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-- Posted Tuesday, 24 February 2009 | Digg This Article | | Source: GoldSeek.com
How low can the Dow go in this bear market? Yesterday the index dropped to 7,114, a 12-year low, and there is no sign of a market bottom in sight. It was notable that almost all stocks tumbled without exception, so there was again no place to hide like last November. Bank nationalization is the new fear on the street. Taking over bankrupt banks, stripping out the toxic assets and them returning them to public ownership is increasingly seen as a logical solution. But it will annihilate shareholder capital, and the worry is that a legion of risk-averse state banks will not provide the entrepreneurial support to revive American business. Or more cynically, state banks will not offer loans that can be used to buy stocks and fire up prices again. Oil and gold At some point commodities and basic resources stocks are going to be a major buy. Gold and black gold look obvious beneficiaries from the near-panic global creation of paper money and inflation to come. If these stock prices continue to fall with everything else - due to automatic panic disposals of entire portfolios - then they will be the obvious buys at the bottom. But how long until we get there? Wall Street is not known for its patience, but it does have a considerable capacity for self-delusion and hot air to support prices. There is also plenty of hot air coming from the new Obama administration and Americans love to talk. However, there is nothing else to sustain price levels. Profit forecasts for the year ahead are still too optimistic, and the outlook is increasingly for big losses from major companies and low or no dividends. Cash up There is no reason to risk capital in equities at this point. Money is better taken out of the market and kept in cash or precious metals. Bonds have an increasingly toxic feel, for reasons of supply if nothing else, and will surely crash once stocks hit rock bottom. The dollar is probably safe as long as the markets are selling down. But the moment markets hit bottom any investor with brains ought to be out of the US dollar whose crash, along with bonds, is inevitable, and actually the next part of the economic recovery cycle. Bond holders need to be driven out of bonds and into stocks, and dollar devaluation will make US exports competitive again.
-- Posted Tuesday, 24 February 2009 | Digg This Article | Source: GoldSeek.com
Previous Articles by Peter Cooper
About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in
1999 to complete his first book, a history of the Bovis construction group.
Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.
 Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.
He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.
Order my book online from this link
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Bonds and Dollar Will Crash After the Dow Low!
