Terrible Timing and Analysis

I must admit, I had some terrible timing on my sale of SDS. I 'think' I should have held just a bit longer, as I think we are going to see a nice pullback over the next couple days. I'm still up about 1500+ for the year on this short play.

So why did I get scared out of this position: mostly a knee jerk reaction to the OMG, there is so much liquidity in the market there are too many dollars that need to be invested somewhere, and that is driving market prices up.

So I was trying to surmise what type of effect rising inflation would have on the big american comapnies. The top companies are listed here:
http://money.cnn.com/magazines/fortune/fortune500/2008/full_list/

So let's think about Walmart and how US inflation/weak dollar might effect them. Walmart sells stuff, typically at prices lower than other stores. Costs of imported goods (most of Walmarts sales) are going up because of the weak dollar. Sales are up, because of a weak economy and people are searching for the best deals because there dollar will go farther at Walmart. So one might expect Walmart's US stores to be somewhat offset by the volume of sales generated from there lower cost items. Walmarts employees are probably not seeing much of a change in pay or benefits due to current US inflation. Walmarts overseas stores are continuing to provide a steady supply of foreign income which should play when profits are converted back to dollars. If inflation causes Walmart's prices to rise, then it will also cause it's competitors prices to rise, so this type of retailer will tend to do well.

XOM, COP, and Chevron. Big oil companies. Well this a no brainer. It's like selling crack to a country full of crack addicts. Oil goes up, they charge more, and make more profits. Inflation, particularly of oil prices helps them. Demand in the US doesn't seem to get effected much by the price of a gallon of gasoline. People are still stuck in there cars getting from point A to point B.

Next you have Ford and GM. Dismal companies. They are only hurt by inflation. Inflation in incomes in low, costs to raw materials is higher, people buy less big ticket items because they are able to save less (and banks are taking less risks on loans). Oil costs too much, and I imagine the highest margin on vechicles are there SUV's and Trucks which people are shying away from. The only thing that can help the US auto industry is a major inovation in how vehicles are powered.

Next we see some financials. Terrible outlook. Despite all the easy money, they only can make so much money from lending, investing, insuring, etc. If the underlying economies growth is weaking so the financials will follow, but more amplified.

I'll take a look at some more industries later in the week.