Friday, November 03, 2006

so much for "top of the cycle"

Today's revised employment numbers are quite a shock. No more slowing economy and soft/hard landing talk. Now, we see increased wage pressures and super-low unemployment. I think we are in a great position here - low interest rates, structurally low inflation, falling commodity prices and a good labor market.

To that end I am using these dips as buying opportunities. I mentioned a week or so ago that I'd like to be more long but could not justify it. Here, I can justify. Some new positions to mention:

* RIO. This is a recommendation from Jim Cramer's show. He identified this industrial metals play (copper, nickel, etc.) and I think it's a great pick. It trades with a Brazil discount that will likely disappear as the political instability plays out over the next few weeks. And, it's a great way to play scarcity in these metals.

* Goldman Sachs (GS). Finally, an entry point for this best of breed investment bank on its way to $200.

* NVIDIA. I do think NVDA's shares are pricey here. But there is a buying opportunity here because the shares have been hit by options cost restatements. This has no impact on the long term business prospects or earnings going forward. These guys are well positioned to take advantage of the video gaming story that is developing thanks to Electronic Arts' blowout quarter. (EA might be a good long -- I am doing some research on it today.)

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