Dow Breaks 2-Year Lows

June 26, 2008

U.S. stocks plunged sharply Thursday on signs of further deterioration in financial markets and another surge in oil prices. The Dow Jones closed down more than 350 points, dropping to its lowest level in two years.

In financials, Goldman Sachs (GS) downgraded brokerage stocks and put Citigroup (C) on its "conviction sell" list under the expectation the financial services behemoth would face an additional $9 billion in write-downs. Goldman said it's "hard pressed" to raise the group's rating for the immediate future because the fundamentals of major brokerages are still deteriorating.

On the oil front, crude briefly topped $140 for the first time ever, and retreated just a hair to close at a new record of $139.64.  Though most of us have come to grips with the ever-rising state of oil prices, General Motors (GM) has been very slow to adapt and paid the price for it Thursday. GM fell almost 11%, to the lowest level in more than 33 years, as analysts lowered their six-month price target for GM to $11 from $19.

The dollar's significant decline as of late also helped to push oil prices up again today. The Federal Reserve has been less hawkish than investors anticipated, and the dollar continues to suffer. Because of all these factors, OPEC President Chakib Khelil said that oil could rise to between $150 and $170 per barrel this summer!

Folks, are you really surprised by this news? My PortfolioGrader Pro tool illustrated the downward trend in the financial sector early. This free tool keys you into the fundamental rankings of thousands of stocks, and if you use PortfolioGrader Pro it's clear that financials will continue to face hard times. No one who subscribes to my investment services owns ANY of these banking and brokerage stocks. On the other hand, my subscribers are heavily invested in the firms that are part of the energy solution in this age of expensive crude – namely, oil service stocks working to increase global supply.  It doesn't matter if you're a Blue Chip Growth, Emerging Growth, Quantum Growth or Global Growth subscriber – our portfolios in each of these services are padded to resist ailing sectors and profit from the thriving ones.

I'll say it as many times as I have to for you to understand: The value bubble has burst. The financial sector is a No Fly Zone. Money is in growth now, and I expect this trend to continue for several years. My Blue Chip Growth subscribers know the drill: Our Buy List is full of stocks that are profiting from both commodity inflation and the weak dollar. Just look at our Blue Chip Growth Buy List winners: multi-national corporations like McDonalds (MCD), up 45%, and Colgate-Palmolive (CL), up 18.09%, that generate half of their revenues abroad. We also have fertilizer companies that are HUGE successes, like Potash (POT), up a whopping 229%, and Mosaic (MOS), up mammoth 242%, that are profiting from the skyrocketing demand for their products amid the global food crunch! Throw in our success in oil service stocks like Transocean (RIG), up 47% and National Oilwell Varco, up 53%, and you can see why my Blue Chip subscribers aren't worried. The Dow and the S&P may be losing ground, but we're making lots of money!

Yes, 350-point drops in the market are unnerving, but don't let days like today knock the wind out of you. In my Blue Chip Growth service, we had 10 stocks that ended up in the black today and many others that handled today's volatility with minimal losses. Subscribe to Blue Chip Growth and ride the growth wave all the way to the top!