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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: zonder who wrote (19067)	12/20/2004 12:39:36 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Hmm. And we should listen to Prudent Bear... why? :-) I agree. why? had they just put half their money on gold and the rest shorting the us$ they would have had fantastic years. Instead they likely do stuff like short treasuries on every attempted yield breakout. Treasury bears on Russ's board do the same thing. Short treasuries at 4. OK that works short more at 4.2 short more at 4.5. Next thing you know we are back at 4 again, and sometimes well below that. I read prudent bear for stats only as their commentary is usually dead wrong. Mish

To: zonder who wrote (19067)	12/20/2004 1:01:54 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

Bernie Schaeffer's 2005 Market Forecast schaeffersresearch.com

To: zonder who wrote (19067)	12/20/2004 1:17:42 PM
From: mishedlo	Respond to of 116555

Outside the Box Valley of the Dollars: excerpt from Basic Points The Rule of Page Sixteen Long-time readers have learnt our investing rules. One such rule oft cited in these pages is The Rule of Page Sixteen, which is, "You don't make or lose serious money from a story on Page One: you make or lose serious money from a story on Page Sixteen which is on its way to Page One." For three years, this journal has talked of the inevitability of a major dollar bear market--a Valley of the Dollars. Given the basic data on the US dollar and the nation's towering trade and fiscal deficits, we were amused that the mainstream commentators continuously pooh-poohed the idea that the euro and the loonie were headed for major bull markets against the buck. When this bear market began to unfold, we were amused that the mainstream commentators kept finding other topics worthy of their comment, while dismissing the dollar's problems as a mere temporary nuisance. In the past month, greenback groans have reached Page One. Faced with such an unexpected story, the media has naturally found forecasters with indifferent or dreadful accuracy records who scream of "Armageddon" and other such scary outcomes. A slow bleed isn't worth a front page story: what's needed is a prediction of a Crash producing blood in the streets. In the past week, the dollar decline has been on the front page of such publications as Fortune, The Economist and The New York Times, and Wall Street research has actually begun discussing the implications for sectors of the market and specific stocks. To us, it looked as if the dollar was readying itself for a rally. ........................ INVESTMENT RECOMMENDATIONS 1. For three years we have prefaced our yearend investment recommendations as follows: * all other things being equal, avoid investing in companies who produce what China produces; * all other things being equal, invest in companies who produce what China needs to buy. That strategy remains intact. 2. The yearend pullback in the commodity stocks is a splendid buying opportunity. The golds, base metals, and oils are very attractive for those with time horizons longer than a few weeks. 3. The global economy is slowing down, partly in response to sustained high oil prices, but also in response to the overindebtedness and near-zero-savings rate of that great American hero--the US consumer. The safest "economy-sensitive" stocks are the basic materials companies, because they are so cheap relative to companies selling direct to American consumers. 4. The dollar will fall in 2005. Watching the fire in the skyscraper across the street from my office, I thought how fortunate it was that there were no serious injuries and deaths, because the descent down the fire escapes was so orderly. We hope that is a metaphor for the dollar's descent, but will be watching for signs that the eurodollar market is experiencing strain. Maintain a strong overweighting in gold stocks as a hedge against a 1987-style panic. 5. Dividends remain the best key to evaluating stocks generally. With Bush's re-election, the great dividend-paying stocks, such as those included in the iShares Dow-Jones Select Dividend Payers ETF, should be core investments. 6. Where possible, invest in bonds issued in strong currencies. 7. Geopolitical risks remain high, if only because Al Qaeda is showing signs of desperation as its havens get taken, and its leaders are captured or killed. 2005 could be a year in which a Page One story--a horror story--becomes, at least temporarily, the over-arching force in the financial markets. 8. Barring a financial panic or a major turn for the worse in the War on Terror, 2005 could be a year of calm in the financial markets. The recent surge in stocks would suggests that estimates of global growth of 2.5% could be too low. We incline to the view that the equity buyers' enthusiasm is overdone. 9. Paraphrasing Runyon, the race (in terms of economic growth) is not always to the swift (such as China and India), and victory is not always to the strong (in currency terms). But that is the way to bet. more here: investorsinsight.com