This is an extract from the Motley Fool's free email. Has anyone had any experience with this mob? The Motley Fool Presents Take Stock Our unique Foolish take on what's really happening on the stock market Rediscover That Old Winning Sharemarket Feeling Tuesday 10th January 2012 Dear Fellow Share Market Investor, People are running away from shares, but there are great growth opportunities, especially in the overlooked small cap sector. Are you a fighter, or a quitter? When the chips are down, do you pack up your bags and go home, or do you double-down your efforts, try even harder, and never give up? It has been a tough time for wearied, bloodied sharemarket investors. The S&P/ASX 200 index is back trading at the same levels of early 2005. Over the past 10 years, it is up only 20 per cent in total (dividends excluded). Worse, from its October 2007 peak, the market is down close to 40 per cent, including last year's fall of 14.5 per cent. Run away When looked at through the rear-view mirror, the picture looks bleak. Add into that the seemingly unsolvable European debt crisis, and you'd be excused for running away from shares, and fast. And that's exactly what many investors have been doing. Having been fully invested during the go-go years of the mid 2000's, and having a whale of a time, now the going has become tough, they've taken their bat and ball and gone home, or gone to gold. Speaking of gold, in recent months it too has been exposed as an emperor with no clothes. The doomsters kept telling us gold was the safe haven for when the world economies and world sharemarkets inevitably imploded. Reality has been very different. During the November sell-off, virtually all asset classes fell (with the exception of the U.S. dollar and U.S. treasuries) including gold. When markets panic, as they are prone to from time to time, there really is no place to hide. Goldnothing going for it We're not particularly fond of gold. As an asset, it pays no dividend and is virtually impossible to value. Not only that, as we saw above, in times of panic, it too is no safe haven. Back in early September, when gold was riding high, we put our heads on the block by making a bold prediction "stock returns over the next 10-15 years will be above average, and gold returns will be below average." We're off to a decent start since then, with the market flat but gold down over 14 per cent. Only 116 months to go to see if we're right. Putting our money on the line Today we're going to make another bold predictionthat yields on U.S. Treasuries will rise over the next 3 years, meaning the underlying asset will fall in value. Putting my money where my mouth is, by selling calls, I've set up a short position on the iShares 20+ Year Treasury Bond Fund ETF (AMEX: TLT). The ETF has an average duration of 28 years with a weighted average yield to maturity just under 3 per cent. I'm betting, as the U.S. economy slowly recovers, the yield will slowly but surely edge higher. The yield was 4 per cent only in July. Soif gold is not going to do it for us, and treasuries/bonds aren't, and property definitely isn't, what is? No surprises here when you hear us say the sharemarket. After all, we're in the business of recommending individual stocks to investors via our relatively new Motley Fool Share Advisor service. But just think about this As reported in The Sydney Morning Herald, "for the sixth year in a row the Australian sharemarket chronically underperformed many of its global equity market peers, despite being at the centre of a mining boom and being part of an economy that managed to notch up its 20th consecutive year of growth." People are pulling their money out of shares. Domestic interest rates have already fallen, and are projected to fall even further, the 10-year bond yielding 3.75 per cent. People continue to ignore the sharemarket, despite it looking very cheap." ..and on it goes....
Wow...that's some very 'emotive' langauge...reminds me of the Daily Reckoning's mailouts there for a while. I think emotion and investing make for poor bedfellows.
I doubt equities will outperform gold over the next decade. They may be right about treasuries eventually but I wouldn't be betting on it.
Logic FAIL. He was doing okay up until making the assertion that the world's sharemarkets and the global economy collapsed last November. Either financial Armageddon happened last November (and I missed the whole thing, dammit) and we're wrong about gold or conditions continued to deteriorated and people did exactly what they did during the GFC and sold off everything and he's wrong about gold. I pity the Fool.
I know this is the place for precious metals stackers to congregate, but I'm guessing there will be a time when the return of stocks will outstip those of precious metals. Albeit for potentially the wrong reasons, is it possible this Fool may be onto something and a savvy value investor may be able to navigate the market and purchase some undervalued stocks in the next 12-24 months? Long story short, what kind of market predictors can we use to signal placing some of our hard-earned dollars into other assets? Or is the stacking game a permanent fixture?
If you listen to Martin Armstrong then you'd think stock markets will indeed rise as money moves from the bond markets..?
Unemployment in the U.S. falls below 5%, there is no danger of European states ditching the Euro, China maintains economic growth, all the countries with debts higher than their GDP pay back the money they owe and cease being insolvent like they are currently, etc, etc. But yes, there probably are bargains out there. Somewhere.
What surprises me about the ASX is currently how few bargains there are (my personal observations only) despite the price having fallen so much since the 2007 peak (in comparison to 2009 which was full of real small cap bargains).
