7/28/03
The Dow broke through 9200 decisively up 160+ points on Friday. Should the Dow continue its upward thrust, the next stop is 10,000 Dow. During this period of euphoria, listening to the Fox Saturday Morning Business lineup, the only talking head who was bearish was Jim Rogers. It would seem to me that about 10,000, if attained would be the top, but during periods of unwarranted euphoria anything can happen (see 1998 - March, 2000).

The NASDAQ is following the Dow, but not with the same intensity. The new expectations are now 6% GDP growth for 2004 and 4-5% for the 3rd and 4th Quarters of 2003. Again, I just don't see it. There are a few positive indications, but nothing on this order or magnitude, no real improvement. The markets are rising because reported earnings are 63% (S&P) above expectations, but expectations have been beyond dismal. Compare earnings to even year-to-year, and the earnings are still bad - and compare sales year-to-year and sales are down, meaning if the earnings gain is for real (debatable at best), it is strictly from cost cutting.

Which leads us to unemployment numbers. This week again, a large number of layoffs were announced.

The Fed has said they will do anything to stop deflation. That anything obviously will be inflationary. The only question is how inflationary. It is still too early to tell.

Gold is trading in the range of 345 - 370, but Gold stocks are rising. Continue to hold AU, NEM and BGO and add to positions only on dips. By year-end 2003, Gold should have broken well above 400 per ounce.

--- As a sidepoint:

We have just developed a portfolio which is largely risk averse (maximum exposure 10% of portfolio) with a combined yield of approx. 8%.
For any of you who are interested in this "model portfolio," please send us an email at:

modelportfolio@arnoldsramblings.com

-- And a reminder: For all of you who are passing Arnold's Ramblings on to friends, family members, enemies - whoever, now you can provide them a fresh copy, direct from the source! Ask them to go to http://www.arnoldsramblings.com/NavLinks/Subscribe.html.

Copyright 2003 Arnold's Ramblings Inc., All Rights Reserved.

- posted by Arnold @ Monday, July 28, 2003