CONTRARIAN BLOOD

If there's an ounce of contrarian blood in you, take a look at FCX and NEM, two equities that are about as unwanted as rain at a picnic. Both are near their 52 week lows. Both are in the mining and metals business, two sectors about as unwelcome as a case of the aviary flu at a chicken farm.

See YUM for the correlation there.

There's a reason for rain and there's a reason for unwanted. Meteorologists are the original hedge crowd: 30% chance of rain, sleet or indigestion after that huge Thanksgiving feast.

Meteorology has some science behind it. Key word some. Unwanted equities frequently have some science behind their status, too, the numbers. In this case, the global GDP numbers for starters. Right now they resemble my first love without make-up. I always had a thing for less attractive attractive ladies. You just know 'em when you see 'em.

Barry Ritzholtz a money manager and proprietor the The Big Picture and somewhat of a big Wall Street blowhard, claims he likes to fade the narratives in favor of the numbers or what he calls the facts. But just as there are two points of view, ask any sleazy attorney, there are two sets of facts, his and the other person's. Both are subject to interpretation.

That's the category we think these two are in now. Both have low P/E ratios. The dividend payout ratio on NEM is low and of the two has shown more steady dividend growth. Valuation traps exist. This is why DYH is so important.

NEM just cut its quarterly dividend from 42.5 cents to 35, not much different from all the cost-cutting in other ways American corporations have been doing since the recession hit. Politicians, bureaucrats and Keynesian worshipers seem to be the only folks opposed to cutting costs, aka spending.

Wall Street wags with the aid of MSM celebrate what are for the most part ramped up cost-cutting earnings to help inflate equity prices and it's all Hail Cesar. Their current drum beat to the masses is "What are you waiting for?"

Having taken so long to get back in, these people know, contrary to what pseudo-psychology preaches, once back in: they will take that long to get out again--setting up the perfect, pollution-free environment for The Big Squeeze.

If you think big government or big Wall Street firms like GS are ethically opposed to such things, you might want to consider purchasing one of those new $500 protective head gears you can wear anywhere we've seen advertised.  

Man made disasters provide big government two distinct opportunities: the chance to get even bigger via increased legislation and access to lots of tax-free money. If you think about it, it's kind of seigniorage in a way.