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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Diamonds and Dogs

A note from John Hussman

John Hussman, founder of the Hussman Mutual Funds, "it is impossible to be a successful equity investor without the willingness to accept some amount of market risk when conditions appear frightening. If anything should be clear from the bubbles of recent years, the greatest risks are not when prices are depressed, the economy is weak, and investors are frightened, but rather when prices are elevated and an unendingly positive outlook for technology, or housing, or global growth, or private equity, or emerging markets, or commodities seems all but certain."

Diamonds and Dogs
Wednesday, January 28th, 2009

Diamonds
Bulls were in charge today as the Dow rose over 170 points in late trading. The headlines continue to be dire though, with the job losses announced in January at 125,000 so far. Financial stocks stood out today, led by Wells Fargo (WFC) up $4.72 and JP Morgan (JPM) up almost 9%, topping all Dow stocks. This action was also before the Fed decided to keep rates at their remarkably low levels.

Dogs
Time Warner (TWX) division AOL is letting 700 people go the old fashioned way according to an internal memo. TWX actually traded higher today, but the $10 handle is about 40% lower than its 52 week high and a tenth of its price in 2000. Job cuts are hitting every sector as the headlines are getting worse, but are typical for the depths of a bear market/recession.

Tuesday, January 27th, 2009

Diamonds
The technology is there. Netflix (NFLX) rose over 15% on Tuesday as the online marketer of movies reported a 45% rise in profits. NFLX is thriving even as the economy worsens as they earned $22.7 million for the quarter. The company added 718,000 customers for the quarter. I guess when you are laid off, you might as well pop "Caddy Shack" in. NFLX finished the session at $34.82.

Dogs
In another hit to retailers, Kohl's (KSS) fell $1.35 today to $37.52. Consumer confidence numbers are at historic lows and that usually spells trouble for the retailers. With a PE of about 12, and $6 billion in shareholder equity, KSS may be able to weather the storm.
Diamonds and Dogs market commentary is a journal of daily observations on anything that happens to be of interest to our author. Obviously, our primary focus is the stock market and world economic events, but for this page we have no defined topics. We want this page to be dedicated to the interests, concerns, and possibly to the financial gain of our clients and friends. All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.