TFN eNews 09/21/2009: A make-or-break week for gold prices … and gainer #62!
Published via e-mail broadcast on September 21, 2009
In today’s TFN eNews:
* First Day of Fall
* No green bananas!
* 30% gains on this biotech stock
Dear TFN eNews reader,
The first day of fall kicked off another crazy session in the markets. I kept looking at the daily movements in the stocks we’re tracking. It was almost enough to trigger an epileptic fit: One moment, half the stocks were in the green. A minute later, they were deep red, with the previous losers now being on the upswing.
We’ll be seeing more of these flibbertygibbet days in the weeks ahead: There’s plenty of false optimism and positive spin of negative numbers. And yet the level of distrust has never been this high!
(Rightfully so: In fact, U.S. financial and economic policy now has turned hostile to private business, private job creation, and private wealth building — all factors that make me disconsolately bearish in the long term. And the same people who saw catastrophe looming three years ago when new job creation was off by 10,000, now see a recovery when only a quarter million Americans lose their jobs in any given month!)
Of course, volatility is good for equity investors. I can’t remember a time when you could buy and sell stocks at a substantial gain in such short intervals!
But I noticed a change in how I look at stocks: I still consider the long-term potential of any given security. But this is a time when I’d avoid buying green bananas (or their stock equivalents)! There’s no mega-trend in sight that could sustain a protracted upward move of U.S. equities.
The lack of a mega-trend has had a positive side effect: The money that drained into real estate speculation from the stock markets in the aftermath of the 2000 “crashette” and the 2001 post 9-11 drop is no longer tied up in property. It’s not going into new consumer debt or retirement plans, either. There’s far less of it than there used to be, to be sure. But it’s still pentiful.
And i t’s sitting on the sidelines…
But if you run the numbers, there’s simply no worthwhile alternative to stocks right now!
The Federal Reserve is punishing savers with miniscule interest rates. The Administration’s fiscal and monetary policy is punishing bond buyers with the specter of runaway inflation a year or two down the road. And “safe haven” currencies aren’t quite what they used to be since Iceland collapsed and crude oil dropped below $80.
What we’re seeing in the markets right now are cautious forays back into U.S. equities. They’re limited in scope… and aimed at the short- and medium term rather than the long haul.
In short, it’s a trader’s market!
*** But shifting gears from long-term “investing” to short-term “trading” requires a corresponding shift in focus.
Last week, when I sold our Hot Stock Confidential pick BioTime (OTC:BTIM) for 26% gains, I was asked if I was crazy to sell such a great stock for such a “paltry” gain.
But I received unexpected assistance from HSC Member Neil B., who wrote:
“I want to tell you how pleased I am that you suggested a close-out of the BioTime position. I watch the market and my holdings the better part of each session and I appreciate a quick 20% – 25% profit. No matter what the price does in the future, this is a profit booked, and a super profit at that. I never look back at a profit, well, hardly ever. I look at every open trade as a potential for loss as well as profit in this environment. When you book the profit the gain is yours, not before. I am surprised how long you keep open trades that have large profits pending. I am not complaining, it is just an observation. I usually will close these trades with a healthy gain without waiting for that ‘home run,’ to play it safe. Needless to say, I am very pleased with your service. I thank you for your efforts. It is sincerely appreciated.”
It’s trading vs. investing. Both are valid propositions. Just that in this kind of market, I think the long-term investing approach has a higher level of risk!
*** There’ll be some of you who’ll tell me I’m nuts for selling Enzo Biochem, Inc. (NYSE:ENZ) today, for 31.8% in o trading days.
For all intents and purposes, ENZ is a great long-term hold: A biotech company that’s actually making money right now (as opposed to 5 years from now!) … and is likely to leverage innovation into greater market share.
Two weeks ago, on September 10, I recommended our HSC Members “buy Enzo Biochem (NYSE:ENZ) below $5.50, with an expectation horizon of 20-30% by Summer 2010.”
Today, we exceeded that projection. ENZ trading at up to $7.14. If this were 2004 or even 2006, I’d say let’s take a long-term perspective and sit this one out for triple-digit gains.
But it’s 2009 — late September at that! This market is a rodeo… and no matter what I decide, I’m likely to look like a rodeo clown. I’d like to be a rodeo clown with a 30%-gain in my pocket.
If you want to hang on to the stock for the long term, please do so. Chances are we will catch up with you at a later point… because I think this stock has the hallmarks of a multi-play!
For the time being, sell Enzo Biochem (NYSE:ENZ) for gains of 30%-plus.
ENZ was logged as our 62nd double-digit gainer for 2009. Our 75 closed positions have averaged 22.4% gains… or 1,680% “compound gains” as our competitors would call it.
And at an average holding period of 53 days, we still have one leg solidly in the investing world!
(I sincerely hope you consider joining our premium service Hot Stock Confidential – once you’re comfortable with the overall approach we’re trying to elaborate right here in the TFN eNews…)
*** “The G-20 is set to meet later this week,” writes TFN guru Andrew Snyder today. “Already, we’re hearing rumors of big news and huge deals coming from the event. Gold bugs better pay attention!
“Because I think his is a make-or-break week for gold prices. With an ounce of gold once again hovering at the critical thousand-dollar mark, investors are eagerly awaiting the markets next move. Chances are it’s going to be a big one. Here’s why:
“It was no surprise when the International Monetary Fund (IMF) announced its plans to unload 400 tonnes of its gold holdings earlier this year. In a time filled with economic woes, the global lender needs the cash to issue new loans and shore up its own balance sheet. The big surprise is who may be purchasing the gold…”
You really can’t afford not reading on right here: http://www.todaysfinancialnews.com/gold-and-resources/major-breakthrough-in-the-commodity-carry-trade-10026.html
*** What other service has generated 62 double-digit gainers in 39 weeks!
“Needless to say, I am very pleased with your service. I thank you for your efforts. It is sincerely appreciated.” — HSC Member Neil B.
Quote of the Day:
“For this administration, the disaster that is Obama’s healthcare push is like a leaked celebrity mug shot after a night out with Divine Brown. The celebrated penance isn’t to go off and quietly do good works (in Obama’s case, hammer out a truly saleable, bipartisan health care bill) — it’s a public appearance on a feel-good, late-night talk show.”
– S.E. Cupp, Newsmax.com
Recommended Reading:
Major breakthrough in the Commodity Carry Trade
Obama cancels missile shield: Curious timing?
The 3 Best Chinese Stocks Under $5!
Today’s Top 3 Financial News Stories:
MoneyNews.com – Cramer: Time to Sell Treasuries “Cramer forecasts that 30-year Treasury yields will soar to 5 percent within the next few months from 4.2 percent currently.”
WSJ.com — Europe stocks decline as metals plays fall “Having climbed for four of the past five weeks and moved 55% above the lows of March, the pan-European Dow Jones Stoxx 600 (ST:SXXP 242.97, -1.95, -0.80%) fell 0.8% to 243.05. The often-volatile metals sector led the downturn.”
Bloomberg.com — U.S. Stocks Extend Global Drop as Dollar Gains, Oil Declines “U.S. stocks fell, pulling the Dow Jones Industrial Average down from an 11-month high, on speculation a six-month rally has outpaced prospects for profit growth. European and Asian shares also dropped as the dollar and Treasuries gained, while oil, copper and gold retreated.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
Next Article: Is there no end to China’s buying spree?
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