Peter Lynch was one of the greatest investors and managed the Fidelity Magellan fund. He would comment about his shopping trips with his wife and how those trips impacted his stock positions. We went to BestBuy last night to look at a new computer monitor. My wife went to look at the Wii games as I was analyzing features and benefits of each monitor. We both were encountered by sales associates. Last year you couldn’t even get one to make eye contact with you let alone assist you. This year, they were seeking us out like sharks in a feeding frenzy. Once they found out what we were interested in, they immediately took 10% off of any purchase we made. The sales associate commented to my wife, “We just need to sell something”. In Oklahoma, our unemployment rate is below the national average and have not had the same economic impact as the eastern and western states of the country. If sales are down at our locations, one can only imagine what they are in those states such as Michigan, Florida, New York, and California.
“Black Friday” is just a few days away. I wonder how the powers that be will massage the expected severe drop in sales? You can be sure that come January, store closings are going to ramp up and inflict further damage to the commercial real estate market whose bubble is expected to pop in 2010. Any recovery suggested by the media will only be short lived.
Any further economic stimulus will not address the huge debt problem, only add to it. Be prepared for the double dip. Many precious metal newsletter writers are calling for a “top” in the price of gold. I disagree. It may dip due to volatility, but it has a long way to go before it goes to a “mania” level of $5000-6000. Expect daily swings in the $100 class. Those who trade the precious metal will be whipped around like a kid on a merry-go-round. Our historic assumptions that those in power are in control will evaporate just as Dorothy and her friends realized who was behind the curtain in the Wizard of Oz.
More portfolio managers are now getting on the gold wagon: http://seekingalpha.com/article/174334-paulson-gold-s-bull-run-is-just-beginning?source=feed
In the cycle of investing, smart money gets in first, institutional money goes in second, and last of all, John Q. Public hops in. Until the shoeshine boy gives you a tip to buy gold, it would appear that gold will continue its march upward. Silver will follow.