Beating the Bear

I'm fairly close to the Fannie Mae/Freddie Mac debacle. Since I want to maintain my anonymity on this blog I will no go any further in my explanation than that. However, my main concern during the morning hours yesterday when both GSE's stock prices were plummeting, was not their ultimate fate - there is no way the U.S. government will let them fail - but rather the stock market in general. Or, to put it more bluntly, my own portfolio. As the Dow, NASDAQ, and S&P were spilling blood, I carefully watched as my own portfolio ended up actually making money for the day. Why? One reason is I am completely out of financials, which is a broken sector and will remain broken for the foreseeable future. As I've mentioned before, trying to catch the bottom here is a fool's errand. I cashed out of Citigroup the Monday after I posted about it a few weeks back, at a fairly significant loss. I do still own Mastercard, but it's not subject to the same pressures that the banks and investment firms are. I also own some pharmaceutical-related stocks. Everything else in my portfolio consists of energy, commodity, and material-related stocks; steel, coal, copper, oil, deep-water drilling, natural gas, oil sands. These spaces, which have been working for years, looked ready to crack a few weeks ago - they all pulled back significantly. That wasn't really a surprise because in a real bear-market the sectors that had been working are the last to be taken out. I expected the downward trend would continue. But these sectors seem to have stabilized now and may be headed back up. The oil story is a real one folks - we don't have enough, period. Anyone who expects oil to return to the price levels of a few years ago is fooling themselves. The global expansion is for real too: Brazil, China, India, Russia, the Asian economies, while having slowed a bit recently, are all still expanding significantly. I'm staying in these spaces until I see they don't work anymore; but with the market as schizophrenic as it's been lately, it sure is tough on the nerves.