Did it today -- sold some more of my GGG for Moody's (MCO) -- probably not a good price for the trade but at least I have some exposure which is what I wanted. My thinking is that I am not really increasing my exposure to housing/debt/financials but rather just shifting it from Graco which was about 40% exposed to housing. I expect Moody's to be faster growing than Graco over the next several years and its selling at a similar valuation despite Moody's having even better economics than Graco which is really hard to do.
I figured my loss exposure to MCO wasn't much greater than to GGG and it could be even better protection because Moody's has underperformed Graco significantly over the last couple of years -- prior to that MCO was a better stock.
Buying MCO at almost half off and I figure that the stock will not get truly cheap because Buffett owns 18% -- he will just buy more at the right price. So will the company -- figure on $500 mill in share buyback annually which should be enough to buy back between 10-15 mill shares (265 mill outstanding now). Between the company and Buffett, I figure the stock has some downside protection. If it falls further -- say to the low 30's I will buy more. If it just pulls back to the $35 area, then I will probably just buy some options in the stock. increase my exposure without risking a lot of capital. I just figure that this round of financial declines is done -- will there be further declines? quite possibly but this round is done. Think end of March 2001 as far as the tech stocks go.