This week's testimony by JP Morgan chief, Jamie Dimon, holds some clues to the future. These clues can be used to develop better investment strategies. While much of the questioning appeared scripted, as you could tell from several not-so-literate-bureaucrats reading questions that they seemed to not understand themselves, Jamie Dimon continues to set himself apart as a class act. He is not only very likeable (I have met him many times as a former Smith Barney employee myself), he comes off as very transparent and contrite over JPM's large recent losses. I long for the days when corporate losses are none of the Government's business. The takeaway is that government intervention in the banking business is far from over. Increased capital requirements and a reduction in risk taking rule the day. The money multiplier, used to create money in our banking system, will no time soon provide a robust lending environment. Without those wheels churning out cash, inflation going forward will be muted. But woe the day the tires actually bite the pavement, when inflation will roar. Hang on to your Gold, mining, and energy stocks, and add as they go lower. Unwinding long term bond positions during this lull would be wise. This transition may take some time. Recent weakness in commodities businesses will not last. You have time to implement slowly, but you won't want to miss this one.
The author personally owns GLD, SIVR, XOM, CVX, APA, COG, TBT, GDXJ, PPLT, SJT, WFT