Utilities Are Warning the Correction Is Here [View article]
Its not about traders looking at interest rates - its about investors who focus on Utilities and who know that the sector's profitability is highly dependent upon the cost of capital.
Interesting about Spice, but doesn't surprise me. What we're talking about here is a method of exchange for goods.
Gold is an investment like anything else, and if the objective of an investor is to make money, it shouldn't matter whether its by Gold, Stocks, Bonds, etc. etc. What should matter is continuously positioning a portfolio to best take advantage of the strongest investments out there.
I find this to be a curious statement. GDX, a gold miners ETF, lost over half its value in the second half of 2008 during the crash. GLD also declned. In an actual crash, gold did not protect you, and certainly did not run away as you put it.
Thank you for the insightful comment. My apologies for the confusion. The purpose of pointing out a potential bond rally is to provide another argument for why I believe a correction is likely to occur much sooner than expected. I could be entirely wrong of course, but investing is a game of imperfect probabilities. Given the weight of the evidence (bond relative strength looking like its bottoming and defensive sectors looking like their are stabilizing), I believe the market is warning us that a decline is coming.
The question of course is how big a decline and the duration of it - this is unknowable except with hindsight. Because of my respect for the unknown, I shy away from blatently suggesting a course of action - that is a decision the individual investor must make given risk tolerance. I am making a short-term argument that the market may correct, causing defensive sectors and the bond market to rally. This is completely independent of the longer-term outlook for either asset class. Stocks do not go straight up and can have long periods of corrections followed by advances.
Think of it like driving a car. I am more likely to know if there is traffic ahead a mile from where I am, versus 5 miles, or 10. The short-intermediate term can be far more observable than the long-term.
Thanks for the comment and question. While I did not include more "beta-driven" sectors, the performance of retailers/consumer discretionary, and technology, both of which have led the bull market this year, do look to be topping. Retailers this month in particular have failed to keep up with the broader averages.
In May, the three defensive sectors outperformed (down less than the broader markets) but they all bottomed out around mid-April. My argument is that the recent period of stability in relative performance may indeed be a transitioning period where defensive sectors once again come back to outperform. More often than not, defensive sectors outperform in periods of declining prices.
Long-term is a rolling series of short-terms. It is far more observable to see that which is on the horizon than beyond it. Your statement regarding "constant changes of opinions" is an incorrect characterization given that I have correctly "called" nearly every major market move this year with dated proof, within the context of the reflation theme for 2012 I pounded the table on since January. I am simply addressing short-term price movements based on intermarket trends.
Be careful - markets could easily turn around next week. The point is that gains need to hold and continued improvement internally needs to take place for the odds of a real trend higher to increase.
Pay Attention: European Financials Give Harsh Warning To Bears [View article]
Fair enough, but human behavior does not change. From that perspective, money will continously overreact and underreact, which goes back to interpreting price with a behavioral/psychological overlay. Appreciate the perspective.
Well said as to your second paragraph. Germany has zero incentive to leave the EU. If Germany did, it would result in an immediate recession as their currency would then appreciate precipitously, choking off their export machine.
Are Emerging Markets Heading For Significant Strength? [View article]
A well thought out post, and I don't necessarily disagree. Remember that everything I do is about trying to gauge market expectations. I'm actually in the process of writing a new article now looking at Copper which is highly dependent upon emerging markets. Based on my analysis, it appears Copper is in the early stages of recovery. The emerging market idea may not be a long-term idea, but for a trade I think that crowd movement will position back into the growth theme, and as such, exporters.
Utilities Are Warning the Correction Is Here [View article]
Is the Gold Bull Market Over? [View article]
Gold is an investment like anything else, and if the objective of an investor is to make money, it shouldn't matter whether its by Gold, Stocks, Bonds, etc. etc. What should matter is continuously positioning a portfolio to best take advantage of the strongest investments out there.
Is the Gold Bull Market Over? [View article]
A Bond Rally in January [View article]
The question of course is how big a decline and the duration of it - this is unknowable except with hindsight. Because of my respect for the unknown, I shy away from blatently suggesting a course of action - that is a decision the individual investor must make given risk tolerance. I am making a short-term argument that the market may correct, causing defensive sectors and the bond market to rally. This is completely independent of the longer-term outlook for either asset class. Stocks do not go straight up and can have long periods of corrections followed by advances.
Think of it like driving a car. I am more likely to know if there is traffic ahead a mile from where I am, versus 5 miles, or 10. The short-intermediate term can be far more observable than the long-term.
Prepare for a January Correction [View article]
In May, the three defensive sectors outperformed (down less than the broader markets) but they all bottomed out around mid-April. My argument is that the recent period of stability in relative performance may indeed be a transitioning period where defensive sectors once again come back to outperform. More often than not, defensive sectors outperform in periods of declining prices.
Brazil An Early Fat Pitch? [View article]
Brazil An Early Fat Pitch? [View article]
Will Spain Haunt Dow 14,000? [View article]
Mini-Correction Over? [View article]
Mini-Correction Over? [View article]
Pay Attention: European Financials Give Harsh Warning To Bears [View article]
Did Draghi Flip The Spring Switch? [View article]
Are Emerging Markets Heading For Significant Strength? [View article]
Energy's Turning Point Catalyst? Reflation [View article]
Energy's Turning Point Catalyst? Reflation [View article]