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When a Hurricane Blows, Even the Turkeys Will Fly
The Oxford Short Alert
Thursday, November 18, 2004
By Alexander Green, Investment Director
Email – #231
** When a Hurricane Blows, Even the Turkeys Will Fly
A few weeks ago we were on a roll, locking in short-term, double-digit profits in stocks like Allied Waste (NYSE: AW), Newell Rubbermaid (NYSE: NWL) and British Airways (NYSE: BAB).
But things have gotten tougher lately. Considerably tougher.
This morning’s headline in Investor’s Business Daily says it all: “Nasdaq Storms to 11th Gain in 13 Days.”
And it’s not just the Nasdaq. The Dow also hit a seven-month high this week.
I mention this in part because I received an e-mail from a Short Alert subscriber this week asking a question many of you may be asking yourselves.
“How can companies with such lousy fundamentals be going north instead of south?”
The answer, of course, is: “For the very same reason great companies go south in a market correction.” The vast majority of stocks will move in the same direction as a powerful market trend.
But only temporarily. Before long, investors start sorting out the wheat from the chaff. And then losing companies start acting like losers.
That’s why we concentrate on problem-laden companies, not great companies trading at rich valuations. Often those rich valuations are deserved. (And sometimes they’re too conservative.)
And here’s what we’re doing right. We have a smaller number of shorts than we usually have, since the market is in a confirmed rally. (And two of them we just added last week.) We’re using buy stops to protect our positions. And we’re set to capitalize on a correction in the market, should one suddenly materialize.
Remember, turning points in the market are notoriously unpredictable.
Companies with weak earnings and a poor outlook can move up temporarily during a rally, but – unless there is a change in the fundamentals – the move generally proves short lived.
So keep the faith.
Next week is a shortened holiday week. Unless there is some urgent news, you’ll receive your next Short Alert the following week.
Here’s wishing you and your family a happy and prosperous Thanksgiving!
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com, or contact Pillar One Advisor Greg Galloway at 800.438.3040 or 407.667.4729.
Stock
Symbol
Current Price
Comments
CNH Global
NYSE: CNH
$19.25
Sell short at market. Use a 20% buy stop.
CenturyTel
NYSE: CTL
$33.07
Sell short at market. Use a 20% buy stop.
Safeway
NYSE: SWY
$19.81
Sell short. Buy stop is $21.
Avnet
NYSE: AVT
Buy to cover
Stock hit buy stop.
Health Net
NYSE: HNT
Buy to cover
Stock hit buy stop.
Janus
NYSE: JNS
$16.31
Sell short. Buy stop is $18.
Bio: Alexander Green is the Investment Director of The Oxford Club. A Wall Street veteran, he has over 16 years experience as a research analyst, investment advisor, and professional portfolio manager. Mr. Green is also considered one of the most talented financial writers in the business. He’s been featured on “The O’Reilly Factor,” profiled by Forbes and Marketwatch.com, and has written for Louis Rukeyser and several other leading financial publications. He currently writes and directs The Oxford Club Communiqué, the Oxford Insight e-letter, and four elite trading services: one focused on momentum stocks, another focused on companies with significant insider buying, another dedicated to international growth stocks and another focused on short-selling fundamentally flawed companies. Mr. Green is also a top-rated speaker at financial conferences around the country.
Copyright – 2004 The Oxford Club, LLC. The Oxford Club does not act as an investment advisor or advocate the purchase or sale of any security or investment. The Oxford Club expressly forbids its writers from having a financial interest in any security recommended to its readers. All of our employees and agents must wait 24 hours after an Internet publication prior to following an initial recommendation. And for hard-copy-only publications, 72 hours after the publication is mailed. Investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. The Oxford Club provides its members with unique opportunities to build and protect wealth, globally, under all market conditions. The executive staff, research department and editors who contribute to The Club’s recommendations are proud of the reputation The Oxford Club has built since its inception in 1984. We believe the advice presented to its members in our published resources and at our meetings and seminars is the best and most useful available to global investors today. The recommendations and analysis presented to members is for the exclusive use of members. Copying or disseminating any information published by The Oxford Club, electronic or otherwise is strictly prohibited. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time.
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