My Gut Says

I can get pretty emotional. Luckily I try to always keep my head to balance things out, but often ideas start from my subconscious and work their way froward. This is (I believe once again) is how many successful people (something I aspire to be) think. Edison “thought” of a light bulb long before he could build one, and Einstein “knew” his theory of relativity ages before he could put it on paper.

Call it “Blink”, or intuition, or even educated hypothesis (hey, I’ve been reading voraciously!). But the fact is that while I’ve been way off on timing, I have yet to be wrong in event.

I knew Real Estate would fall, as would the stock market, particularly banks and homebuilders. I knew the credit party was over the day that Bear Sterns (RIP) couldn’t sell that $200 Billion junk-bond portfolio (yes, I shorted the market). I had a gut feeling that silver would rally and then possibly slice in half, something which I actually took into calculations. Too bad we couldn’t call the “next Enron” (Madoff) or short the distressed financials (damn Feds!).

What do I think now?

The “R” or “D” words: I don’t think we’ll sink into a major depression, although many will panic as if we are while we get pretty close. That panic will signal the worst of times for the market, and start the best of times for patient investors.

King’s Cash: A rally. A hard and fast one too! The word “inevitable” comes to mind. Just wait for physical buying to start. I think there is a silver bullet (all pun intended) to the precious metals case. Something tells me that the ETFs aren’t so Kosher. It’s like an Enron thing – no one knows why, something’s fishy. If rumors even start that Barclays/SLV/PerthMint/COMEX may possibly go bust, the metals are headed for the sky.

The Fuels: Are you kidding? I have no idea what the scapegoat will be – global warming, peak oil, narrowing contango. One thing I bet is certain: Oil and natural gas are passionate to burst. It will be 2007 all over, just without any psychological resistance till $150.

And finally… dun, dun, dun, dun (scary music plays)… The Dollar: Oh dear! I just flat out have no clue. One question, really, you want to own them inflationary scrip? Whether its Weimar or the Civil War or even Bolivia all over again, would you even take the chance? I came to learn, you don’t bet against the crowds in a bear market, unless things are squarely in your favor (like a solid company that still has earnings, dividends and a pulse and is selling for 2/3 it’s book value). In the case of the Dollar, the “Unamerican” rational minded Economics 101 Professor (no, not me) would say “beware”!

Now back to my rational mind…
I have come to the realization that the best way to diversify is over many years, buying into each sector as its respective opportunity arises. Today the opportunity that is soon leaving us forever is Commodities, particularly Gold and Oil. I have invested accordingly and encourage you to do your due diligence before doing so as well.

From a Medieval Captain’s guide: “If still foggy and you have compass continue sail!”

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