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Craig Brockie
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Craig Brockie is a contrarian investment advisor in Beverly Hills, who provides wealth management services to high net worth clients. He prefers to bill his clients solely based on performance, getting paid only for results.
My company:
Contrarian Advisors
My blog:
Contrarian Investing News
  • 2 1/2 Years Of Dividends Wiped Out In 30 Days 2 comments
    Jun 6, 2013 1:39 PM | about stocks: VNQ, XLU, IYZ, XLP, PG, KO, WMT, CVS, VZ, GDXJ

    My previous two blog posts have been about the risks relating to high dividend stocks.

    "You're In Danger If You Own These Stocks" was posted as these stocks were peaking on May 17th.

    On May 30th, "Has The Bear Market Begun? It Has In These Stocks..." was posted, identifying that the bubble in high dividend stocks had finally burst.

    This week, another author has pointed out how 2 1/2 years of dividends have been wiped out in just 30 days. So much for these "defensive" stocks being defensive.

    The place to invest today is the commodity sector. Gold and gold mining stocks were completely decimated earlier this quarter and have reversed trend, quietly setting a bullish pattern of higher lows.

    My favorite fund, junior gold minding fund GDXJ, has already rallied 20% from it's recent bottom. I expect it to more than double from today's price within the next 12 months. Simply returning to its high of 8 1/2 months ago would fullfill this conservative target.

    For further explanation on why to invest in gold and mining right now, read my earlier article, "Gold: The Recent Collapse And Approaching All-Time High" which was published the exact day the gold price bottomed and "The Anatomy Of A Gold Mining Crash - And Recovery".

    We are experiencing a transition from a multi-year bull market (which began in March 2009) into another multi-year, crushing bear market similar to 2007-2008. The following 20-year chart of the S&P 500 iindex shows this pattern emerging.

    (click to enlarge)stock markets set to collapse again

    The good news is that major market transitions such as this are a process rather than an event. While high dividend stocks have already begun to head south for the winter, the commodity sector is just beginning to warm up and will likely be red hot before their bear market begins several months from now. If this sounds unlikely to you, just recall how the S&P 500 peaked in October 2007 and commodities didn't hit their eventual peaks until several months later. Remember oil hitting $147/barrel in the summer of 2008?

    Of course, in late 2008 no equities were spared. And none will be this time around either. The only two places to be just prior to and during the upcoming collapse will be US treasury funds like TLT and ZROZ as well as the short fund, HDGE. While a person could buy HDGE now at these levels to hedge their portfolio, US treasuries are still overpriced.

    It will be time to aggressively accumulate treasuries and HDGE in the upcoming months. In the mean time, ride the wave in the commodity sector as it's going to be a massive move, similar to early 2008. Gold is sure to set a new all-time high above $2,000 per ounce and gold mining stocks will more than double from their recent lows. Carpe diem.

    Disclosure: I am long GDXJ.

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Comments (2)
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  • freetime
    , contributor
    Comments (3) | Send Message
     
    God stuff Craig. Hon far are we from the apocalypse? Best regards Roger
    9 Jun 2013, 09:48 PM Reply Like
  • Craig Brockie
    , contributor
    Comments (156) | Send Message
     
    Author’s reply » Thanks Roger. I don't expect the market to finally bottom until 2015. Then of course, it will be time to buy, Buy, BUY.
    10 Jun 2013, 12:16 PM Reply Like
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