Stocks Tumble To New Credit Crisis Low
Stocks dropped on Friday in a worldwide sell-off with investors cashing out as signs mounted that the global economic slowdown could be deeper than feared.
In the overnight hours, stock markets tumbled around the globe. The selling was so fierce that by the open index futures were lock limit down. In other words they were halted from trading until after Wall Street's opening bell.
Even though stocks ended at 5-1/2 year lows it was not the bloodbath that many investors had feared and by the end of trading they wondered if this was, in fact, a short-term bottom.
How are you trading?
This is probably the most optimistic I’ve been about this market in a while, says Karen Finerman. If you can find companies with great balance sheets and you can hold their stocks 6 months to five years, I think you should buy. However, I don’t think it’s possible to pick a bottom so make sure to have a hedge on.
I also feel more optimistic than I have in the past, says Mohamed El-Erian, PIMCO Co-CEO and Co-Chief Investment Officer. We’re probably in a better place today than we have been in a while. We’re starting to see the final stages of deleveraging and we’re seeing policy go from announcement to implementation. We just have to navigate what lies ahead.
There are some companies that are ridiculously cheap, Finerman adds. At 2 times cash flow I’d look at Freeport McMoRan. And RTI International Metals trades at 1 times cash. There are even companies trading at negative value where the cash is worth more than the entire enterprise value of the company.
El-Erian agrees. If you think now's the time to dip a toe in stocks he recommends three things. Look for a name that has been damaged by the environment but is likely to recover. Second focus on the capital structure. And don’t expect the recovery to be instantaneous.
Ingersoll-Rand is trading at only 4 times forward earnings, adds Guy Adami. That’s not just a value, that’s absurd. Other names he thinks have been unfairly punished during this sell-off include Johnson & JohnsonChurch & Dwight and Celgene .
In the pharma space I also like Celegene, adds Pete Najarian. Any company that’s acquiring or developing drugs should be promising.
Stock markets tumbled around the globe on Friday. The iShares MSCI Emerging Markets Indx dropped substantially on more evidence of a sharp slowdown and a rash of profit warnings worldwide.
I think you have to pick and choose your companies. In emerging markets I want to see volatility in EM currencies subside before I can get comfortable going in, counsels Tim Seymour.
I’m long the dollar with the PowerShares DB US Dollar Index Bullish , exclaims Jeff Macke. My investment thesis is this; "My currency is better than yours, Canada!" And I’m also short the S&P with the ProShares UltraShort S&P500 .
HARTFORD, METLIFE CLIMB FROM LOWS
The U.S. Treasury Department is closely studying how it could give relief to insurance companies under a $700 billion financial services rescue package, two sources familiar with the deliberations said on Friday.
Insurance giants such as The Hartford and MetLife surged higher on the news.
With the Treasury coming in, some of these stocks look attractive, says Guy Adami.
I think this is a dangerous area, counters Pete Najarian. Be careful.
It’s like roasting marshmallows while Rome burns, exclaims Jeff Macke.
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Trader disclosure: On Oct. 24, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (SDS), (UUP), (WMT), (MSFT), (BNI): Adami Owns (C), (GS), (INTC), (MSFT), (AGU), (BTU), (NUE): Najarian Owns (BNI), Is Short (BNI) Calls, Owns (BNI) Puts: Najarian Owns (MS) Put Spread; Najarian Owns (GDX) Call Spread: Seymour Owns (AAPL), (EEM), (MER): Seygem Asset Management Owns (RIO), (CCJ): Finerman Owns (GS), (PM); Finerman's Firm Owns (MSFT), (DEO): Finerman's Firim Is Short (COF), (USO), (IYR), (IJR), (MDY), (SPY), (IWM), (BBT)
CNBC.com with wires