"Street Critique"-Hilary Kramer, Market Strategist & Author of "Ahead of the Curve."
Wednesday, February 06, 2008JEFF YASTINE: With stock prices beaten down in recent weeks, tonight's "Street Critique" guest thinks that it's still too soon to bottom fish in certain sectors. She's Hilary Kramer, market strategist and author of "Ahead of the Curve." And Hilary welcome back to NIGHTLY BUSINESS REPORT.
HILARY KRAMER, AUTHOR, "AHEAD OF THE CURVE": Jeff, thank you for having me here.
YASTINE: Before we start talking about sectors to avoid, what would you say about this market? We have given back about half of the gains of the past two weeks just in the past couple of days.
KRAMER: This is a very treacherous market, Jeff. We are going to see a lot more pain because it's doing a lot of head fakes. It has these fake rallies up and then it comes down hard. On a technical level, it looks like we're going to go lower and you got to respect the market action out there.
YASTINE: All right, with that in mind, what sort of sectors are areas that might be tempting to try to pick bottoms in but that you would say avoid it for now.
KRAMER: OK, the home builders, OK, the home builders, yes. They've caught a bid the last few days, but remember, there will be home builders that will go out of business. The revenues line keeps going down. There's a problem obviously, in terms of financing. So companies like Standard Pacific, SPF, you're going to see company goes under. So be very careful on the home builders. Don't think you're getting a bargain. Don't try to catch a falling knife. The same with the financials. Citigroup is a phenomenal company. Just because it looks like it's heading back up and it's going to go to 60, right now it's in the 29 range. It could see 22 again very easily and as an individual investor, you've got to remember that you're a few steps behind everyone else. This is a trader's market. Those are the only ones that are making money in this market.
YASTINE: Hilary, isn't it possible though that with a great deal of short activity on these sorts of sectors that the financials, the home builders could still see more gains, just on a short squeeze?
KRAMER: They could but the problem is that there are major, fundamental problems, which is that even though rates have been lowered, there's a liquidity crisis out there and it still has to make its way through the system. So one's better off standing by the sidelines waiting. I always say, cash is king.
YASTINE: Is there a third sector here we can talk about?
KRAMER: Yes, retailers. Again, I'm seeing a lot of interest in the long-size (ph) retailers. Now on the short, Sears (SHLD) -- they hang their hat on being a big real estate play, but as we know the value of real estate has gone down. Also, these mass luxury retailers, like Coach, Tiffany's who have enjoyed phenomenal runs the past few years. It's over for them right now because unemployment has risen and it's a consumer-led recession that we're in. The consumer doesn't have the money that we used to have. And, therefore, we're going to see companies like that suffer as well as some of the commercial REITS because many of these stores aren't going to be able to afford the prices that the commercial real estate properties are commanding.
YASTINE: Hilary do you have any of these stocks you've mentioned in your portfolio?
KRAMER: Just Sears as a short, SHLD.
YASTINE: All right, Hilary, thanks for your time. I appreciate you coming on to the program.
KRAMER: Jeff, thank you for having me.
YASTINE: My guest, market strategist Hilary Kramer.
