Wednesday, May 06, 2009

Financial Markets, Real Estate and the Dollar

This is a snapshot by my investment guru, let's see how much of this comes to pass.
Do you agree with anything below? Disagree?
Synopsis of the Financial Markets, Real Estate and the Canadian and US Dollar

As the markets go down,
so does OIL and C$.
Just watch the charts.

Same old, same old...
US$ up, everything down,
and then the reverse...

US$ down - to create inflation (that's why OIL goes up)
to get out of the housing mess created by US banks.
However, China comes and doesn't allow US$ to go down by much.
The stock market comes to a halt.

US$ up - recession continues.

Today is the turning point - as bank stress tests come...
Chart shows TOP ($spx - 500 leading US companies).
Closely mimicked by $tsx (but not the same - due to the weighting of gold stocks).

Canadian mutual funds are down (and will stay down in the long-term) due to the heavy weighting in energy.
Canadian mutual fund managers bet against the US$ - they will NEVER recover.
Some have already left the industry.
However, if you go for swing trading you will not only recoup all your loses but pretty much make more.
With the right stocks - in the US (in US$).
Not mutual funds.
NO "investing for the long-term".

If you want to invest for the long-term just hold C$ (nothing else).
I don't see 1:1 again, nor gold to $1000 nor OIL $100 - remember that - that was inflation.
There is no US$ devaluation and except for these 1-2 month bounces there is nothing else the US Federal Reserve can do (they are bankrupt).
They have no money - have to print or borrow from China.
And when they print $ they don't create jobs - they just give it to Wall Street.
The FED can't lower rates any more (they are zero).
32 US banks have gone bankrupt in 2009. (regardless of the stock market games).
Unemployment will be even higher this summer (the official one) -
not it is at 26 year high.
That's when you buy - on OFFICIAL BAD news.
You sell on good (are there any?).

Follow GM the next couple od days - don't be a collector
(the price should go up to $138: 100-1
reverse stock split - like NT).
Most likely GM will not be around in a month from now - the best scenario is a government-run company.

I can't take the credit for writing the above synopsis, but it's very interesting read.

So, what do you think of the above synopsis, agree, disagree, or something else?

I hope this finds you Happy and Healthy!

All the Best!


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

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