Financial Sense Blog

If we really want freedom, we have to embrace the truth.

The United States Postal Service announced this week that all future first class postage stamps sold will be the so-called "forever stamps" that have no face value but are guaranteed to cover the cost of mailing a first class letter, regardless of how high that cost may rise in the future. Currently these stamps are sold for 44 cents, but will increase in price if and when the Post Office hikes rates.

A look at the long-term trends. Over the years I have been told that, on average, from trough to trough the cyclical bull/bear cycle lasts about four years -- two-and-a-half years for the bull, and one-and-a-half years for the bear. Looking at the monthly bar chart of the last 22 years, it is hard to see anything that looks the least bit like an average market cycle.

Bears are by nature cautious and while caution can be an ally, it can also be fatal where bold action is required.

Next year - a positive year but a scary correction on the way to that positive year-end close.

Getting right to the point, I believe it will be very important in the year ahead that investors keep “time frames” in mind. This applies both to the real economy and the financial markets. Short-term, prospects for headline US GDP growth at least over the first half of 2011 are looking pretty solid.

With gold and silver both boiling ferociously into record territory repeatedly throughout the last half of 2010, the outlook for 2010 looks even more bullish for the monetary metals. Forget the perennially fallacious predictions of the financial mainstream. There’s nothing but higher prices for both these metals on the horizon.

Month January is named after the Roman god Janus. He is depicted as having two faces. One looking back at the fading last hours of the old year, the other trying to discern the new year. Similarly I contemplate the final two trading days of the old 2010 year and the opening of the first five trading days of the 2011 year. This period is sometimes marked by swirls of positioning often referred to as “window dressing” in order to make portfolios appear as attractive as possible.

The Wall Street press is working overtime to generate enthusiasm over stocks among retail investors. Is this setting up the next major top?

In a development that is very positive for active portfolio managers—in fact one of the most bullish developments in the last couple of years in our opinion—the strong correlations between individual stocks and the bond market or major market indexes since the 2008 financial crisis are ’decoupling’.