Time to Look for Bargains

One of George Sosos' rules of investing is that companies that survive tough times will reward investors with huge gains.

My pick: ALD. The shares are trading at 30% under book value. The dividend yield is almost 22%. Is this company going to survive?

Yes. There are two reasons for that. The dividend for the rest of the year has already been declared on a carryover from last years' earnings. Also, they recently raised almost $200 million in unsecured debt. Most of this was at 7.82%. The is not a bad price. In fact, it's confidence inspiring. If ALD can raise money in this environment, they will be able to pick up huge bargains themselves.

In other thoughts, I am not happy with a lot of my current positions. Most of the ones I really like, I've covered or sold with big profits.

Homebuilders: they have probably gone as low as they will for a while, now that the government backup of Fannie and Freddie has removed the fear of mortgage rate spikes. I'm thinking of closing these positions.

Forex: my CNY position hardly moves at all. Although I think it's a winner, the upside is probably minimal. Also, I bought this position for the same reason that I hold FXP, the Shanghai market index ultrashort ETF.
FXY also seems to be going nowhere. Since I've bought FXY, it spiked to 100 from 93. Since then, it's come back down to 95 and followed the dollar down with the weakness in the Japanese economy. There's no money to be made holding one weak currency against another.

Treasuries: I would have expected a flight to quality with the past month's whipping of the market. However, this has not materialized. If the current panic didn't cause a flight to quality, there's not much chance of it happening. On the contrary, the bailout will probably cause the Treasury to borrow more money. This will increase supply, at the same time that China is overheating. Sooner or later, China will have to stop printing money, and therefore Treasuries. If oil falls, as I am beginning to expect it will, OPEC will also not be a big buyer of Treasuries.

I am going to watch VLCCF spot tanker rates like a hawk. If they've shown or start to show any weakness, it may be time to short oil. Demand is weak. US oil inventories are rising, and I expect tanker rates to weaken soon.

I am thinking about moving to the following positions:

Long income-producing bargains: (MCGC, ALD, XGM, etc.) 30%
Short 30-yr. T's: 20%
Short oil: 10%, but wait for a bounce...

I started moving in that direction today by closing FNM at $8.15 It hit a low of $7.07, but if I had covered with the bailout news on Monday, it would have been at $9.73.