9/9/03
Hi,

It now appears that the Dow will peak at between 9800 and 10200 and the NASDAQ will peak at 2000 - 2100. This peak will be accompanied by major optimism from the talking heads and from the media in general. There does appear to be a modest upturn in the economy, but expect this upturn to fizzle by year end. The second quarter GDP growth of 3.1% was accomplished in truth by really being 0.7% excepting the INCREASE in the defense budget. The increase in defense spending accounted fro 2.5% approximately of growth in GDP.

With the Dow down only 16 - 17% from its highs, many people are finding little improvement in their portfolios i.e., CSCO high 80+, now 20; MSFT high 70+, now 26; JNPR high over 300, now 12; YHOO high at 400+/-, now 35; AOL/TW high 65, now 15 and on and on. There has not been a significant improvement in most portfolios.

Gold and gold stocks in particular are performing really well. There should be a pullback in gold prices and gold stocks during September, I would use this as a buying opportunity. By year end, Gold (the metal) should be up to 450+ from the 370s today and the stocks should soar.

Long term bond yields have started rising - after a brief period of retrenchment and consolidation. 30 year bond yields should expand aggresively. Today 30 year yields are about 5.35% - Before this rise is over we will have yields well into the 8 - 9% range, and possibly much, much higher. If you own long-term bonds, corporate, treasury or muni, you should be looking to liquidate while the going is good.

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- posted by Arnold @ Tuesday, September 09, 2003