As I suggested in my last post, the window for purchase of HL at historic lows would close by April 10th. I do not believe I will see buy-side executions at $2.50 again. I expect HL to move above $3 by the end of April, but present opportunity between $3-$5 for several weeks to come.Hecla will move in a staircase fashion to north of $6 by July, 1999, however.
There should be several opportunities to purchase HL on weakness, but each successive opportunity may be at a higher low, for the most part. There is absolutely no need to chase this, or any other stock, ever. A very difficult passion for me, and most others to control, regardless of our insights. I am satisfied buying in a range on weak days.
Altogether, towards the end of the calendar year, Hl will begin ascending at a clip that may be a bit alarming to those that are unfamiliar with this asset class. I will not distribute shares until the momentum in price approaches historic levels; Hecla could well be above $35 at the time, but with ever widening swings in price. (Incidentally, the very trading action witnessed in the internet issues now; an invaluable lesson to be observed closely, as it will one day descend upon HL) It will be important to divorce all emotion from ownership, more so, than at any other time, when this moment is upon us. I do not care to sell at the best, nor buy at the best, available price, but to earn a profit.
The indexes in the market have all made new highs on fewer issues advancing and more new lows created. This is a classic secular bull-market top. Distribution should accelerate in the second half of April, with a major low in place by early June, were that the case.
If indeed, it courses along a path familiar in history, purchasing very small capitalization value stocks will provide returns in excess of any other class, but gold and silver, that happen, anyway, to also fit into that valuation camp right now, for several years to come. They should have the service and product pricing advantage besting their bigger global rivals by their nimbleness to react to a much more dynamic world ,and local, political and economic environment.
In a few years, I suspect, the golden fleece of global presence so often touted these days, if history is not bunk, will become a profit millstone., as global events produce enormous challenge to execute business across oceans with any certainty of fair return. This happened in the 1930s, and 1970s, as you well know. It benefited the small by virtue of their size.
There should be several legs to this bear-market that cannot be as easily assuaged by Federal Reserve policy this time around. It is antithetical to a healthy financial market, ultimately, to lower barriers to credit at this stage of economic growth expecting that this will not finally impact currency integrity. I thought it would have been realized by the financial markets in October last when that action had been taken, but did not discount fully the enormous emotional momentum overwhelming all market fundamentals.
Now that we have embarked upon a journey never recorded in the history of our stock market, we are surely without a compass to indicate direction. I think it is reasonable to suggest however, that the apex of emotion driving these market indexes is passed, and we may wake to a reality very unpleasant to them very soon.
Had the Federal Reserve not intervened last October, I think we may have seen a DJIA of 5,850, but indeed stabilized over the next couple of years. Now I am not so sure. I do know that the opportunity to descend to the lows established in 1982 over the next few years is greater now than in October 1998 at the time of intervention. Risk to the markets exceeds any measure established in '29, 1893, 1872, 1780s, or ever, for that matter.
Greenspan, and company, should learn to recognize the beneficial aspect recession has to stanch the vigor of public emotion and ebullience. That when growth in a barometer, as the stock market is, exceeds that which produces consistent benefit to the economy over the greatest length of time, it is probably better to act to cool rather than perpetuate it. I do not believe, at this juncture, there remains a resource at the disposal of the Fed to execute a normal recession now. We have gone to far unchecked. We have climbed to the highest point available upon a cliff somewhere on the mountains of Kauai searching for some safe point from which to leap into the Pacific currents below without self-annihilation. I just do not think such a point exists but in the fantasies of imagination.
Well, enough jibberish, if a remarkable bear-market does not happen in the next months, than we truly have written a new history without precedent, and ...?
Terry |
