Friday, December 18, 2009

Raise Cash

What will the markets do now? A surprising number of people think an economic recovery is underway but many are very bearish and don't believe it.

There is no question that we are at or nearing a crux point, so the first thing we should see is a period of indecision with extreme volatility in both prices and volume. Overall, I think movement will be downward in prices, across the board. After that, things should sort themselves out. Some things will continue down and some will turn around and go up.

If I had to guess, I would say that stocks, industrial commodities and building materials will go down. World currencies will continue to deteriorate. Agricultural commodities, energy and precious metals should eventually resume their bull market, though not at the same times or proportion. I am often dead wrong. My phone number is not in any of the Blackberries of the rich and powerful, for inclusion in late night strategy sessions.

Now is not a buying opportunity. Almost everything except the dollar has been increasing in value for most of the last year. I think everything will come down a peg or two, at least. Some things maybe a lot of pegs. Good buying opportunities may start at or near previous lows. They may prove to be even lower than that or may not be opportunities at all, except to lose more money.

Raise cash. It's cheap right now. That's always a recommendation.


Steve Harkonnen said...

Stop printing cash altogether. Fiat money never did ANY economy any good.

Anonymous said...

Last year the DJ was in the 8,000 range, and today it is in the 10,000 range. My I.R.A. has increased by $20,000 during the past year. If I had a lot of cash lying around I would invest in the stock market.

-- Gary in Texas

W.C. Varones said...

I'm holding cash short-term tactically, but I think you'd be crazy to hold cash long-term with Obama planning trillion-dollar deficits as far as the eye can see.

They'll never be able to tax enough to get the debt under control. Inflation and default are the only options, and inflation seems more likely to me.

See also James Grant:

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