I do think gambling will continue to have a great future for those who invest in it. As I heard Charlie Munger say at the 2007 Berkshire Hathaway shareholder meeting, gambling is a tax on the uninformed. But heck, the uninformed just keep getting richer. For now, these gambling stocks with a Chinese connection are way ahead of themselves. They are pricing in google-like growth rates in earnings. I do not think they will see that type of earnings growth, which can only mean that stock prices have to drop to meet reality.
Don't be Fooled by Recent Rally Written By: David Neubert 2007-11-14 10:50:51 The last two days have all the markings of a bear market short-covering rally. The sectors that have the most negativity have rallied the most: Retail and Financials. If this were a real transition from a negative selling market to a rally, the sectors that have been leading would continue to lead: Technology and Materials.
So what is happening? People who short stocks are much more skittish than those who go long; they are also more disciplined traders. That means that when a trade starts going against them they get out in a hurry (remember, good traders know that the odds are stacked in their favor and survivors win. I always told my traders, "Survivors win so get out if you don't know why a trade is going against you. Don't be right, be a survivor.") That is why bear markets are full of break neck rallies in lagging sectors. That is exaclty what has been happening the last two days.
Is it Time to Make Money at the Expense of the "War Profiteers"? Written By: Thomas Chenoweth 2007-11-15 18:05:33
As the calls for ending the war become louder, I can't help but think what the consequences could be for some of America's largest defense contractors. As much as I don't want to see any potential cutbacks in defense spending put our troops at a disadvantage, it seems abundantly clear that some big cutbacks are on the horizon and that the indexes that track this sector are sure to go lower.
I continue to buy overweight financials, especially the big ones like Citigroup (C), Bank of America (BAC), JP Morgan Chase (JPM), Morgan Stanley, Goldman Sachs (GS) and Lehman Brothers (LEH). I'm even short some puts on the Financials ETF (XLF). In the short term, financials have to go higher as hedge funds cover shorts and, more importantly, mutual fund managers buy to correct the underexposure to the financial sector. Most Fed easing cycles imply very good returns if you buy just as they begin. The exceptions? The last one. I'm hold financials for the short run but I'm going to lighten up on these as this rally progresses. Why? The recipe is in place for some stagflation.
Stagflation is a period of inflation and low or no growth in the economy. The last time this existed was back in the 1970's in Britain and the US.
