Tom’s Blog On Markets & Investments

What am I trying to do with this blog in the middle of an avalanche of market, finance and economics blogs?  Get the big trends, the longer terms right.  I write to clarify, and change when needed, my thinking on where we are and how to catch the bigger picture investing trends.  Any approach to investing needs a framework.  The framework should be general enough to be valid for 9 to 12 months and should be testable through economic datat and market action.  So here’s my current look, by asset class, at how the major asset classes are trending.

Equities

• We are currently enjoying a rally in a bear market
• The bear market may not have that much longer to run (ie, could bottom later this year), but I am anticipating at least one more leg down before it is all over.
• It would be unusual if we did not test or come close to testing the lows of late February and early March, 2009
• With some well-run smaller and regional exceptions, there is still a fair amount of price and time risk in financial sector equities
• Baring some surprising reported earnings strength later in the year, at 900 to 925 the S&P 500 is fairly valued.

Fixed Income

• There are better values for most investors in the fixed income market than in equities, currently.

Commodities

• Gold is in a long term bull market that began in late 2000 at about $250 per oz.
• 50%+ corrections in commodities are a feature of almost every major commodities bull market.
• Oil had a roughly 75% correction in 2008
• Silver had a roughly 60% correction in 2008
• Gold has had two corrections in this bull market, 26% in 2006 and 34% in 2008, neither one major.