12/19/02
Hi,

With this issue of Arnold's Ramblings, we have a large number of new recipients, so I feel it appropriate we review the last many issues:

THE ECONOMY

I do not see any real strength in the U.S. economy now or in the forseeable future. Retailers are selling goods at deep, deep discounts, thus profits will be down, way down. The auto companies are not only giving 0% financing, but in many cases a cash advance is recieved as well. Thus zero down, zero interest, no payments for up to 2 years and they pay you, the buyer! Insane. When payments are due, defaults will commence.

THE STOCK MARKET

I still see 6,000 or less Dow, 1,000 or less NASDAQ. I know this is a broken record. I wish I can be wrong, but the Dow can not exceed 9,200 -- thus we should be going lower, much lower. I would like to see the bottom in April 2003 or so, but it may still take until August 2003. Once the bottom is in place, the next 12 months the NASDAQ should rise up to 100%, then about 25% the second year and 15-20% the third year, before reversing and testing the lows again.

GOLD

The price of gold the precious metal has today risen to a multi-year high (5 1/2 yr.) and should continue rising. First to 360 then 375, then 400 and from there skyward. If you haven't already purchased precious metal stocks, now is the time - before prices soar. The only stock recommendations continue to be precious metals with only up to 20% of your total portfolio.

REAL ESTATE

Real estate appears to be topping. If you are looking to sell within the next 2-3 years, sell no later than this spring. Real estate prices could fall over the next five years up to 50% or more.

RECOMMENDED INVESTMENT STRATEGY

1. PAY OFF ALL DEBT EXCEPTING HOME MORTGAGE

2. Start making payments towards the principal of your home mortgage.

3. Keep 80% or more of your investable assets in cash -- money market accounts (Treasury) or Bank CDs (up to $100,000 per account, FDIC limits)

4. Up to 20% in precious metals stocks:
ABX Barrick Gold
NEM Newmont Mining
AU Anglogold
BGO Bema Gold

5. Any other stocks you own you should be either selling or placing stop loss orders to protect the price.

In summary, I do not see a vibrant economy for at least 5 years, probably 7-10 (Follow the lead of Japan, 1989 to present). Japan's stock market peaked in 1989 at just under 40,000 and today trades at 8,600 - thirteen years later.
- posted by Arnold @ Thursday, December 19, 2002