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-- Posted Thursday, 8 January 2009 | Digg This Article | Source: GoldSeek.com
I prefer rogues to imbeciles because they sometimes take a rest.” Alexandre Dumas 
Many of you know my distain for the bulk of so-called professionals on Wall Street. You know I feel most are like a real estate salesperson tossed off the Empire State building who says all the way down, “so far so good.” The Archangel Gabriel could show up in these folk’s bedrooms and tell them the stock market was going to fall or not go up, yet most would ignore such warnings because their job (and bosses) depends on them getting people to buy. The sad thing, despite realizing how biased the bulk of so-called strategists and advisors are (and their desire to just keep capturing and holding onto assets), is most investors still allow these people to influence and/or make their investment decisions. If I had a dollar for every time I’ve heard “the market has discounted all the bad news” and “the bottom is in” and “the market is already rising on expectations of a second half economic recovery”, I could go on a long paid vacation. Look, everyone is entitled to their opinions and some will be wrong (including me). But when you take into account the biases just mentioned and the fact that so many of them have been wrong throughout this absolute disaster that has changed lives for the worse for a lifetime, you want to scream out “enough is enough.” Wake up and smell the roses! This economic upheaval has been misunderstood and badly missed by many. Here are just some of the worst predictions about 2008. Like I said earlier, everyone is going to miss sometime but many of the voices being touted in the media who are saying the worst is behind us, are the very same people who had horrendous and life-changing forecasts for the worse (the guy who shouts and screams on TOUT-TV is a prime example. He and his employer have amnesia on so many of his wrong predictions but have the nerve to run ads that suggest he’s the #1 soothsayer). This time it is indeed different! For the love of God, stop listening to anyone who keeps comparing this time to previous ones and such comparisons paint a rosy picture just down the road. We’re in unprecedented times and you can throw away many of the past factors that worked in typical downturns. Again, you must realize that most advisors are trained to look at the cup always half-full and can never suggest doing nothing if they wish to keep their jobs. U.S. Stock Market - Another pet peeve of mine is how these “Don’t Worry, Be Happy” prognosticators continue to note how the market is up 20% from the lows and/or a stock is up 50% or even 100% from its lows. The market falls from 14,000 to 7,500 (which is about 45%) and then rises to 9,000. I’m no mathematician but aren’t I still down 35%? Yes, there will always be someone who buys the bottom or sells the top but the fact remains there will always be countertrend rallies in bear and bull markets. They mean little to anyone other than a trader. The hoopla would become justifiable if and when the market actually breaks above previous highs or above key moving averages. Unfortunately, this market hasn’t done either. In fact, despite all the holiday cheers and New Year optimism, the DJIA has still not taken out resistance just above 9,000. And this comes on the heel of “Investors Intelligence’s” report this week that there are more bulls than bears now since last August. What does this mean? The assumption is if you turned bullish you made your purchases already. So, despite much more assumed buying, the market is unable to move through a level where it has been repelled before. One could start to suggest we’re looking at a triple top. If so, then we need to watch for the market taking out the levels it retreated to each time it was repelled. In this case it’s in the 8,450-8,500 area. What’s even more interesting is how many big bears turned bullish in this timeframe, including a very good friend of mine who was once as bearish as I was and still am. To me, this has all the makings of a bull trap. Stay tuned. Oil - I continue to suggest purchases of oil-related investments (as per model portfolio) when oil is between $35-$40 until further notice. U.S. Bonds - I’m not alone in my recent belief that the treasury market is a bubble ready to burst. The continuing news that China may greatly lessen its desire for treasuries, how poorly a German bond offering went yesterday, and despite very poor U.S. economic news failing to rally treasuries, all suggest my entry to the short side appears to be at or near the top. Precious and Base Metals - I remain very bullish on precious metals but continue to urge no real base metals exposure. Base metals remain in a bear market downtrend and only corrected a very oversold condition recently. U.S. Dollar - The only party that doesn’t know the U.S. Dollar is dead is the U.S. Dollar!!! Mining and Exploration Shares - the majors are correcting their sharp gains made near the end of 2008 while the juniors are trying to remove themselves from their respirators. Peter Grandich is Chief Commentator for AGORACOM.com, Canada’s largest online small cap investment community. Read and respond to his blog at http://grandich.agoracom.com/
-- Posted Thursday, 8 January 2009 | Digg This Article | Source: GoldSeek.com
Peter Grandich is the Managing Member of Grandich Publications, LLC (www.grandich.com).
The company publishes The Grandich Letter (first published in 1984) which covers the metals and mining industry, follows world markets and economies, and covers the Canadian markets from an American prospective.
Grandich also provides a variety of corporate finance and development services to publicly-held companies.
Peter Grandich is also the Managing Member of Trinity Financial, Sports & Entertainment Management Company, LLC (www.trinityfsem.com), a Registered Investment Advisor in the State of New Jersey. Trinity provides investment advisory services to individuals, small to mid-size businesses, professional athletes and entertainers.
Peter is a long-standing member of The New York Society of Security Analysts and The Society of Quantitative Analysts.
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