Haven't Reached the Market Top Yet
Posted at 1:22 p.m. EST, Friday, Dec. 10 We've not seen the highs for the year. It's become quite fashionable to say we have, but when I look at the dearth of news and the breakouts -- whether they be in transports, banks, oils or the housing index -- they translate, in my opinion, to higher S&P 500 and Dow prices. Doug Kass mentioned earlier that there were
Banks Are Officially Out of the Woods
Posted at 2:58 p.m. EST, Thursday, Dec. 9 We are there. Day three of a three-day bank rally. We have broken the spell. The rise in interest rates, so potentially good for the gross margins of banks because of rising net interest margins, the holy grail of bank investing, is being viewed as the clarion call to buy, just as it is being viewed as such for the insurers. The mortgage mess? Not considered to be nearly as toxic as we thought, especially with Fannie Mae now out there willing to negotiate principal reduction terms. The second-lien worries from home equity loans? A canard. Written off. Totally in the stocks, except from where the media are concerned. WikiLeaks? I think that unless they have a memo which says, "Let's steal from everyone and lie to the Congress about it," this will be ho-hum. The mortgage putbacks? These are all litigation issues to be handled one at a time and will not only not overwhelm the banks but will be worth no more than pennies a share, even for Bank of America ( BAC - Get Report). Remember the clues: Home Depot ( HD) is saying that people are putting money back into their homes. They do that when they know they can increase the value of their homes. We know that taxes aren't going to soar for people who have problems making their mortgage. We know that unemployment benefits are going to be extended for people who are having problems making their mortgage. We know that with far fewer homes being built that can actually replace the naturally lost stock that occurs every year, let alone the million people historically who need to get new homes because of divorce or families that now too big to stay under the in-laws' roof, we need intact homes to sell. Who has more of them than Wells Fargo ( WFC - Get Report) and Bank of America? Most important: I think that the press itself is sick of the story. The editors don't want any more stories about mortgages. They are sick of them. People have stopped reading them. They are at last into "Find me another scandal" mode. In the meantime, outfits like Goldman Sachs ( GS - Get Report) are coining money on stocks and bonds and currencies. Credit has gotten better and better. And the banks are all about to play defense with their excess capital, capital that we know will not have to be replenished, because the people who make the capital rules are far more worried about breaking the insolvent European banks than about trying to give JPMorgan ( JPM - Get Report) a hard time. It's been a long time, but this morning we initiated a position in a bank for Action Alerts PLUS. Stephanie Link and I have been waiting for a rally that had some staying power, one that would most likely make the Meredith Whitneys seem like broken records or tune-changers -- why shouldn't she declare victory while she still has it? It is time. The three-day winning streak is upon us. The dividends are coming. The yield curve is here. And the mortgage morass is just way too boring for the press to win Pulitzers with these days. That's the time. Can't pick one? Pick the Banking Index (BKX.X), which bottomed in August. The story's a good one. The tax losses have been taken. Get some. At the time of publication, Cramer was long JPM.