Financial Sense Blog

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’.

Speaking with Carol Massar and Matt Miller in a Bloomberg interview back in July 2010, former Energy Secretary Spencer Abraham said, “(The United States) is a country whose economy has always been based on having plentiful, affordable supplies of energy. But one of the things we can do is develop more sources here at home...

The Fed's lucky streak of luring bond investors with low interest rates may be drawing to a close. Nevertheless, the extended period of low borrowing costs has bred a new breed of investor. To the bulls and bears, we can now add the ostriches - those who bury their heads in the sand of declining debt service ratios while refusing to face up to intractable levels of total US government debt. If these ostriches were to actually look at the numbers, they would realize that it is their investments which are made of sand.

The end of 2010 is rapidly approaching and the pundits and commentators continue to make their 2011 market predictions. I for one believe predicting future market moves is a futile endeavor where if you are right one year later you are viewed as a sage; if you are wrong nobody seems to remember or care.

Many municipalities, local and state, just printed their third quarter in a row of rising tax receipts. In the past eight quarters, state and local governments swung a collective $115 billion in budget balance, from $65 billion deficit to $50 billion surplus (source Strategas). “State spending fell 3.8 percent in the 2009 fiscal year and 7.3 percent more in the 2010 fiscal year” said the lead editorial in the Sunday New York Times (December 26). They are making tough decisions on budgets and expenses. Our take is that not all situations can be painted with the same broad brush.

Over the past year we have received many questions about Europe’s debt woes and their implications for the global outlook. As the year progressed it became clear that there is a fair bit of confusion regarding national debt levels and determining which countries are most vulnerable and why.

It is a commonly held belief by many precious metal investors and even a good percentage of market pundits that silver always outperforms gold during the latter stages of a precious metals rally. When the chart action goes parabolic — such as in January 1980 or May 2006 — silver is at its most profitable, or so the thinking goes. The truth, however, is that silver outperforms gold only during orderly and strong price advances that remain trend-bound. Once gold and silver prices achieve the wildfire stage, the blond metal can outshine its albino sibling both on the way up and especially on the way down (by falling less, of course).

Essential to Profit and Protection in 2011 is distinguishing Sectors in a Genuine Bull Market from those in an Ersatz Bull Market likely due to the Artificial Asset Price Inflation and Market Boosting resulting from Destructive Fed Q.E.

Since the early 1990 decade, the nation's maestros have promulgated the notion that cheap money is a beneficial factor for the sustenance of wealth, for economic development, for the standard of living, for the robust industries, in general for the American society. Nothing could be further from the truth, but even today the reckless US economists from the Keynesian Camp and their controllers from Wall Street have convinced the multitudes that cheap money is a good thing.