Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Mid 2010 Investment and Economic Thought

Stock-Markets / Financial Markets 2010 Jul 25, 2010 - 02:52 PM GMT

By: David_Urban

Stock-Markets

Best Financial Markets Analysis ArticleIt was my mantra at the beginning of the year that long-term investors should stay in cash and wait for attractive buying opportunities to come along.

Price-earnings ratios are once again becoming attractive. While they may seem high and nowhere near lows that sparked past bull markets investors would be wise to begin putting together lists of favorite stocks and begin monitoring prices in anticipation of putting cash to work.


We may take 6 months to a year to find a bottom but for investors it is better to well prepared in the event a buying opportunity comes along.

At this moment, we are in a stock pickers market and you should act accordingly.

Globally, markets will likely take their cues from the US and investors should proceed with caution.

Until the US government makes a serious effort to reign in spending investors should have money in Gold and Silver as a hedge against currency debasement and loss of purchasing power relative to the world.

Gold should move to new highs later this year but will likely see some sideways to lower trading action in the near term as we move through the historically weak summer period.

Gold stocks are less attractive to me. They should be trading higher based on a higher gold price but there are some factors restraining stock prices.

First, you have rising costs at mines partly related to the depreciation of the dollar. While we point to the USD Index, the truth is over 50% of the Index is made up of the Euro and I believe approximately 90% is European currencies with little or no exposure to Asia and South America.

Second, gold stocks are aggressively acquiring the remaining low hanging fruit in the exploration area, in many cases with stock. The problem with these transactions is the effect of dilution since the acquired assets have zero revenues.

Personally, I am waiting for a bit of a pullback to the 1175-1150 area with an absolute floor at 1065.

Investors in gold equities should slide down the exploration curve, as there appears to be value at the far low end in the prospecting and drilling areas.

Silver is attractive at the current price but given its volatility relative to Gold and the chance for Gold to pull back, Silver may trade lower over the short-term.

In fact, Silver is completing a very rough and ugly head and shoulders pattern leading me to believe that we may see some weakness in the coming weeks and months.

If commodities in general pull back over fears of a slowing economy both Gold and Silver will find any potential gains limited.

Canadian banks are showing value but again prices may get cheaper over the next six months. The TSX looks oversold as do most Canadian banks.

Asian economies look to continue their recovery and growth. A slowdown in the Chinese economy will defuse talk of a large currency appreciation. Non-correlated Asian markets should do well over the second half of the year but I expect problems in the US to overshadow the growth story and mute any potential large gains.

Stock prices in China and Hong Kong should continue to struggle as IPO’s and bond sales are absorbed.

Avoid South American equity markets over the near term as the difficulties facing individual countries may spill over into neighboring countries causing problems. Some of the problems include the reconstruction efforts in Chile, government and trade problems coming out of Argentina, and a Brazilian economy firing on all cylinders.

While the oil spill in the Gulf continues to provide tremendous amounts of speculation on the ultimate size of liability for BP there are some factors to consider.

Did Exxon go out of business after the Valdez spill? No.

Did any of the cigarette companies go out of business after the government settlement? No.

Does BP have attractive assets worldwide? Yes.

Will they survive? Yes.

No doubt, there will be additional regulation, massive fines, and increased scrutiny over oil and gas operations in the Gulf, Alaska, and all over the lower 48 states but the industry will survive and move forward for the future. As a high-risk investment, BP does look attractive under $30 but remember that this is a high-risk investment. The stock could trade lower if the broader market moves lower over the second half of the year.

***Disclosure note: I own BP stock in my personal account. This is not an endorsement to buy or sell nor should it be taken as such.***

The recent decline was due to portfolio window dressing as I noticed that Gold and certain Asian markets where I trade (which are up for the year) held up and saw buying as the US market (which is down) fell as portfolio managers rushed to tweak portfolios ahead of the mid-year reports.

The rally last week in the US was not met with a similar rally in the markets I follow which, in addition to weak volume, leads me to be very cautious.

It is my opinion that we are still in a topping formation and look to see lower markets through the end of the year with the major indices ending up down for the year.

Personally, I am putting together a buy list of stocks with good dividend yields and earning bases and plan on waiting for the right moment to allocate capital.

In the coming weeks and months I will expand more upon the themes touched on during the first and second parts of my commentary.

Note and partial disclaimer: My political thoughts are not my personal views (politics especially) but how I see the world unfolding based on the past year and historical trends. My personal views often clash with my investing views but as I learned long ago, you should not invest with your emotions but rather invest with conviction based on what is actually happening in the market.

By David Urban

http://dcurb.wordpress.com/

Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. This article and the author is not responsible for typographic errors or other inaccuracies in the content. This article may not be reproduced without credit or permission from the author.  We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided "AS IS" without any warranty of any kind. Past results are not indicative of future results.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN THE STOCK, BOND, AND DERIVATIVE MARKETS. WHEN CONSIDERING ANY TYPE OF INVESTMENT, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER. 

Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile.  This is not intended to be investment advice or a solicitation to purchase any of the securities listed here.  I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.

David Urban 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