Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Dividend Aristocrat Is Leading the 5G Revolution - 22nd July 19
What the World Doesn’t Need Now is Lower Interest Rates - 22nd July 19
My Biggest 'Fear' For Silver - 22nd July 19
Reasons to Buy Pre-Owned Luxury Car from a Certified Dealer - 22nd July 19
Stock Market Increasing Technical Weakness - 22nd July 19
What Could The Next Gold Rally Look Like? - 22nd July 19
Stock Markets Setting Up For A Volatility Explosion – Are You Ready? - 22nd July 19
Anatomy of an Impulse Move in Gold and Silver Precious Metals - 22nd July 19
What you Really need to Know about the Stock Market - 22nd July 19
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Long-term Financial Markets Investing Overview

Stock-Markets / Investing 2009 Feb 23, 2009 - 04:00 PM GMT

By: Oxbury_Research


Best Financial Markets Analysis ArticleIn Greek mythology, Sisyphus was a king punished by the gods. In the Greek equivalent of hell, named Tartarus, Sisyphus was cursed to roll a huge boulder up a hill – only to watch it roll down the hill again. Sisyphus' punishment was to repeat this task throughout eternity.

In the midst of this punishing bear market, I think that many investors who read Bourbon & Bayonets are probably feeling like Sisyphus right now. Many investors have seen their accounts, such as their 401k, back down to levels last seen a decade ago. Like Sisyphus, they have had their investment accounts “roll back down the hill”.

However, unlike Sisyphus, investors' “punishment” will not last forever. This bear market will end and a new bull market will be born. I know what you're thinking – when will it end? Unlike the so-called experts on CNBC, I am honest enough to tell you that I don't know. All I can do is hazard a guess based on my more than 25 years experience in the investment business.

As regular readers of my Bourbon & Bayonets columns may know, I approach investing from a long-term fundamental perspective. I try to find investments which will bear fruit in one year, three years, five years or longer. I could care less about short-term performance.

I also am not a technical analyst. Don't get me wrong, I do look at charts as one tool in my toolbox. However, I am not a technical analyst who makes short-term trades based solely on what the charts “say”. To me, that is merely extrapolating past and current trades into the future. Look at how well that worked in 2008.

When Will It End?

What has been happening in the financial markets for the past year and a half is the liquidation of bad investments that were made in the biggest credit bubble in history. The Fed and other central banks are calling this liquidation process “deflation”. However, this is not deflation in the classic sense where a contraction in the monetary base has led to to a fall in the general price level.

I do not care to be on the opposed to what central banks are trying to do. The central banks are trying to unleash inflation and are expanding the monetary base rapidly. St. Louis Fed president James Bullard was pretty explicit this past week, “We can be fairly certain that rapid expansion of the monetary base will be sufficient to head off any incipient deflationary threat. Rapid monetary base growth has been associated with inflation in a wide variety of times and places in economic history”.

I think that the timing of the end of the current bear market is highly reliant on actions that global governments have and will take, along with how much more of the liquidation process we have to go. This process will take a while - my best guess is 2-3 years. But with central banks going full tilt at creating money, I wouldn't be shocked if it were only 1 year.

My tendency would be to like an individual company's stock or bond if the company either has no debt or does not need to re-finance their debt in the next 2-3 years. However, I would be willing to begin to establish a position in a company in piecemeal fashion, even if they had some short-term debts, if I really loved the industry they were in and the company's business model.

So what areas do I like and dislike for the long-term? I will give readers my 2 cents worth and look at many areas and give them a rating from 5-star (Great) to 1-star (Terrible).

Star Ratings

United States – 3-star. And I think 3-star is a stretch. The US was once the greatest nation in the history of the world. But from the Greatest Generation and prior generations, we have gone on to the Baby Boom Generation and to the current Generation DUH? It seems to be getting worse with each generation. I am not optimistic on the future.

US Treasuries – 1-star. Treasuries have never been a great long-term investment. This is especially so now, with the “fear” trade pushing Treasuries to bubble-levels.

TIPs – 3-Star. This is the one exception to what I said above. The overblown deflationary fears have given investors the opportunity to purchase TIPs at reasonable prices.

US Dollar – 1-star. I do not like any fiat currency, period. I would say that the US Dollar is the worst of a bad bunch and the Chinese Yuan the best of a bad bunch.

Corporate Bonds – 3-Star. Overblown fears about defaults being greater than the Great Depression have pushed most corporate bonds to fantastic buying prices. Investors do need to do their homework if they are buying individual bonds.

Real Estate – 2-Star. This sector is really beaten down. However, there is still way too much debt in this entire sector.

Stock Sectors:

1-Star sectors would include: financial and technology. I have never owned these types of stocks and never will.

2-Star sectors would include: retail, media and consumer discretionary.

3-Star sectors would include: industrial, utilities, medical and health care.

4-Star sectors would include: consumer staples, large energy companies.

5-Star sectors would include: natural resource stocks – mining, agricultural, water, energy and alternative energy. The cash flows with many of these companies, such as BHP, is healthy which means they won't have to tap the debt markets over the next several years. I like to invest long-term in sectors that are involved with scarce resources and that have a positive supply-demand outlook in the future.


Gold – 5-star. I believe every investor should own some gold as an insurance policy against financial market catastrophes. Think of gold in the same way you think of insurance on your life or home or car.

Base Metals and other Precious Metals – 3-star. A bit too reliant on industrial activity. However, the long-term trends in the emerging markets is positive.

Energy – 4-star. The long-term supply-demand outlook is extremely positive – the world is running short of cheap, easily accessible energy.

Agricultural & Softs – 5-Star. This area offers huge potential. The supply-demand balance is positive in most of these commodities. Water and arable soil globally are become more and more precious. People will always need to eat.

International Markets:

Europe – 3-Star. I'm biased since I am descended from European heritage. Europe definitely has problems, but I believe the current fears over Eastern Europe are vastly overblown.

Mid-East & Africa – 3-Star. I believe this area offers incredible potential. The big question is whether this area will ever get its political act together.

Latin America – 3-Star. This area is a real mixed bag. I would rate Brazil and Chile as 5-star . Other countries I would rate lower, such as Mexico which is a 1-star . Mexico is far too dependent on the future of the US.

Canada & Australia – 4-Star. These countries are sitting on a wealth of natural resources. This wealth will help them overcome the effects of the financial crisis over the long-term.

Southeast Asia – 3-Star. These countries need to make some economic changes, as they are too dependent on exports.

Japan & Korea – 2-Star. Too dependent on exports. I don't think they will ever recover from the current economic crisis.

Russia & India – 1-star. I would never invest in either country because of their governments.

China – 5-Star. The Chinese Communist Party is the most liquid financial institution on the planet. They also seem to be the best capitalists on the planet.

Bourbon & Bayonet readers, I look forward to any and all comments.

Click Here to Comment - Don't Be Scared...


By Tony D'Altorio

Analyst, Oxbury Research

Tony worked for more than 20 years in the investment business. Most of those years were spent with Charles Schwab & Co., both as a broker and as a trading supervisor. As a supervisor, he oversaw, at times, dozens of employees. Tony was trading supervisor during the great crash of 1987 and was responsible for millions of dollars of customers' orders.

Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.

© 2009 Copyright Oxbury Research - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Oxbury Research Archive

© 2005-2019 - 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