thanks powayseller for the nice compliments; happy to share my thoughts
I picked up 2 views of the Zeal writer that I agree to. Disclaimer: I’m not a convert because I already held the same view so understandably I’m biased.
Firstly, the Zeal writer thinks that US stock market has entered into a secular bear market that will last a number of years until valuations undershoot the other way. Check out http://www.zealllc.com/2005/longwave2.htm and at least read the 1st chart where he shows if you use PE as the judge, over time the market tends to oscillate around a mean of 14x. It last peaked at 44x before the tech bubble bursted and last trough was 6x in 1982 which was right before the greatest bull run we’ve seen in our life time so far (well, my life time anyway). Conclusion: stay away from the stock market unless you think you’ve got a winning strategy that allows you to go against the tide.
Secondly, he’s a commodity bull, which I am somewhat. For a quick summary of his view, try this article http://www.zealllc.com/2006/21bull.htm. If you have more time I also recommend reading Jim Rogers’ book Hot Commodities. Basically he thinks that we’re in a secular bull market that started around 2001, and commodity bulls usualy last something like 10, 15 years so there’s a long way to go. And one way to jump on this band wagon is to buy gold (which is probably the easiest commodity for the average joe to get into; as long as you have a stock account you can buy gold by investing in ETFs (GLD and IAU).
Re: economy. I’m somewhat undecided. Key is what the Feds will do with rates. If Ben continues raising rates, the commodity bulls could face some hiccups. If not, hard assets will go off the roof. But the tricky thing is since they stopped publishing M3, they could be doing something sneaky like continue to pump money into the system without lowering rates. So this is a tough one.
Re: investment. Bulk of my portfolio is in a few low risk asian equity hedge funds. I’ve been increasing allocation to gold since late 2004 and will continue to do so. For long only equity, the only sector I’m betting big on and will continue to add to is China (again I’m extremely biased on this one). My US stock exposure is down to single digit but no plan to totally get out yet. Am also looking to build up on foreign currencies if US rates stop increasing.
