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Stock-market investors like the sound of bulls, but is it time to get back in now?
Harbor Advisory's chief investment officer Jack DeGan suggests that value investors take half a position in some stocks now, and wait to invest the rest.
"Be careful of falling into a value trap, which is where share prices fall more quickly than earnings estimates and book value get marked down, which creates the illusion of value," he cautioned CNBC. "Value investors have to be patient."
He has two areas of special interest:
"The stocks that are levered to the international infrastructure build-out have been crushed in the last two months," he said. "These are stocks like Boeing, Caterpillar, Emerson, General Electric; they're growth cyclicals...although this international slowdown may slow infrastructure spending, it'll be deferred, not canceled, and that business will be there in a year's time."
His second area of interest is energy. (See Part 2 for his energy picks .)
Energy stocks are oversold and now is the time to jump in, Goldman Sachs analysts wrote in a research note on Friday.
A rebound in the fourth quarter will be due to better-than-expected demand for oil in China after the Olympics, improved demand in the U.S. because of the decrease in prices and a need to restores low inventories, the analysts said.
Most of Goldman's top 10 list of favorite energy stocks are from outside the United States, especially from emerging economies. They are: Cairn India, China National Offshore Oil Corporation (CNOOC), Russian Gazprom, Brazilian Petrobras , Spain's Repsol , and Canadian Suncor Energy .
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Oklahoma City-based independent oil and gas producer Devon Energy , integrated energy company Hess, with headquarters in New York, oilfield services giant Schlumberger and offshore drilling contractor Transocean are the U.S. companies on the Goldman Sachs list of favorites.
CNBC's Maria Bartiromo discusses Thursday's wild market ride and rally, and looks ahead to Friday's events.
(Also: See her weekdays onClosing Bell
- Washington Mutual (WaMu) - Are Citi and Wells Fargo shopping?
- Manufacturing activity
- Jobless increase, thanks to Hurricane Ike
- Possible money infusions from the Fed, ECB and Bank of Japan.
Precious metals still have plenty of upside, two strategists told CNBC.
As Morgan Stanley and Genworth and State Street and WaMu and others are feeling the squeeze, I feel the need to dispel some myths that are crippling Wall St and arguably the world. It's all a bunch of B.S...
...as in, Balance Sheet.
Now before you go crazy -- I know, I know, it's all VERY, awfully real.
But I continue to think that the accounting-based mandates (that brought on the writedowns that brought on the losses that brought down the capital that brought on the downgrades that brought on the shorts that have brought us to the brink) need to be rethought and relaxed for at least six months, or until an orderly market is restored.
To think that Merrill or Morgan's toxicity disappears simply because it's tucked into a bigger balance sheet (B.S.) is... well... you-know-what!
The Panic of '08
- Video: The Death of Capitalism
If anything, it screams to the ultimate reality that this current crisis we are in is temporary and manageable -- as long as you've got some time and money.
So by blindly forcing viable companies to act -- and account -- precipitously, we have destroyed untold billions in wealth... only because we couldn't wait for unpriced mortgage-linked assets to get a bid.
Lehman , Merrill , AIG : bankruptcy, buyout, government bailout. Goldman Sachs shares slide amid the fear. And Morgan Stanley is desperately seeking a merger. What does it all add up to?
The death of capitalism, says Paul Donovan. The senior international economist at UBS says governments must step in to steer the global financial system -- or the free market as we know it is doomed.
Watch the video for his frightening prediction.
The Panic of '08:
Finding cheap stocks in a downdraft isn't hard. Finding valuable stocks can be. David Pearl has a simple formula for stepping back from the fray and pinpointing the potential winners.
Don't go it alone!
"The framework one should look at is companies that are very profitable," the head of U.S. equities for Epoch Investment Partners told CNBC. "If they generate cash, they're going to do very well, even in a downturn. That cash means they can never go out of business -- and when their stock is down, they buy it back, or buy a competitor very cheaply."
"Davita is an example," he said. "When you provide services to the chronically ill, if you lose kidney function, you need to be dialyzed three times a week for the rest of your life, so they have very stable revenue -- which translates to great free cash flow, and that cash pays down any debt and buys back shares."
Mary Jane Matts says it's essential to separate companies and stocks from today's market turbulence -- to find accurate values for them.
"I would look away from the financials, but just because the financials are so difficult to value doesn't mean that traditional fundamental techniques cannot work outside of that sector to find good investments," the manager of the four-star Fifth Third All Cap Value Fund told CNBC.
So who makes her list?
"In the health-care sector, we'd point to Schering Plough," she said. "It's a stock that's somewhat unique in that they have very little in the way of patent exposure, and are not facing the same cliff that the rest of the pharmaceuticals are."
Matts also likes XTO Energy in the energy exploration and production space.
"(It's) a company that's an extremely low-cost producer, again, back to the real economy, where we think the long-term, secular trends in energy are going to be supportive of improving returns here," she said.
Disclosure information for Mary Jane Matts was not immediately available.
Crazy bets on market volatility and a big move in Morgan Stanley ... That's what the options market seems to be looking for, according to Rebecca Darst of Interactive Brokers.
The real attention-getter, Darst said, was a single huge bet that market volatility, as measured by the VIX index, would blast up to 50. At its Wednesday close it was around 36. The higher the VIX, an index of option hedging activity, the more nervous the market.
"We actually did see somebody enter a large-size long position in November 50 calls. On the VIX , November 50 calls," she said Thursday morning on CNBC. "It was 15,000 lot transaction. There was not terribly much open interest at the strike, so we can safely conclude that this was an opening purchase. (There is) about a 5 percent chance, according to current market conditions, that VIX will break 50 by November, so we'll see what happens. We've been stuck in a bit of a regime for several months where these incursions, up about the 50 line, have been very short lived."
In the video at left, CNBC's Maria Bartiromo discusses Wednesday's market turmoil and looks ahead to Thursday's events.
(Also: See her weekdays on Closing Bell .)
- Housing starts, oil prices and the gold rush.
- Thursday's earnings reports: FedEx , ConAgra, Oracle
- All things AIG
- SEC's rules against "naked" short selling, in effect on Thursday
- Barclays' buy of Lehman unit
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