Thursday, May 11, 2006

This is why trading stocks is like performing your own open heart surgery...

It's always best left to professionals. The market at some point in the next month will have another "The Fed's almost done (REALLY!)" rally, but the market's obsession with commodity prices is bordering on silly.

As we've said before in the past commodity markets like oil, nat gas, gold, silver, etc were traded by industry players. Today every hedge fund with $10 and a dream is trading commodities. This is creating a very dangerous market for untrained investors. Hedge Fund managers and traditional portfolio managers are chasing new highs in almost every metal. These managers are trading in commodities like they are equities and the differences are stark.

I still think we get one more run at the records on Wall St. - 11,750 has been my target - but the increasing pressure on the US economy from weakening housing markets, rising long-term rates, reduced foreign investment, a weak jobless recovery since 2001 and a new Fed president that looks like a deer in the headlights means I'm getting increasingly negative on 2006 - 2010.

If I'm right - you heard it hear first. The 2008 election could hinge on the perfect storm of crashes - the stock market down 30%, commodities down 50% and real estate down 15% and falling like a brick - all occurring in 2007.

1 comment:

Anonymous said...

Why 2007? What will trigger it.