11/23/02
Hi,

It seems to me we are in a trading range from 7250 to 9200 for the time being. We could go as high as 9800 though I would say this is highly unlikely. Should we drop below 7250, we are back heading towards 6000 and lower.

My original view was that the bottom - 6000 or less for the Dow and 1000 or less for the NASDAQ - would be by April 30, 2003. It seems that this has been postponed back maybe until July or August 2003. Every day there are more layoffs, still. Yesterday GE announced that it had to shore up its capital in GE Capital and earnings would miss in 2002 & 2003 - and it went up!

I continue to believe that there will be massive bankruptcies in all of the high debt industries: airlines, cable TV, telecoms, etc... Ultimately the bondholders will own the companies and the debt eliminated. This washout phase will take many, many years.

The ecomomy still does not appear to be any stronger. Housing prices at the highs and rents are starting to decline in New York, Los Angeles and elsewhere. Does this foretell a top and subsequent drop in real estate prices? I do not know, yet. It is too early to tell.

Continue to pay down debt - and if you haven't bought gold stocks yet, buy them now. Gold and precious metals stocks should comprise no more than 20% of your total portfolio.

If you still own other stocks, please place a trailing stop loss, so you will salvage most of your money in the event stock prices are still heading lower.

- Arnold

Copyright 2002, Arnold's Ramblings, Inc. All Rights Reserved.
- posted by Arnold @ Saturday, November 23, 2002

 
11/1/02
Hi,

ALL OF YOU BULLS MUST BE REALLY HAPPY. SPEAKING FOR ME, I AM CONFUSED. Let's quickly summarize where we are: the stock market up over 10%, gold down 2%, bonds down over 8%. Normally when stocks go up, bonds go up. WHAT IS THIS TELLING US? I DON'T KNOW. It appears to me to be a major short covering rally, for stocks anyway. Bonds were at a bubble - I have stated my belief that bond yields will rise - the ten year went from 3.57% to 4.24% IN THREE DAYS! That's a 3/4% change in yield in 3 days!

Where do we go from here? the DOW and NADSAQ should start to base and head lower, gold should head higher and bond yields continue rising.

Economic activity is still not visibly improving. The great earnings last week from IBM reflected an 18% drop in earnings (that drove the stock up 12%) GE's great earnings were with a drop in sales. Consumer debt - continues to rise to unsustainable levels, the trade deficit - is at a record high - most importantly imports are continuing to rise while exports are declining. Companies are continuing massive layoffs.

Rumors abound United Airlines may file for bankruptcy. Other rumors involve major telecoms and cable providers filing for bankruptcy. There are even rumors of a major bank failure that is imminent - NOT A PRETTY PICTURE.

If you have not sold out your stock portfolio yet, PLEASE, for your sake, place stop losses below the trading points of your stocks. If Arnold is wrong, you will continue to own these stocks; if Arnold is correct, then you will be saved from very painful losses.

You should be up to 80% in Treasury Bills, Treasury Money Market Funds or Bank CDs (no more than $100,000 per bank, FDIC rules). Up to 20% in gold/precious metals stocks such as:

Newmont Mining (NEM)
Barrack Gold (ABX)
Bema Gold (BGO)
Canyon Resources (CAU)

Please be as liquid as possible and reduce or eliminate all debt - first consumer debt, then mortgage debt.



Copyright 2002, Arnold's Ramblings, Inc. All Rights Reserved.

- posted by Arnold @ Friday, November 01, 2002