I have figured things out or I think I have, certainly not with the certainty of the Amazing Departed huge buyer of Yahoo! for a quick million or two easy money over the weekend, snap-o-fingers simple as that, time enough to count the moolah, buy the Ferrari, drink mojito, blah, blah.
My humble take:
Now that the credit crisis is 'over', and the Fed has signalled an end to interest rate cuts, the dollar will go higher as against the euro and other currencies. As a result, commodities, including gold, will go down. Everything dollar denominated will go down in price as the dollar rises. The stock markets will also go up as confidence and optimism start to take over. Happy days are here again.
Euro down, more imports, etc.
The problem are the fundamentals, which suck. They will bring the dollar down again as they inevitably assert themselves. Gold, oil, etc., will inevitably go up. Fed rates at 2% simply cannot support a strong dollar given the rest of the garbage. No need to list it; standard bear fare.
The question is timing and the theme to which one adheres because both offer promise. If bullish, go with the mo, get on the bullish side created by the strengthening dollar, sell gold, trade equities, but be careful because the fundies will assert thermselves.
If bearish, fill the pantry with cheaper gold, oil, etc., sit tight and wait.
Opportunities on both side of the aisle.
The question, as always, is when.
But does the 'when' really matter in view of rotten fundamentals? I don't think so, and that is why the bear case IMO offers less risk. If bullish, the risk of getting caught with pants down, like dear Amazing Departed, is very real. |
