CANSLIM.net Help Lines
954-785-1121 OR 1-888-CAN-SLIM

 


>>> UPGRADE YOUR MEMBERSHIP NOW AND GET IT ALL - CLICK HERE
INM July 2010 - Watch Out In The War On The Productive Class
Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net
CANSLIM.net


I still believe that growth-oriented investors stand some of their best chances of getting above average returns the same way we have been approaching it for our actively managed clients' accounts at Source Capital. That is, by sticking to the investment system which involves fact-based buying and carefully managing a small handful of individual stocks during favorable market periods while being both disciplined and selective, or otherwise, sitting on the sidelines in safe low-yielding cash equivalent investments during unfavorable market periods.  Please do not think that I am becoming a gold bug or changing investment tactics if I might go on a rant about the challenging and hard-to-predict economic environment policy-makers around the globe have successfully created for us. I will do my best to come forward with some helpful information and ideas you can possibly use to get ahead in the process.  Or, at the very least, this might put some things that are happening in a useful context.

Amid the influence of great worldwide market forces our leaders have supposedly set forth policy which works to create and maintain fair and orderly markets. Yet, against that backdrop, in recent years we have seen big run-ups to record highs in asset classes like real-estate and oil, followed by major panic and plunge!  You probably know this from directly experiencing the price volatility that homes like yours went through in the past decade. And we also saw crude oil rally up through old records to $147 per barrel and then quickly plunge to the low $30s before gradually rebounding to $80, then again retreating.  One can easily get the impression there is just too much money circulating and speculating in the world, and there are too few asset classes the world's masses are willing to put very much faith in, both at the same time. 

Any American who has any dollars is afraid of those dollars' buying power being quickly destroyed, especially beyond the extent that their value already may have been destroyed. Fueling those flames of fear at present are an increasing number of media outlets and "experts" that are each repeatedly pointing out any new record highs and near record prices in precious metals including gold and silver.  Few are sympathetic to the poor gold mining and production companies that have in many of the cases endured decades where the market price of the metal was very near and even below their production costs for long periods. Now, after they have been blessed with a rally from $400 to $1,200 per ounce of gold they can finally ramp up production, pay their leases, fix up and buy new machinery, hire crews, and do what any good production company does - produce!  Sure, many others might just sit on their immense reserves and still enjoy higher valuations without working or producing anything more than before, when prices were lower.

We cannot forget about the war!  I am not talking about Afghanistan, or Iraq, or any other troubled region of the globe.  I am referring to the ongoing war on the productive class and the producers of our society. See, unfortunately, production of new gold is a "crime" for which the departed Australian Prime Minister, Kevin Rudd (see http://www.guardian.co.uk/business/2010/jun/24/mining-supertax-australia-gillard), and perhaps many other world leaders (Obama?) are now coordinating huge "windfall" super-taxes and restrictions/moratoriums on production. Effectively, such policies send jobs overseas to other places, while the worldwide market forces will eventually have their way and prices will inevitably normalize in due time. But, think about that and other manipulations impacting gold prices and markets. A huge 40% tax if you make more, or just the threat alone, is a force of manipulation impacting prices. Of course, I consider the act of misappropriating billions of dollars and making loans to hand-picked financial companies which are publicly traded to be a gross and illegal manipulation of securities prices. Some just say this time it was necessary.

The world's central bankers and policy-makers may want, or they might willingly tolerate a gold bubble or climax run up to $2,000 - $3,000 per ounce, or even more. They tolerated and clearly assisted in creating the recent bubbles in other asset classes, and then they rushed and ranted to fix the world's horrible problems created by greed and lack of regulation "so that it never happens again."  It seems as though the run-ups in prices of some asset classes has helped fiat monies (money not directly backed by any tangible assets) somehow look more attractive too, maybe working the same way that some houses in the neighborhood going up in price helped other houses in the same neighborhood to also rise.

I like Newmont Mining (NEM) based upon its strong annual earnings (A criteria) history and strong sales revenues and earnings increases in recent quarterly comparisons (C criteria). Technically, volume has not been extremely robust behind its gains for new highs.  I would rather own an individual equity position in a company like it than gold or silver bullion.  Keep in mind that, even after recent years' great run up in silver and gold prices, such dramatic gains are still "small" compared in the context of 10-fold or 14-fold rallies precious metals made a few decades ago.  One who is clearly a fan of bullion illustrated how NASDAQ was up 1,900% and substantially outperformed gold in the 1970s although THAT OUTPERFORMANCE was not his primary point - (see http://seekingalpha.com/article/211960-for-the-last-time-is-gold-in-a-bubble?source=dashboard_stocks-sectors ).

Keep in mind that individual stocks that are leading performers commonly outperform diversified stock indexes. In a bullish market environment gold companies' shares can dramatically rise right alongside rising technology firms' shares, retailers' shares, and financial firms' shares.  Let's stay alert to whether we are in a bullish market environment, or if we are in a period where 3 out of 4 stocks are likely to decline.

About Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net :
Kenneth J. Gruneisen has successfully completed the CAN SLIM® Certification Program.  Mr. Gruneisen became a Registered Representative in 1987 and his career includes experience offering personalized assistance to investors with more than a decade of experience as a Registered Principal managing a branch office.

The recommendations made by CAN SLIM® certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil & Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil & Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.


Comments contained in the body of this report are technical opinions only and are not necessarily those of Gruneisen Growth Corp. The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness cannot be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto. Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities.

Related Content :

The recommendations made by CAN SLIM® Certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil + Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil + Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.

Copyright © 1996-2014 Gruneisen Growth Corp. d/b/a www.canslim.net  All rights reserved. Protected by the copyright laws of the United States and Canada and by international treaties.  The names "CANSLIM" and "CAN SLIM®" are service marks and trade names of Investor's Business Daily, Inc., a California corporation, and are used by Gruneisen Growth Corp., a Florida corporation, under license. GGC is solely responsible for the operation of and opinions expressed in this Website. Daily Graphs® and Daily Graphs Online® are registered trademarks of William O'Neil + Co. Incorporated and are used with permission.

Privacy Policy | Terms of Use | Contact Us