dead cat bounce, page-18

I wouldn't mind floating my investment ideas here to see what people think. Currently I am happy with either a Bear or a Bull outcome and I am putting my money where my mouth is and sleeping sound at night this year. I would like other peoples input if you have any.

Things are bad - but I do believe that we will have a Bounce for at least a month that will be fairly strong - Bear Sterns rally strong but I don't care if we don't.

My hypothesis is that Energy stocks are the play of the day. There is a distinct correlation between oil and the market. As Oil goes up, the market goes down and vice versa as money comes out of one and goes into the other. Bond yields on the long end of the Treasury and corporate curve are continuing their climb. This is a sign that people are loosing faith in Treasuries, American government policy and wall street. People are becoming adverse from too much exposure to bonds and scared money is running for Oil. The supply of money is drying up - new corporate bonds, mortage backed securities and leveraged buyouts are not happening and won't for a while. This is the life and blood of the economy and the stock market, hence a long term Bear market is more or less inevitable in my opinion. I admit, I might be wrong on this - but I don't really care because of my strategy as outlined below.

The reason I like Energy is simple. If the market continues to tank, Energy prices will go up. Although energy stocks will trade lower in the short term, as Oil, Coal and Gas keep climbing, the value of these stocks will become obvious and money will flow into them for a piece of the action. If the market keeps moving up, Energy prices will come down to more sane levels, but won't come down to such an extent that they are not worth investing in as the bull run will be on again and demand side expectations will lift. Thus, Energy stocks will trade well into the next Bull run as well as hold value in the next Bear run. My strategy is simple: Buy energy stocks using cost averaging over time. I am content putting money into quality Energy stocks as they tank with the market as well as when they move upwards with a bull market. Find some nice, quality small cap Energy stocks with sound management teams and go with them - I know I am sleeping a lot sounder this year while everyone else around me has been running for the hills.