Monday, March 24, 2008

a rally in financials would really get us going

when the financials lead, much can follow. if they are doing well you can buy companies that need credit, you can buy goods makers that thrive when people get credit. one can even buy retail stocks.

and, most important, one can buy long-dated asset stocks, stocks that are growth stocks that will pay dividends down the road, because when the financials rally, that means the market "thinks" there is less inflation in the future.

if jpm is being bought, then one can buy companies like emc and ibm that sell into the financials. because jpm is a big credit card company, you can buy axp, cof and ge. one can also buy companies that are related to housing, like mas.

also, companies that could be takeovers by europeans can also be bought. possibly the dollar has bottomed. but most particularly the growth stocks - think pg - get a real boost because we now see that inflation will not erode the value of that dividend stream.

financial leadership is the best for what it signals, which is why the rally can be so powerful.

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