3 THINGS I THINK I THINK
11 November 2009 by Cullen Roche
11 Comments
- The market is on pace for an 18% rise in November at the current rate. We’re up 8 days in a row (yesterday was flat) or every day this month. Do you feel comfortable playing the next hand of blackjack after a string of aces like that? I sure don’t.
- International bonds are soaring. Domestic bonds aren’t selling off. The inflationary story that gold is telling us appears to be in conflict with other asset prices. My guess is gold has gotten a bit ahead of itself here.
- The VIX is up on a strong day for equities. Is the smart money reaching for protection as everyone else chases the numerous growing liquidity bubbles?
You’re stealing my thunder.
Ha. You can have your thunder back. But you owe me a steak for our bet earlier.
Oh okay. I’ll throw one on the grill tonight and mail it your direction.
The concept that gold buying is an inflationary indicator depends upon your definition of inflation. Personally – and I have read others citing the same reasons – I have been buying gold recently (for the first time) not to speculate but to hold, long-term, as a hedge against fiscal disruptions and currency collapses. Some central banks may now be doing the same.
Well, gold is an inverse dollar play so if you’re using the traditional money printing definition of inflation then you should be buying gold.
in my view the trend is your friend for the time being. But I do feel that until the government deals with the basic structural problems in our financial system of too much debt, we will not have a sustainable recovery. So even though the stock market can stay irrational in the shorter term, in the long run I believe it will go back to reflecting the fundamentals of our boom and bust economy. And that’s why I continue to feel that for long term investors a better portfolio allocation is in cash and gold. I think the gold price will continue to rise due to a lack of faith in central banks’ policies and in fiat currencies. I recently saw a very interesting articles called What Gold Bubble? Setting the Record Straight which I think is particularly useful for investors to read to get a better sense of what’s going on in the economy and the govt’s role in influencing it.
Hi TPC,
I have a request. A blast from the past if you would.
If you have old investment letters from the folks that you feature on your site. (Rosenberg when at ML, Saut, Russell, Goldman Sachs, Morgan Stanley, Pretcher, Faber, etc) I think it would be interesting to see a representitive view of what each was saying on the economy and the markets in September 2007 (just before the end of the 2002-2007 cyclical bull market) and Septmber 2008 (just before Lehman) to compare to their current outlooks.
I have gone back and read Grantham’s work over the past years and find if very interesting.
I’ll look into it. Maybe I’ll start a segment looking at real performance of so-called gurus.
He’ll send you some issues from 2001-2005:
http://www.gloomboomdoom.com/public/pSTD.cfm?pageSPS_ID=1300
Additional issues on the side panel here too:
http://www.gloomboomdoom.com/public/pSTD.cfm?pageSPS_ID=1000
There is no reason for this rally to quit until the end of the year. The hedgies, the prop desks, and the big sellside will not allow it to happen. Next year is any ones guess