"Street Critique"-Hilary Kramer, Chief Market Strategist at Greentech Research
Wednesday, January 14, 2009PAUL KANGAS: Tonight's "Street Critique" guest has brought with her a list of sectors and stocks she thinks are poised for recovery. She's Hilary Kramer, chief market strategist at Greentech Research and author of "Ahead of the Curve." And Hilary, good to see you again.
HILARY KRAMER, CHIEF MARKET STRATEGIST, GREENTECH RESEARCH: Paul, thank you for having me on tonight.
KANGAS: Before we get to your picks, what's your read on the market and this New Year so far?
KRAMER: Well, I'm sticking with my theme that I've had for the last eight months which is that it's very treacherous. There's another leg down to go. We're seeing that. This is a market that will just bring you to your knees. And it's very demeaning, very upsetting and people need to have discipline either to stay out and not jump in thinking they're getting a bargain or go with the course if you've gone this far.
KANGAS: OK, now, tell me the areas where you're seeing potential strength. Then we'll get to some individual picks.
KRAMER: OK. Well, it's more that I really believe that we're going to see oil continue to weaken, but over the long term, oil is not going to be in the $20 or $30 per barrel so therefore as oil continues to go down, I would buy an ETF, like O-I-L, which actually tracks oil but you want to pick your right spot. There are also very fine companies, well managed, cash-flow producing like ConocoPhillips (COP) right now in the high 40s. It could have another 5 to 10 points to drop. Once it does, I'll be a buyer of a COP and I'm going to sock it away for two years and keep it in my portfolio. You can do the same with some of the international oil companies, companies I've mentioned before, Petrobras. There's (INAUDIBLE) oil out of Norway.
KANGAS: For the moment, these are just on your shopping list, not actual purchases.
KRAMER: That's right. That's right. Cash is king. I've been on the side lines. I've been short a lot of companies and even still, I've felt the pain.
KANGAS: Now I understand there are a couple of areas you're avoiding like the plague. What are they and why?
KRAMER: I have been avoiding retail, especially high-end retail and most of the large retailers that are highly leveraged. That would be companies like Sears, Talbot, Ethan Allen. It's just better to stay away right now just like we saw Lehman Brothers which could never fail, fail or AIG. Some of these companies that seemed to have been around forever and are anchored at malls, they could go away. And it's the same for some of the REITs. The REITs are very, very seductive. It's REIT. The bring a lot of money in terms of the dividends, but they're cutting dividends and we're going to see a severe slowdown when it comes to office properties, multifamily and commercial real estate.
KANGAS: Hilary, do you own any of the stocks mentioned or have any other disclosures to make?
KRAMER: Not on these companies.
KANGAS: All right. Always great to see you and thanks for dropping by.
KRAMER: Thank you, Paul.
KANGAS: My guest Hilary Kramer, author of "Ahead of the Curve."
