Investing Wisely - Year End Forecast for 2011
My focus is "Investing Wisely", e.g. taking advantage of the Bull / Bear Cycles as they occur within the overall marketplace. Integrating modern analytics within these Cycles, means maintaining a process of the thorough fundamental, technical and consensus analysis of the marketplace. I believe that this discipline provides the necessary clarity regarding the Rotation that most all Companies goes through - from favorable times to unfavorable times and perhaps back again.
I am going to climb out on the limb again as we close out this year.
It is not clear sailing for the Bulls or the Economy - in front of us.
I would simple like to share some of the things that I think "fight" the conclusion that many pundits are drawing for 2011:
Sustaining the Bush tax cuts is not a stimulus. No one's check is going to be bigger as a result. This is more of an absence of a negative versus a positive.
The $115b, 2% reduction in Social Security taxes is a stimulus. But not much of one. It comes to $15 a week for the average worker. elimination of the Make Work Pay program. Net net no big deal.
The dollar is too strong to think that our economy is going to grow much in 2011 and will bring us higher trade and current account deficits.
2011 will be a year of non-stop muni "crisis" talk. What this really means is that the states, counties, cities, towns and villages will all be cutting expenses.
Energy prices are rising. In 2011 we will see this in both electricity and gas. $15 a week savings from SS is going right out the window and into a gas tank.
Mortgage rates are not getting cheaper.
Don't count on the EU lifting US GDP in 2011. Not going to happen.
China is a question mark. I say that they cool in the coming year by more than the current thinking.
Wild Card. There are always surprises. Rarely are they good.
So if the above is correct it is going to put a big dent in markets that are now trading very rich. If in fact what we are seeing is a big misread on the economy and a distortion by QE2 then we are going to see the bottom levels on the charts again
My Current Bottom Line:
* I am holding 100% Bearish Positions.
* Patience and Discipline - waiting for my list of Fundamental, Consensus and Technical - "Conformations" to all fall into place is part of the necessary process for "Investing Wisely".
* Inflection Points historically have occurred historically about three - five times per annum. We have already had 5 clear and meaningful Inflection Points so far this year. Investing at or around the time of my Inflection Points has proven to be a profitable way to invest.
* In my late August posting, I said: "The Market is now (very possible) setting up for another meaningful but likely (short in duration) Rally!" It certainly did rally!
* Now it looks just the opposite. One of these days this choppy and bifurcated market (late April to date) will do something meaningful and the next possibility of that is a meaningful Pullback.
* High Volatility may not currently be showing up on VIX due to the current rally - but VIX being an Inverse Indicator, I can assure you that it is clearly - alive and well.
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Smile, have Fun - "Investing Wisely",