They are letting you into the hottest stocks. There are analysts downgrading the airlines today. There are some taking down the bulk shippers. I guess it is just a matter of time before they take down the mortgage insurers.
There is a remarkable lack of enthusiasm for these groups, despite the structural changes I see happening in each.
That anyone would think that the airlines should be downgraded right now, ahead of the finalization of the U.S. Airways (LCC)-AMR deal, seems just plain fanciful. When that deal closes, there will be so little competition in so many routes that the stabilization -- no more fears of price wars -- adds to the legitimacy of the move.
As for the bulk carriers, the Baltic Freight Index has been inching up and inching up, so what's the point of downgrading Diana Shipping (DSX) now, as I said earlier today?
Finally, I keep thinking that you must stay focused on the mortgage insurers, particularly Radian (RDN), because it is obvious to me that more and more houses will be built and bought.
There is an unwillingness on the part of the analysts to embrace sections of this market that have been dogs for a very long time. These critical analysts seem to think that all of these stocks and sectors are simply staging relief rallies. To me, there is structural change. These were areas where there had been intense competition, and that competition has fallen by the wayside. That means higher prices are coming, and it is still way too early to leave the table.