You'll have to excuse the lack of frequency in my "Journal" posts lately, I've been fighting a sciatic nerve problem. I am now standing up at my desk instead of sitting. Along with medication and stretching, hopefully the problem will be resolved.
Okay, here we go!
I have several areas to cover this week, so lets get started.
Hidden away deep in the pages of the WSJ two articles appeared on different days. The first article had a headline that read, "U.S. Aims to Fill Oil Reserve", and the second headline read, "China Accelerates Filling Up Its Oil Reserves".
I've been saying for quite sometime that the "Go Green Gang" cannot accomplish their goals with oil prices at current levels. In addition to the above WSJ articles, did you happen to notice the recent jump in gasoline prices lately?
According to a recent Lundberg survey, the average price of gasoline rose nearly 12 cents in the past three weeks.
To get a jump on the next move for oil, last week we added the USO: U.S. OIL FUND to the ETF portfolio. In the Fidelity Sector Fund portfolio, we added the Select Energy Fund (FSENX).
While oil prices may not reach their 2008 highs immediately, I believe oil prices are heading higher, and by 2012, they could takeout the 2008 highs.
Next, we got news that former Treasury Secretary Robert Rubin resigned as Citigroup adviser (?). Rubin collected millions at Citi which was just a license to steal. Citigroup is rumored to be in talks with Morgan Stanley to combine its brokerage operations. The brokerage business has bee dying for quite sometime. I advise you to get the heck out of Dodge while you can. I saw this coming years ago.
In reality you do not need to house your brokerage account with a Wall Street firm. This includes the banks who bought the brokerage operations of Merrill (Bank of America), A.G. Edwards (Wachovia/ Wells Fargo), Morgan Keegan (Regions Bank), J.C. Bradford/ PaineWebber (UBS) etc... The conflicts of interest are just too huge. My advice is do it yourself or find a quality independent rep. This is a major step towards leveling the playing field for investors.
Going forward, you need to be patient. I'm convinced that the Obama Administration will be engaged, and change the public sentiment from negative to positive in the weeks and months ahead.
VP Dick Cheney made a stupid comment the other day in the WSJ. He was defending the Bush Administrations handling of the economy saying that "no one saw this economic downturn coming". Oh, really Dick? Then why in 2006 did President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005?
I think they knew it was coming, and here is an article I wrote on the subject on November 2, 2006.
Here are our Top 10 ETF's for the week of January 12th:
1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) GLD: SPDR Gold Shares
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust
Here are our Top 10 Fidelity Sector Funds for January 2009
1) FSCHX: Chemicals
2) FBIOX: Biotechnology
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSENX: Energy
10) FSRBX: Banking
For the Week:
The DJIA dropped almost 5% last week on the heals of a dismal jobs report. The Labor Department said that 524,000 jobs were lost in December, and the nations unemployment rate rose to a 16-year high of 7.2%. Did anyone in their right mind expect the jobs picture to look pretty?
Look for President-Elect Obama's stimulus plan to light a fire under the stock market. Whether it will work or not is anybody's guess, but I believe investors will initially give Obama the benefit of the doubt.
When it comes to the economy, consumer sentiment is everything. If moods improve, sales will pick up. As sales pick up, employers will rehire workers.
I find it encouraging that the stock market didn't freak out after Friday's employment report was released. In fact, it signals that investors are looking forwards, and many are seeing a light at the end of the tunnel.
So, we have the stimulus package to look forward to. Lets hope the crooks on Capital Hill don't try and lace the new bill with a bunch of pork.
Let me reiterate what I think will happen in 2009. The Wall Street media has investors scared out of their minds. They like to do this when they are accumulating positions. Once they are done buying, the news gets magically better.
1) Gas and oil prices will rise.
2) Gold prices will rally.
3) Treasury yields will rise.
4) The U.S. Dollar will decline.
5) China will resume their pace of growth.
6) Government stimulus will work.
7) Home prices will stabilize by mid-year.
8) Pent up consumer demand will lead to better spending numbers toward year end.
-Gold
-The U.S. Dollar
Our current asset allocation is as follows;
95% Equities: (Normally 95%) Aggressive
80% Equities: (Normally 80%) Moderately Aggressive
60% Equities: (Normally 60%) Moderate
40% Equities: (Normally 40%) Moderately Conservative
20% Equities: (Normally 20%) Conservative
