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Toyota's Tempting... For Now


Despite company's warnings, there may be a temporary upside.


Greetings from New York where I'm picking through the tape and still grinning from a magical 24 hours. I play a cynic on TV (and in print and, let's face it, in real life) but the forces of jaded are no match for the beaming faces of children at Christmas. Genetics and insight will catch up to the kids soon enough. For now, at 3 and 6 respectively, Superfly and Lou are in their Yule Tide primes. Any trader worth his salt knows to maximize the good times and count his blessings. I've done a lot of counting since last we spoke.

Here's what I'm watching and doing when not milking every last second out of the Rockettes experience:

  • Minyan Cheryl e-mails asking what I meant the other day when I said "in the big picture Toyota (TM) is doomed". The keys are timeframe and what doomed means. To me, doomed means "making expensive products people either don't want or already have". I've been mocking Japan's finest for most of this year and have been leaning on the short side of the name, on and off, in between jibes. During that time Toyota has been thoughtful enough to warn multiple times, complain about the economy, its home currency and everything but the weather. Last week TM announced an expected loss for the first year of operations in the 70 year history of the company.

  • Now, as an investor I wouldn't touch Toyota with a 10-Yen pole. As a trader, I'm long TM as of Wednesday. Toyota was a great short when Bad News Catalysts loomed. Barring the company buying Google's (GOOG) space program division, I'd say Toyota predicting its worst year ever qualifies as about the worst news we're going to get for a while. The stock has held $60 numerous times. If it closes under $59ish, I'm gone. If it closes above $66, I'm gone. If the company offered me a no money down Prius I wouldn't take it. In the big picture, Toyota is most likely doomed. But the same could be said of us all. At this point, Toyota is simply a trading play and, for the moment anyway, I'm playing it long.

  • When we look back on 2008 statements such as "(company XYZ) is too big to fail" will be every bit as absurd as anything from the Great Depression. The very idea of the government being powerful enough to "save" corporations in a recognizable form to the benefit of shareholders is simply asinine. It's roughly the same as declaring a person "too important to die". Regardless of whether you are flesh and blood or an obsolete organization, there is no bargaining with death. It comes to us all; even if you have the ability to print your own money.

  • Of course, Disney (DIS) did (reportedly) "save" Walt Disney by freezing and storing him under the Pirates of the Caribbean ride in Anaheim. I even wrote a series on talking to Walt's disembodied soul. But that didn't save me from being long the stock this year nor the abomination which was, and is, Bolt. Prior to those disasters not even frozen Walt could save Disney from 20 years of malaise and creative torpor before the company was saved by Michael Eisner in the 80's. Unless CEO's freezing themselves becomes a condition for getting TARP money, I'm skeptical that industries run by government committees are going to be able to avoid something similar to Disney's cyclical trip. At best.

  • After weeks of rumors, Apple (AAPL) has announced that iPhones will be sold in Wal-Mart (WMT) beginning this Sunday. By tradition, both Apple and Wal-Mart take most every penny of profit from vendors with whom they choose to do business. When Apple made a deal with AT&T (T) it was simply assumed that Apple fleeced Ma Bell on the margins. It's much tougher to figure who's zooming who on iPhones being sold below production cost (or very near production cost) out of the world's biggest discounter. In terms of how I'd play the news the answer is "not at all". I'm still long Wal-Mart, as I have been all year, I don't want anything to do with AT&T and Apple might be a Toyota-esque trading buy at $80 but I can wait.

With that I'm off to do a little shopping prior to tonight's Fast Money. With the markets more or less flat and the news flowing like mud, there should be plenty of airtime tonight for me to detail my Canadian Invasion Stimulus program. It's an idea simply to Big and Brilliant to fail, Minyans!

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Position in TM

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