Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Investing - Steer clear of the US. Stock Market; Look to Asia!

Stock-Markets / Asian Economies Jul 19, 2007 - 10:35 AM GMT

By: Money_and_Markets

Stock-Markets

I'm in Asia right now. And I can tell you first hand that things here are as vibrant as ever.

There's been no change in the spectacular fundamentals underlying this region. With the exception of Thailand, almost all Asian countries are exploding with economic growth. For example, Singapore's second-quarter economic stats just blew away expectations, with GDP rising 8.5%.

All this growth has two important results:



1. Asian stock markets, while also a bit more volatile right now, are in strong long-term bull markets. So unlike the U.S., I continue to recommend Asia stock markets!

2. Most of the natural resource bull markets are also very much intact. I'm talking about oil, gold, base metals, and foods. Huge demand for natural resources — mostly coming from Asia — virtually guarantees higher prices to come for the world's most precious resources.

Indeed, just look at the price of oil, which continues to soar. As I noted last week, I would not be surprised to see $100-a-barrel oil before the end of the year.

In fact, it seems the International Energy Administration (IEA) now agrees with me on the oil crisis. Last week, in a seminal report, the IEA published an analysis unequivocally forecasting that the world faces a massive energy crisis within five years! [Editor's note: For more on this, see Sean's article, " Profit from Oil's Next Surge ."]

Considering the IEA is late to the game and normally very conservative, I say beware: A massive energy crisis, where oil prices could hit $150 a barrel and gas could reach $5 a gallon, could arrive sooner rather than later.

Meanwhile …

Although the U.S. Stock Market Has Rallied Strongly, Don't Be Fooled

With rare exceptions, nearly all of my indicators on the U.S. markets are turning south.

Even though U.S. stocks appear strong, I don't like the downside risk. At best, I think the Dow can get as high as 14,500, for an additional 700-point gain. On the other hand, I put the downside at 11,000, a whopping 2,800-point fall.

Put another way, the Dow's downside risk is now four times greater than the upside potential. That's not the kind of market you want to be in!

In my opinion, most U.S. stocks are overvalued right now. They're trading at the kind of price-to-earnings ratios we saw back in the heyday of the bull market, just before the 2001 collapse.

Moreover, I can't understand why anyone would want to invest heavily in the U.S economy right now. Not only is it very weak, but there are also two other problems.

First, the U.S. dollar's prospects are horrible.

Short-term, the dollar is at a record low against the euro … a 15-year low against the British pound … a 30-year low against the Canadian dollar … an 18-year low against the Australian dollar … and even at a 10-year low against the Thai baht, a country that is still under military rule from a recent coup.

That's what's happening right now. Longer-term, other than a temporary bounce here and there, the dollar is still toast. That's because the U.S. government is now nearly $9 trillion in debt … because the U.S. economy is so weak … and because our trade deficit with the world continues to break record after record.

Plus, our Federal Reserve is caught between a rock and a hard place. They can't raise rates for fear of causing the U.S. economy to completely collapse. And they can't push rates down, either — out of fear of causing a total collapse in the U.S. dollar.

Bottom line: The U.S. dollar is in for a long-term decline that could see its value fall much more against nearly all other currencies. The only questions that remain are how much and how fast?

I can't answer those two questions. But I can say that the dollar's poor outlook is one more reason to stay away from most U.S. stocks. And to instead opt for foreign markets and natural resources, both of which will act as a hedge against a weakening dollar.

Second, our central bank continues to print money and credit like there's no tomorrow. That threatens to send the value and purchasing power of the U.S. dollar even lower . It also virtually guarantees that inflation in the U.S. will continue to rise.

I've told you in recent issues how some measures of consumer price inflation in the U.S. already suggest that overall price levels are rising at 7% or 8%. And don't be surprised if you see inflation running at more like 11% or 12% by next year.

I think you get the picture about why the U.S. is a risky bet right now. But just to bring home my point about how much better Asian stocks are doing, I want to leave you with a table. It shows the performance of 13 Asian stocks I mentioned here in Money & Markets in June 2006 …

Company Symbol Total Return
(6/15/06 - 7/17/07)
Sinopec Shanghai SHI 43.72%
CNOOC, Ltd. CEO 61.50%
Petrochina PTR 57.78%
Santos Ltd. STOSY 42.73%
China Pet. & Chem. SNP 110.95%
Alumina Ltd. AWC 55.45%
Aluminum Corp. ACH 170.01%
Posco PKX 144.58%
Amcor Ltd. AMCR 23.37%*
Kubota Corp. KUB -2.35%
Korea Electric Power KEP 34.29%
Huaneng Power Intl. HNP 84.32%
Mitsui & Co. MITSY 73.39%

* — as of June 13, 2007, last available data date

As you can see, many of these stocks have been doing quite well. And if what I'm seeing here in Asia is any indicator, there are plenty more gains ahead for these foreign shares.

Best wishes,

By Larry Edelson

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules