Gold Going Higher
I know that I wrote an article stating I was not a goldbug, but these are certainly not typical times. Gold, along with treasuries, is viewed as the go to asset class during times of distress regardless of price or recent performance. I mentioned that I do not like the fact that it does not generate cash flows, thus making it impossible to value correctly. Ironically, that is working in its favor because nobody can say it is expensive.
Second Half Surge?
It’s amazing how many economists and analysts projected strong GDP growth up to 4% for the second half of the year. As anemic reports flooded the wires, I kept wondering how this was going to happen. One pundit came on CNBC and said lower oil prices would be a major catalyst for the growth. I strongly disagree with that because oil is dropping now due to the very weakness that they didn’t predict. Analysts finally seem to be facing reality and are starting to slash their growth forecasts. That’s why they get paid the big bucks.
Stock Picking? Not Yet
I still think this environment is too macro driven to be overly concerned with individual stocks. Preserving capital and avoiding being a hero are more important right now. However, always keep a shopping list handy so you can act quickly once conditions improve. Currently, stocks are being held hostage to the macro news flow and whatever investors seem to be focusing on for that particular day.
Right now danger is high, but long term opportunities are being created. Only those with dry powder and a plan will be able to fully take advantage of it though. I would not worry about trying to catch the bottom tick of the market because the risk of that strategy is too high. There will be plenty of time to get in once things turn around. Until then, tread carefully.
Some Random Market Thoughts – 8/23/2011 is an article from: 
