As i predicted in my last post on Friday 13th, we did get a follow through rally in the NASDAQ early this week. But also like i said this rally was nothing more than a short covering rally so treat it like one.
Today was a confirmation of how bad this market is. Banks still need tons of capital to re-liquify themselves (Morgan this morning, Lehman, UBS, etc). The regional banks are in even worse shape and you can see it in stocks like NCC, etc.
Now for the recession story: I have reiterated it countless times on this blog: high gas, high food prices, no jobs, low home equity = Recession!!! and i made my first recession play today.
Since recession isnt something that you can time through option plays (like earnings) and usually takes 2-3 years to get over, i will limit my recession trades to only stock trades. My first pick is Devry University (DV). I have been itching to get long this stock and just got filled on my limit order of $58.7 this morning. With so many people jobless, one of the biggest fallback option for them is to go back to school to either better themselves in their industry or switch industries. Ofcourse a lot of them will choose to go for MBA's from top tier schools but i believe a large percentage of the unemployed population will choose cheaper, faster degrees from universities like Devry. These people have the same problems we all face (see recession problems above) + NO INCOME. They will try to maximise their continuing education potential while finding the cheapest alternative. This is where DV steps in. Real cheap degrees ($25,000) compared to a $150,000 MBA. Even if 20% of the people looking to go back to school choose DV instead of top MBA school, its a huge bump in their revenue stream. Also, Devry and Apollo group are the only 2 leaders in this field.
I will keep posting in series about Recession stocks, so look out for Part 2 soon
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