Friday, March 20, 2009

The Bulldog Returns

I've been blogging since 2004. The large gaps in my archive are due to the fact that I needed to take down much of the investment advice I was posting under the so called "Bulldog Report". So, breaking with tradition, I am going to post some stock picks. Before you read on please remember that any information that follows is neither a solicitation to buy or sell securities. The writer of this article may or may not own such securities at the time you are reading this article. And, don't be a complete idiot-- do your own research before you buy financial instruments of any kind.

Whew.... now with out of the way. I am working on 2 strategies both based on China. The reason these strategies exist is posted here.

STRATEGY 1: CHINA RECOVERY

DBB: ETF for aluminum, zinc and copper
FXI: ETF for top 25 Chinese companies
UDN: ETF for shorting the US Dollar.

STRATEGY 2: COMMODITY RECOVERY

USL: ETF for United States 12 month oil
DIG: ETF PROSHares ultra leveraged long term energy
ENY: ETF for Canadian Energy (stay away from US companies unless ultra leveraged)
GLD: ETF for Gold
EGO: Canadian Gold Mining Stock (probably best financial fundamentals of gold miners)
UND: ETF for shorting the US Dollar


Of the two, I like Strategy #2 the best, since OIL crossed its 50DMA this week. OIL should move to $60-65US by end of 2009 because China has locked up reserves in Russia and Venezuela using excess US dollars in the Central Bank of China (afterall they can't keep buying US treasuries with those dollars earned from imbalance of payments). This move, along with the fact that Mexico will be a net importer of oil in 2010, will move all other buyers to the spot market. Also, remember that China has been providing engineering and financial aid to Iran and Iraq as well as selected countries in Africa for mineral rights.

The only downside I see here could come from a decision by the US government to sell Alaska to the Chinese to pay down the US debt or provide temporary jobs to displaced US workers. Other than that, I think this is pretty sound.








2 comments:

  1. "The nightmare scenario that is staring us in the face, right here, right now isn't hyperinflation. It is in fact a collapse of monetary systems driving demand for dollars through the roof in a crescendo of attempted redemptions into collapsed ("no bid") asset prices - a demand that Ben will not be able to meet, as the collateral backing those dollars will have all been exchanged for worthless pieces of paper.

    The mad scramble will be on, and as it happens trade will be choked off by not a collapsing dollar but other currencies collapsing around the world.

    Unfortunately this shuts down virtually all exports and the economy collapses, along with government funding and our currency - but not through hyperinflation. The mad dash to redeem and sell anything and everything instead collapses pricing (that is, it becomes out-of-control deflation in an exponentially-increasing fashion) irrespective of Ben's attempt to halt it.

    The "death spiral" ends in the destruction of our monetary base - not due to hyperinflation but due to the inability to borrow any more funds, the reduction of the currency's base to a giant circle jerk, asset fire sales in a mad liquidation dash and ultimately, the collapse of both the monetary and political systems in the United States as tax revenues collapse to very close to zero.

    This is a national security emergency that quite literally can take down our government and way of life within months or even days, and I'm willing to bet that not one person in Congress understands the seriousness of the matter.

    By refusing to confront the bankrupt nature of institutions under Bernanke's supervision and by choosing instead to continue to bail them out and take their trash onto his (our) balance sheet, Bernanke is risking something much worse than a Depression.

    He is literally risking the end of America as a political and economic power.

    Watch for a bond market dislocation very carefully. "

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  2. FIREJACK:

    Sounds like you better head into your bunker. Things are bad but they are not that bad.

    I would say that Bond market dislocation has been occuring for more than a year, here and there. Even last week and the week before, I would contend that dislocation occured on the 10 Year treasurys.

    My point is that we are hovering at an inflection point and the USG is working to keep us on the inflation side of things not the deflation side.

    They are putting pressure (threats?) on everyone to come out on their side. Even the Chinese are routing for us if you think about it.

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