As Jon Stewart remarked this week, what is a guy named Art Cashin (Cash-in) doing remarking on this bear market? Art was a hero of mine while at PaineWebber. He was my first read every morning. His notes were written about 5am and included a bit of history (“on this date….) as well as his expectations for the day’s trading. I would often see him across the street at Ruth’s Chris steak house bar after 6pm. This after spending the day on the NYSE floor, when the NYSE had orders. Now, almost everything is executed electronically. How he was able to be on his feet all day, drink into the night and write his note by early morning was beyond my understanding. Now Art has become a fixture on CNBC and the most visible UBS employee and one of the more prescient prognosticators of the market’s short term moves.
> If I understand Art’s current thinking he is expecting a day or two of modest movement, maybe even an up day, as we got today. But then he anticipates a day with huge declines. Soon. I believe him. This would be the long-sought capitulation. And, so, I am getting my buy list together. Some shares are beyond cheap. Recently, however, what has looked cheap has become cheaper. Look at Chicago Bridge and Iron (CBI). The 52-week high is $63.50. I was bidding $10.30 (down 22% on the day!) yesterday and did not buy any. This morning it is down yet another 10% to $9.30. (Later in day: oops, it is now $8.50, down yet another 18%.) Another industrial, Textron, is now $12.50 (oops, now down another 11%) after making a high of $74 last December. Caterpillar is fifty points off its high. Bunge, a soy bean grower and processor, is 100 points off its high. Trinity Industries, a freight car manufacturer with a growing windmill business, is off 50%. GE is off 50% but some are waiting for the other shoe to fall from GE Capital. There are thousands of these examples and these are not recommendations.
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> The point is to get your ammo ready. If we do get Cashin’s big down day I will tiptoe into equities. But I’ll be buying knowing we may have to wait a while before we get any snapback rally. I will be careful to not chase yield. This has been a loosing strategy. Rather, I hope to identify companies which can be self-funding (don’t have to borrow) and have reasonable product demand in the face of a steep recession.
