Don Coxe's June INVESTMENT RECOMMENDATIONS (thanks to Kipp)
1. The current US equity rally shows signs of needing a summer rest. But
it will not fall back into the Slough of Despond. This is a cyclical bull
market within a structural bear market—until proven otherwise. What it
most needs now is a lift from the bank stocks—and from sharply rising
volume on days the market rises sharply, and from falling volume when
it falls. It has been getting none of the above.
2. Remain overweighted in the commodity stocks, and remain diversifi ed
among the four commodity groups. Leadership will rotate from week-toweek,
but all four groups are showing good strength relative to market
indices.
3. We hope we are right that gold-related investments will be rewarding, but
will likely underperform other commodity-related investments in the next
few months. That means the global economic recovery was proceeding
without setting off infl ationary sparks. Thereafter, concerns about the
dollar and the effects of the all-out refl ation programs will once again
boost demand for gold.
4. The dollar has attracted fundamental criticism from one of its largest
holders—the Chinese. They have also transformed their Treasury holdings
by buying bills and selling notes and are well on their way to becoming
a demand depositor at the Fed. By forgoing nearly all the interest they
could earn, they are telling investors that we should be concerned about
the dollar. Believe those who back their bets against the buck so big.
5. The Canadian dollar remains undervalued relative to the greenback.
Canadian companies should emulate Teck: borrow, where possible in US
dollars. Canadian equity investors should shop at home fi rst, then look
for US bargains.
6. Keep bond durations low. We have entered a bond bear market at a time
of a declining dollar. That has historically been a lethal combination.
7. Do not join the all-out bears on America. The American economy is more
resilient than the gloomsters believe. It can even survive the wounds
inflicted on it by the Wall Street-Fannie-Freddie-Frank follies—and
the Pelosi-Obama programs. Nevertheless, there are now some better
investment alternatives elsewhere—across the Pacifi c and above the 49th
Parallel.
Doo Your Own Doo Diligence.
AI
