July 2 2009 3:41 PM EDT

Buying anything lately?

A friend asked this question and here's what I replied:

Not at these prices. I like a lot of stuff, I just want it cheaper. The risk in a big portion of companies is just too high to pay anything more than dirt cheap. I'm feeling hesitant until there is another broad buying opportunity, which could take years. Even if earnings go straight up from here, I want to see some low PE's by way of prices staying the same. We got it in March but it was gone in a heartbeat (and I blew it big time). Next time it will take longer to bottom out and longer to go up (likely, considering the record breaking pace this spring). I'm not necessarily bearish because values are at the historical average, but I am still hoping for periods of great prices after 15 years of high prices. So many companies are issuing stock to prevent bankruptcy (as opposed to invest and expand) while not paying dividends and this is bad for the "market for stocks." I can't really get excited until there are low PE's and normal dividends. I want to be bullish, but if the thing goes up 30% from here it's plainly overvalued again. The one thing that can support the S&P in nominal dollars is inflation, but obviously that isn't real value. Like your email said there isn't inflation yet so it doesn't seem like a big influence on people's decisions right now (unless you're a gold fanatic, in which case there is rampant inflation and everyone is in denial).

Anything that is struggling to survive is really interesting to me -- airlines, casinos, banks. These can still go to the brink and have large % moves. In a broad buying opportunity technology like ADBE at low prices is free money (but the % moves won't be as large). I really like Jim Rogers long term theory on grains and agriculture and bought DBA for my sister's IRA.

Aaron sent me a harrowing review of commercial real estate from Green Street. Did he send you that? A fun thing to watch is the General Growth bankruptcy. Bill Ackman is a financial celebrity and he's pushing a plan to not wipe out the shareholders. It's waaaay up from the lows like everything else (and a risky pink sheet to boot), but if they don't wipe out the shareholders or dilute them by a zillion percent a la the GM restructuring, it could move pretty big over time.