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Strategies & Market Trends : Three Amigos Stock Thread
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To: Ken W who wrote (28477)7/25/2002 7:12:59 PM
From: LAWRENCE C.  Read Replies (1) of 29382
 
Ken, I have been away from SI for awhile. Was shell shocked for awhile by the market.
IMHO The growing trade deficit plus foreigners selling US assets including stocks has weakened the dollar versus the euro. Since the growing trade deficit is likely to get worse before it gets better, I believe the dollar will continue to trend lower over at least the next 12 months and possibly longer unless it plunges. This should be favorable for gold stocks.
I see Corporate profits as a major concern. I expect overall weaking profit margins to continue to be a problem for most companies in any recovery, plus more accounting problems, high corporate debt. The recovery process is likely to be weak due to above. Credit tightening will trigger more bankruptcies (like Kmart) in debt ladden companies. There is a strong possibility of Deflation due to decling profit margins, worldwide overcapacity and lack of pricing power for many corporations. Too many companies are focused on market share instead of profitable sales.
Any way I have been dabbling in gold stocks. The 100 day charts help identify which ones are hotter. Right now the junior gold stocks are hotter: DROOY (bought some today on the pull back), RGLD and GLG have been doing well. I also have some FCX.
Banking sector is vulnerable to bad loans.
Housing sector has been doing well. This is a key sector.
High levels of consumer debt are a problem for sustaining consumer spending.
Auto manufacturers: high incentives; dropping margins; price wars and potential price wars.
On the short side I have JPM and MXIM. I made over 10% shorting F.
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