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The Risk in Stocks Hasn't Been This Low in 34 YearsBy
Thursday, October 23, 2008
You're going to think I'm crazy for writing this, but right now, there is less risk in stocks than at any time in 34 years. The only rational thing for an informed investor to do in this environment is to hang on to good businesses that are obviously worth more than what they're selling for. I put the great businesses of the world like ExxonMobil and Microsoft in this category right now. Both are absurdly cheap world-champion cash generators. It's only when everyone sells do these excellent businesses go for such low valuations.
Further Reading:
How to Make a Safe 38% While Wall Street Goes Haywire Market NotesNATURAL GAS IS NOW ACTING BULLISH
Yesterday marked another "behind the woodshed" day for commodities.
Receiving a bullet to the head were blue-chip names like Freeport-McMoRan (copper), Suncor Energy (oil sands), Petrobras (oil), Goldcorp (gold), and Cameco (uranium). All hit new yearly lows on big volume. All are down more than 50% since June. It's no wonder... Oil, gold, and copper are in clear downtrends right now. Which makes the action in natural gas all the more interesting... We've had a close on eye on "natty" for two reasons: 1) Our colleague Jeff Clark is bullish on the clean fuel. As we've mentioned many times, Jeff has an annoying habit of always being right... and 2) According to the latest trading data, a huge chunk of the hedge-fund world is bearish on natural gas. When everyone gets on one side of the boat, it always tips to the other side. Now, here's where it gets interesting: Commodities tend to move together. If oil suffers a huge 7% decline in one day, there's a great chance that copper, gold, platinum, and natural gas will be down big as well. Yesterday, oil suffered that big decline... but natty barely moved. It's a bullish sign when a commodity refuses to fall when the whole "club" is hammered. |
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