The Perfect Storm

Anyone who saw the movie knows that the fisherman caught in the Perfect Storm didn't fare so well. I see where analysts are saying we have the "Perfect Storm" in the stock market right now, and that is not perfect in a favorable way.

• All sorts of global uncertainty with Israel, Iran and North Korea to name a few.
• Global tightening of interest rates
• Growth prospects don't look so hot.
• Earnings so far have been lackluster.

Now to be clear, we are not yet in a bear market. The DJIA isn't even 10% off its 52 week high. The QQQQ is about 15% off its 52 week high. I am beginning to think that we'll have to hit -20% before things finally stop falling. Kind of depressing, I wish I had a few more defensive stocks, things like CVS and GIS have held up well.

Jim Jubak had a positive note about FTO this morning. He was commenting that refiners who can handle Heavy Sour Crude are well-positioned to make $$$. Here is an excerpt:

"Frontier Oil (FTO, news, msgs) is a fraction of the size of Valero Energy -- throughput of 162,000 barrels a day for Frontier versus 3.3 million for Valero -- but it is even more focused on heavy sour crude. Both of the company's refineries -- in Kansas and Wyoming -- can process heavy sour crude. In 2005, according to Friedman Billings Ramsey, about 70% of the oil Frontier refined was heavy sour crude. (Compared to 60% at Valero.) Wall Street is predicting an even more abrupt drop in earnings for Frontier Oil than for Valero: After increasing by 72% for the second quarter, Wall Street sees earnings at Frontier Oil dropping by 17% in the third quarter and 15% in 2007. With production of heavy sour crude ramping up in Canada, the company seems to me to be very well positioned (Frontier Oil also owns a 38% interest in a crude oil pipeline in Wyoming) for the next decade -- as well as the next six months. The company is due to report second-quarter earnings per share on Aug. 7."

Well, I wrote the perfect storm component this morning. I didn't expect to be so right. Geesh, what a nightmare day. Down 2.7%. TBL was my only stock to eke out a gain. ISNS was flat. I keep telling myself that this is a long term proposition, but it is starting to wear on me a little bit. I am now down 6.7% while IWV is down just 3.4%. It seems remarkable to think that exactly a week ago, I was actually slightly above the benchmark. It can change quickly in either direction.

At the end of the day tomorrow I'll publish the graph... it isn't looking pretty.