The immediate force starting in May 2010 with which our investments may have to reckon may be deflation (lower or stagnant prices) throughout our economy and in asset classes such as the stock market, oil, silver and potentially gold.

The Dow Jones Industrial Average closed at 10136.6 on Friday, May 28, 2010. Gold closed at $1,212.20 per troy ounce and silver closed at $18.43 per ounce on this date. (Editor's note: oil traded at $74.09 when this post was written).

Continue reading » Deflation Risk May Now Threaten Many Asset Classes

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The stock market may continue to rise - but realizing partial profits at the present time and in the manner described below may be a way to protect your portfolio from a correction and enrich your emergency kitty. In this article, I describe price ranges on the Dow Jones futures continuation chart which may be levels to consider for such investment actions. The Dow Jones closed at 10,038 on the continuation chart on October 22, 2009.

Continue reading » Is Taking (Some) Stock Market Profits Appropriate Now?

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Silver is once again garnering attention as it traded through the $17 per ounce barrier this week.

I am adding detail to my previous post that the case for a sharp increase in the price of silver may now be clearer. At the time I wrote that piece, silver had closed for the trading month of May 2009 at $15.73 per ounce on the futures continuation chart. I stated that the silver price could touch the $17 - $20 range, with the possibility of reaching the old 1980 high range of $32-$42 within one to two years in the form of a blow-off top.

In fact the price rose to a high of $16.25 shortly thereafter before going into a correction. Silver has since rebounded, reaching as high as $17.69 while closing for the week of September 25, 2009 at $16.06 on the futures continuation chart. In view of this action, where might we go from here?

Continue reading » Silver Rally: Is It Ready for Primetime?

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The stock market continues to rise to a disbelieving chorus of many hedge fund managers who are simply along for the ride and a mostly noncommittal investing public. Readers of my blog may know that I am invested in equities, various mutual funds and ETFs, and gold and silver.

The Dow Jones futures contract on the continuation chart closed at 9733 on September 18, 2009. A 25-30% correction in the Dow would not be unwarranted, though it may occur from a higher price level. However, there is weekly chart support at the 8640 area on this contract and a daily support band between 8290-8415, either of which may act as a barrier to further decline should a correction ensue. I expect these support ranges should hold. Note: this website will soon present charts on a regular basis.

Continue reading » Stock Market Rally Supported by 20% of Consumers with Substantial Assets

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Both top performing former Mutual Series Funds manager Michael Price and Dreman Value Management's David Dreman concur that rising stock prices in the coming years may present opportunity for stock market profits - if you are invested in the right stocks and if you understand the economic nature of the "recovery."

Bloomberg.com reported on September 9, 2009 that Price, who sold his Mutual Series Funds to Franklin Resources in 1996, is finding value in selected equities in today's market. He sees similarities between the 1974-1982 100% stock market rise, and today's 50% ascent from the March 2009 bottom of 6469. The 1974 market trough to which Price alluded was a once in a generation buying opportunity, when the Dow ascended from a low of 577.60.

Continue reading » Stock Market Bull Run May Last say Two Top Performing Money Managers

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President Obama announced on August 25, 2009 that Federal Reserve Chairman Ben Bernanke would be reappointed to another four year term. Bernanke's appointment, which will likely be confirmed by the Senate, may impact the course of American economic development for many years to come.

Many observers have speculated on what form the Chairman's exit strategy from his policy of monetary ease will take - a policy that saved a select group of failing companies (and their employees' jobs) and potentially prevented a deeper collapse of the stock market and financial system.

Continue reading » The Bernanke Exit Strategy: Seven Stock Market and Economic Consequences

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Both Warren Buffett in his August 18, 2009 editorial in the New York Times and Curtis Mewbourne in an August 2009 report on investment manager PIMCO's website appear to concur on the fate of the U.S. dollar: that it may continue to fall. The dollar index (September 2009 contract) closed August 18 at 79.035.

Buffett points out that "the current account deficit - dollars that we force-feed to the rest of the world and that must be invested - will be $400 billion or so this year." He adds that there have recently been indications that foreign nations holding U.S. dollars have been investing in our companies, financial markets, and real estate in addition to U.S. Treasury instruments. According to Wikipedia, lenders from Japan and China own over 45% of U.S. foreign debt.

Continue reading » Warren Buffett and PIMCO Concur on the Potential Fate of the U.S. Dollar

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BNY Mellon and Dreyfus Chief Economist, Richard Hoey, elaborated on the potential for a continuing bull market in stocks (though not without corrections) in an August 7, 2009 interview on CNBC. The Dow Jones industrial Average closed at 9370.07 on that date.

Hoey stated "we are at a particular cyclical moment." Further, he said that the global recession is over and that the leading economic indicators for every major country in the world are rising. "We are going to have rising real GNP for practically every significant country in the world in the third quarter," Hoey stated.

Continue reading » Economist Richard Hoey Sees Stock Market Climbing a Wall of Skepticism

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Economist Richard Hoey of BNY Mellon & Dreyfus is a veteran forecaster with many prescient calls to his credit. In an interview on July 27th on CNBC, Hoey stated that "the evidence is now clear cut" that the Fed has done enough to stabilize the financial system. He further stated that a "classic recession bottom" is in place and he expects 3 to 3 ½% economic growth in 2010.

Hoey states that "massive inventory liquidation" took place during the 2nd quarter and that auto and housing weakness was so profound that there will be no more exhaustion. He notes that Chrysler has shut down all its plants in America (a sign of the times...) and that you cannot exhaust something further that is not there. Hoey sees the roughly 20% of consumers who still have assets left carrying the weight for his projected economic turnaround.

Continue reading » Is the Stock Market Rally for Real? "Yes," says Richard Hoey of BNY Mellon & Dreyfus

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Readers of my blog may know that I anticipate rising price levels and higher interest rates in 2010 and beyond. Bear in mind that it takes time, sometimes years, for a strong inflation to embed itself in the economy. I want to talk about ways to protect your portfolio from rising prices and interest rates, but first a bit of history:

While President Nixon was in office, Fed Chairman Arthur Burns responded to pressure from the White House eager to have a strong economy when Presidential ballots were cast in 1972. Burns expanded the money supply to help ensure a growing economy in time for Nixon's reelection. Inflation soared to 12% by 1974. The oil shock in 1973 compounded the economic and inflation situation. The stock market lost almost half its value, and inflation hedge investments such as gold and silver plummeted from their highs when the economy dove into a deep recession in 1973-74. In this case, political expediency led to easy monetary policies and extremely high inflation.

Continue reading » Protect Your Investment Portfolio from Inflation and Rising Interest Rates (and Ben Bernanke)

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