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Buy Low, Sell High Whom Do You Trust? G. Bush? N. Pelosi? H. Reid? B. Bernanke

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January 25, 2008

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

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The stock market has had four trading sessions during a week that has seen a big interest rate cut announced by Federal Reserve Chairman Ben Bernanke and a tax cut stimulus package requested by President Bush make major progress in the Congress.

Disappointingly, two sessions were up, two were down, just like a see saw, not a solid vote of confidence for the firm gestures of economic encouragement the government is making to the financial markets. Of course, there are big money reasons for this lackluster response including the fact the tax rebate increases the federal budget deficit translating into a need to replace the money to balance the budget some time in the future. Stimulating the economy probably will also increase imports making the balance of trade worse, a second problem that has to be addressed. So this is not an entirely peachy keen picture, to say the least.

On the other hand, there are promises of a further interest rate cut next week by Mr. Bernanke and the Federal Reserve. That, too, should be stimulative and a reason to rally. All of this would tend to boost confidence, it should be noted, except for the fact that greater economic activity would entail the use of more energy causing crude oil and other fuel costs to rise. A nagging problem, if ever there was one.

From a strictly economic point of view, how much worse can the outlook get? If you believe the old saw, “Buy low, sell high,” then this may be the current bottom. After all, the Dow Jones Industrial Average has fallen to 12,207.17, a low point on the road to economic nirvana.

A look at three of the stocks that I have covered in the past year or so will show that many of them are at comparative lows with no poor earnings announcements to justify the lows.

Take Google, GOOG. It has blown past $700 a share. Now it is around $560. A look at their earnings projections predicts profit of $20.76 per share for the fiscal year ending December, 2008. Not bad.

As I have pointed out, there are other stocks that are comparatively low. If you like growth stocks, many of the internet related companies such as Microsoft , MSFT, continue to put up good revenue and earnings numbers. Microsoft closed at $32.94 but has been as high as $37.50 in the past 52 weeks.

Ebay, EBAY, is another internet related stock. They expect to earn $1.66 in the fiscal year ended December, 2008. The stock closed at $26.83 Friday with a 52 week high of $40.73 The company is getting a new chief executive who has been working of the company’s modus operandi and structure in order to improve profitability and that seems to show promise.

While these are not cyclical stocks, the concept of buy low and sell high still applies as every prudent investor well knows. So the market may be skittish but these stocks should provide a financial outlet to survive the uncertainty.