We wish to give you fair warning right away–if you decided this was the opportune moment to invest your life savings, stop now! This upcoming year is sure to present many financial woes for traders. Extreme volatility in stock and commodity markets will require very delicate knowledge of the macroeconomic climate to ensure you can safely navigate your investment vessel to profit.
Many traders will lose money following the advice and suggestions of analyst forecasts. Thousands more will be the victims of the effects of government manipulation of certain markets. The rest will buy into the mass media drivel, leading to immensely large short-term losses that many inexperienced traders will be unable to recover from. Aspiring investors will be befuddled, wondering how their investments have been unprofitable when their logic seems so sound. Below, we will present some viable long-term investment options and explain why it is almost certain that they will be unprofitable in the short-term. Nonetheless, it would be prudent to hold them and avoid the chaotic mess that will be the day trading environment—which will surely be a ruthless insider arena.
First off, invest in gold. If you can’t buy physical gold bullion or gold coins then buy gold stocks such as GLD. You can also leverage yourself with different ETF’s to double, or triple invest in gold. However, with the coming volatility in the market it is not currently necessary. The Federal Reserve has already printed massive amounts of money, almost tripling our money supply in the span of two years.
Eventually, this will be coupled with money printing to support our ballooning deficit. At the end of the day, this all leads to inflation no matter what any analyst would have you believe–the only question is, when? Everybody has grown to accept gold as a store of value in the case of inflation or economic collapse. When one looks at Europe or Bank of America’s balance sheet, it is a wonder why we all haven’t piled into gold already. The main reason we believe that gold will continue to be volatile is high demand. The commoners are waking up to the international threat to their money, finally beginning to look at gold, and the only thing confusing them is the recent volatility.
We believe the recent volatility is caused by FED manipulation. They simply cannot have investors pulling out of stocks and charging into gold, as it would cause a massive price hike and, eventually, a bubble. So, instead of acknowledging the problems our economy is facing, the FED and big banks are lowering earnings forecasts to make them attainable for poorly faring companies to simulate real growth. At the same time, the FED is doing massive gold inventory sales when the price increases too much in an effort to scare investors. We are telling you now, always keep some amount of gold in your portfolio. Physical gold has many advantages.
However, gold stocks are also recommended. We do NOT recommend gold miners!!!!! Unfortunately, Gold is likely to remain volatile this year. However, nobody truly knows when this debt cycle will cease, and it is better to be prepared today. You may lose everything in the coming sinkhole collapse, so we recommend forsaking your greed for that extra 3% and simply buying gold anywhere in the mid to low 1,500 range.
Move into short ETFs, also often called bear funds. There are ETFs that short all types of markets and industries, and they have become my personal favorite as a day trader. We recommend holding 100 shares of the following stocks for the next 3 to 5 years. Once our economic situation worsens, you will learn to trust us a lot more and will probably purchase more shares. However, we currently ask for some faith from our readers. FAZ is a leveraged fund that essentially triple shorts banks. BAC is currently on very shaky grounds, and with JPM and C giving horrible profits after the holiday season, the industry cannot possibly have a bright future in 2012. EEV is a leveraged fund that shorts the MSCI emerging markets index. This is a great stock pick in case of a global collapse because the first economies that will collapse in a global fallout are emerging markets.
They will crumble because the majority of their GDP is export based and without industrial demand from China, they simply cannot sustain their growth. DXD is a leveraged play that shorts the Dow Jones directly. This is a very simple stock that anybody can play. In reality, with the current market conditions, it’s really no different from playing roulette in the casino.
These investment ideas seem very logical with the collapse of America, Europe, and China impending. Shorting financial institutions, indexes, and emerging markets all seem like great plays that many will consider. However, there are still many steps governments can take to prevent true profitability from coming to fruition. The FED can, for instance, declare QE3, which would once again lower interest rates.
Fortunately, this will have practically no effect because rates are already at record lows. This would, however, once again raise our budget deficit and re-inflate the current stock market bubble, as investors seek to put more money into companies, hoping for higher returns. We personally think that Europe will overshadow any sort of actions by the FED. However, the ECB will become a lender of sorts in times of dire financial straits if it must. They will create new treaties before they allow the collapse of the euro and the European Union. China will also ease their monetary policy once again to relieve financial stress in their country. Overall, these three political moves will hinder the success of the ETFs we recommended.
Nonetheless, we think they are still solid plays for financial fiascos, which are bound to be plentiful this year. You can pick these stocks up now at their lows and await a negative turn in the world market, which we can almost guarantee will happen in the coming months.
If you must invest in stocks, we recommend investing in technological firms—particularly ones that are creating advancements in various fields, such as 3g/4g technology, Chinese real estate, which is currently experiencing a bubble, or in industries that can be considered necessities such as food. Companies such as IDCC continue to hold massive amounts of patents, even as they continue to develop new technologies that will be used in the smartphones of the future. Companies such as MITK create very useful apps that allow users to simply deposit checks through the camera app of their smartphone.
Invest in ideas you see a future in. Chinese real estate is currently experiencing a bubble, which will assuredly have a very harsh landing. There is nothing wrong with riding a bubble up with companies such as SFUN, a holding company for real estate and various furniture stores throughout the Asian continent. However, one must remain wary when investing in a bubble, especially when entering the market in the middle of its life. You can make double your money but you can also lose it all just as easily and much faster if you are not aware. Lastly, we are great supporters of MCD.
The simple logic I always use when people tell me how great of a stock CMG is this: you can buy 15 burgers for the price of one chicken burrito and a soda. I think I have said enough. Not only is MCD a delicious brand that is very well embedded in our culture, but it is significantly cheaper than all competitors. In the case of a recession, where parents will have to work crazy hours, they will be sending their kids to MCD for lunch. Simply put, it is a safer bet than any other fast food company due to brand recognition, price competitiveness, and active advertising. Price increases for different commodities will influence the entire food industry, and MCD has clearly shown us it is willing to adapt to change by launching its successful McCafe addition.
Lastly, watch out for QCOR (Questcor Pharmaceuticals) we are hearing some talk that this company is about to get busted for fraud. This would be a good time to short this large-cap company.
Stocks profiled on our web site are for informational purposes only. Information on these pages contains forward – looking statements that involve risk and uncertainties. The purpose of these profiles is to make investors aware of these companies and should not in any way come across as a recommendation to buy or sell in these securities. Investing in stocks involves risk. You should consult a qualified financial advisor or broker before making any investment decisions. All profiles are based on information that is available to the public.
Past performance of stocks profiled on this web site is not a guarantee as to future performance. The information contained herein should not be considered to be all-inclusive and is not guaranteed by us to be free from misstatements or errors. I currently do not own any positions in this company, though I have held positions in all of the above-mentioned companies at some point, and will likely initiate positions within them within the coming days.
Date of Publication – 01/17/2012
Stock Analyst, Leonid Levit | Elite Daily