Do not buy any "dips" in houses or real estate
I think that for most retail investors, avoiding real estate (especially in the first half of this year) is a very smart decision. Don't be a hero and try and catch the bottom in these stocks. It's simply not worth the risk.
Sell consumer oriented issues. Don't "bottom fish" in the financials. Favor high quality, special situations with strong balance sheets.
In my opinion, bottom-fishing financials in the late first half of this year should prove to be a low risk, market-beating opportunity. Many of the financials that have been marked down in the most recent downturn have almost no risk of going bankrupt. I think buying many of these stocks now will prove to be a smart decision several years from now but I do believe that many of them haven't yet bottomed. I am going to post about this in coming weeks.
The outlook for oil and natural gas, precious metals and agricultural commodities looks strong...Don't be scared out of commodities.
Although I understand the bull-case for oil, I believe that if the United States does in fact go into a recession, demand for oil is going to weaken as consumers are going to focus on reducing their spending. However, all of this might not matter because it seems like the price of oil moves on many issues beyond basic supply and demand (think Geography, not geology).
Europe looks increasingly vulnerable with several major economies (Italy, Ireland and Spain) weakening. The UK is very reliant on finance and could have issues as well. In 2008, the Asian and certain Latin American currencies will perform the best...Investment Thesis: Long Aussie dollar, New Zealand dollar, Japanese yen, New Taiwan dollar and Mexican peso. Short Euro, pound and US dollar.
I believe this point makes very good sense and the lowest risk currency bet is the Japanse Yen because, in my opinion, the Japanese won't be cutting rates and the currency should perform well. An interesting way to play the Yen is through the CurrencyShares Japanese Yen Trust (NYSE: FXY).
Currently, based on metal content and even after base metals fell in price during the second half of the year, the nickel is worth more than $.05 and the penny costs more than $.01 to make (see http://www.coinflation.com/). For a government that needs to balance its budget, this is too tempting an area to cut. Long-term, I see the penny being eliminated and the nickel either reconstituted or eliminated. We may eventually reconstitute around four coins: dime, quarter, half-dollar and dollar or nickel, dime, quarter and dollar.
I really don't know enough about this factoid to comment but it certainly is interesting!
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Reader Comments (Page 1 of 1)
1-03-2008 @ 5:48PM
Sheldon L said...
Three strong financials with balance sheets to back it up: NYB Mellon, Well Fargo, USB.