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October 21, 2010

While I am well on my way to a full recovery, I’m still not fully geared up mentally to grind out my market ideas and observations in a long newsletter...so this one is going to be brief and mostly just charts with some fairly quick thoughts.

I’ll start with the big one….

 Buy the Stock Market

…And I don’t mean to piddle around and pick up a few shares of one of the bank stocks, like Bank of America, which have gotten cheap…What you are supposed to be doing (I believe) is buying the living sh*t out of the stock market…which I KNOW, nobody is doing. Instead people are letting themselves be discouraged by all the talking heads who keep barking about one thing, and one thing only: NOT ENOUGH JOBS ARE BEING CREATED…with the implication being that how could you possibly be truly bullish on the stock market if so many potential consumers cannot find work? Obviously, there are a lot of people hurting out there, but as I pointed out in my recent monster newsletter, http://www.crokerrhyne.com/newsletters/08-17-10.htm , job growth is a bigtime LAGGING indicator, meaning that real job growth does not usually even begin to happen until LONG after a post recession recovery gets cranked up…The fact is, the world IS moving forward, which is all that matters, and with money as cheap as it is, and with the world now fully committed to capitalism (as opposed to 20 years ago when maybe 1/3 of the world’s consumers were prisoners of Communism), and with every business still standing (millions of them) having squeezed out their excesses, and with the fact we are going to wind down those two Asian wars…and on top of all that, throw in the whole Technology thing whose boundaries seem endless and it just make sense to me to assume we are now perched at the inception of a worldwide economic boom…And you are therefore NOW supposed to be buying quality stocks and holding them for the long term…that buying equities today is something akin to buying them in 1982, 1984 or 1992…

The most efficient stock broker I know has been telling me for the entire year that nobody is buying ANYTHING related to equities…and beyond that, that his phone has literally stopped ringing. Believe me, this guy is extremely professional and knows his business, and when he tells me he has, again, LITERALLY, not had an incoming business related phone call in weeks, it is significant…especially when you consider the Dow Jones is dead on its highs for the year after rallying almost 1500 points since early July…and still nobody cares…

As I’ve repeated over and over, this whole investing thing is just a big mob psychology game…but a game that does affect everyone…And when you have the planet’s number one capitalistic investment vehicle (stocks) banging away at new highs, and can concurrently realize that 95% of the painted faces on TV are moaning and groaning about “the economy not picking up fast enough”, and “how can the economy grow if we don’t have enough new jobs”, and throw all that together with the knowledge the public absolutely HATES equities, to me, it just screams, “BUY THE MARKET!!!”.

My belabored point is, stocks have NOT disappeared as an investment vehicle. The public hates stocks. The public WILL again LOVE stocks…and you know when that will be…like clockwork…after the Dow is another two or three thousand points higher…

I still believe we’ll see the Dow hit 25,000…and most likely within no more than the next 3 to 5 years.

 

 

 Sidelines in Treasury Bonds

After spending most of 2010 long the Treasury Bond market, I exited all positions in August and recommended being short this market. Without going into detail, I now have mixed signals as to the current direction in interest rates and I am now totally on the sidelines in Treasuries…

 

 Still see Gold as a MAJOR short…

I have been wrong but I still believe gold is the most over-valued commodity on the board and I continue to recommend positioning on the short side of this market…I don’t think the world economic system is falling apart. I don’t think the world has lost its faith in fiat currencies. And I don’t think we are facing anything remotely approaching hyperinflation (we will still experience bull markets in various commodities, but NOT hyperinflation)…Beyond those reasons, I can’t think of a reason in the world why any of us should be lugging gold bars around and looking for places to keep them safe…and I would therefore guess the Gold story is just another PR “mania” that will end up soaking a lot of people over the next 5-10 years as they watch stocks double or triple while gold dribbles sometimes quickly, and sometimes slowly, lower.

 Commodity Markets to Buy

Where I do think there is major bullish action developing, and where my primary focus now lies,  is in the agricultural markets…Some of them are moving up so fast as to be scary to consider getting on board…but that is what I believe you should be doing. I am still very much concentrated in the Soybean complex but also believe there in major potential in Cattle.

Essentially, as the global economy expands the world’s middle classes, worldwide demand for foodstuffs appears to be overwhelming supply…

Export demand for Soybeans have gone through the roof…Primarily led by China, Soybean Export Shipments are already running about 78% ahead of last year’s pace…This is a monstrous number…

 

 

And here is seemingly the worst trade in the world…but I think it will end up being a big one…And still, no one has said they want it…

I said this would be brief…There are other markets I’d like to address but I’m out of gas…Give me a call if you want to get on any of these ideas…

And thanks one last time for all your thoughts and prayers…

Except for one last word…If the world is in such lousy, lousy shape…and the future is so, so bleak…why in the hell is the following company, somewhat forgotten and unnoticed during the past decade, but still really the epitome of a major, blue chip, capitalistic enterprise, NOW MAKING NEW ALL TIME HIGHS? Call me stupid, but guys,  I firmly believe INTERNATIONAL Business Machines is showing you the Yellow Brick Road…AGAIN, I SAY, BUY THE STOCK MARKET WITH BOTH HANDS…NOBODY YOU KNOW IS DOING SO…THE WORLD IS HEADED UP…AND IN A BIG, BIG WAY…


And for what it’s worth, if you are buying stocks, I would recommend buying the strongest blue chips you find, like this one, and not the ones that look “cheap”.

Over and out…

Bill

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