Broker to Trading

I made a number of lists before the crash. One was in Feb. 2008, it was a list called 'CRASH', i.e. high quality companies which would be devalued by the crash and made cheap. I have already given you one of the refinements on this. But another one from the list is HEW. These are on my mind because of the fact the attempts to pump up asset values by cheap dollars seems to have hit a little roadblock.

HEW was a star performer though crash or no crash, like JOSB. From 2008 - 2009 its revenue is down but it got its cost of revenue down. This is symptomatic of what happened with good companies in the aftermath of the crisis.

Increasing sales was a problem so they cut costs. This is exactly what I mean by the way US companies flourish in tight fiscal environments. They do not slump, they become leaner and meaner, but more precisely their balance sheets tighten up.

This is highly important because this is exactly what the market computes on, when it isn't ebbing and flowing with easy cash. It could be argued the market likes precision (computer programs are exactly this) and a precise tight balance sheet is especially favored. Its year on year is interesting as well (especially COA).

The question is what will happen in an improved economy, the issue is what is happening with the market now. Again this not an analysis, please consult a professional and this is a very complex market environment.

© 2010 Guy Barry - All Rights Reserved.