Stock and Commodity Market Investments Themes for 2009
Stock-Markets / Investing 2009 Jan 13, 2009 - 01:36 PM GMT
Larry Edelson writes: At the beginning of every new year, just as we do with our personal lives, it pays to take a few steps back … put the past year in the markets into perspective … and contemplate the year ahead.
And today, this is more important than ever.
With the economy the worst it's been in a generation … with so many threats to your wealth … with so much confusion even amongst experts … 2009 is shaping up to become what I am calling: “The Year of the Trap.”
Indeed, the onslaught of nightmarish news about the U.S. economy will continue to hit markets around the world like a Category 5 hurricane.
But unless you understand how different today's events are compared to those of the past, unless you understand the forces driving the markets in 2009, and unless you think like a true contrarian, you will get trapped.
And while I'd love to, I cannot give you my detailed 2009 market forecasts and core recommendations to start the year in this edition of Money and Markets .
That wouldn't be fair to my active Real Wealth Report subscribers, who will receive my 2009 Forecast Issue on January 16.
However, today I will give you …
The Five Broad Themes That I Believe Will Affect All Markets in 2009
Broad theme #1: The Bursting of the Bond Market Bubble
While all eyes will likely remain focused on the real estate, mortgage and stock markets, quietly behind the scenes another bubble will be bursting: The bond market.
A tsunami of debt issues from the Treasury to borrow the money planned for the fiscal stimulus and the budget deficit will strike the bond market like a hot knife through butter, slicing away trillions more in wealth from investors who have fled to the so-called safety of government bonds.
In my view, U.S. Treasury bonds are now the riskiest of all assets on the planet. And I expect to see a 30% to 40% plunge in bond prices in 2009, shocking investors all over the world.
Already, in just the first few trading days of the new year, bonds have lost almost 9 full points, or nearly 7% of their value. More losses are likely ahead for bond investors.
Broad theme #2:The Federal Reserve will continue to do anything and everything to save the financial system and turn around the economy, pumping in fiat money like there's no tomorrow.
The Fed is now accepting just about anything as collateral to issue new loans and backstop the risk in nearly all markets. And it will continue to bail out institutions like Fannie Mae, Freddie Mac, AIG, Citigroup, and others that are sure to fail in 2009.
And even while bond markets are plunging, and long-term interest rates start jumping, the Fed will also be forced to keep short-term interest rates near zero to try and pump up the economy, setting the stage for a massive re-inflation of virtually all assets (through a weaker dollar).
Broad theme #3: President-elect Obama will also stop at almost nothing to help turn the economy around.
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| Obama is planning to implement an eye-popping $1.5 trillion stimulus and spending program – the biggest in U.S. history. |
Obama will enact and oversee the greatest stimulus and spending programs in this country's history.
Already totaling a proposed $785 billion, the fiscal spending programs are likely to hit well over $1 trillion, perhaps even a staggering $1.5 TRILLION, by the end of 2009.
Obama will:
- Bail out the unemployed …
- Bail out millions of defaulting homeowners …
- Insure the health of every U.S. citizen …
- And embark upon the most expensive public works programs this country has ever seen.
And don't be surprised to see many of his pre-election policies change dramatically, including much deeper tax cuts and his stance on Iraq.
Broad theme #4:A rise in social unrest all over the world.
This includes terrorism, and inevitable attacks on U.S. targets overseas and likely the first attack within our borders since 9/11. I say this with a heavy heart, for no one likes to be the bearer of bad news.
Broad theme #5: Everything you thought you knew about economics and the markets will be turned on its head in 2009.
That's why I'm calling 2009 the “Year of the Trap.”
Because what you would normally expect to be good news will be interpreted as bad news by the markets.
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| Even the most seasoned pros will be caught off guard in 2009. |
Conversely, what would normally be considered bad news will give birth to positive market developments.
As a result, even the most experienced pros will get the markets dead wrong this year … yet again.
For instance, the economy continues to slide, unemployment soars, corporate earnings collapse — and yet the stock market surges in one of the most powerful rallies ever, trapping even the most seasoned analysts squarely on the wrong side of the fence.
Or deflation rules the headlines, yet commodity prices take off to the moon, again — catching almost everybody off guard.
How would these moves be possible, and what would drive them? And how can you ensure you don't get caught in the trap? Unfortunately, I don't have enough room to get into all the details here.
But all of the specifics, including my first set of core recommendations for 2009 can be found in the upcoming January Real Wealth Report 2009 Forecast Issue. If you’re a subscriber, be on the lookout for that issue!
This will no doubt be another challenging year for investors. So you need to think differently, like a true contrarian, digging below the surface — for nothing will be as it seems.
If you do this, you will find the hidden profit opportunities and turn 2009 into one of your most profitable years, ever!
Stay tuned!
Best wishes,
Larry
P.S. Don’t get trapped on the wrong side of the markets. Subscribe to Real Wealth Report and get an in-depth look at my 2009 forecasts and my core recommendations that will help make you a bundle of money this year!
Join now and receive my January forecast issue the minute it’s published, plus 11 more hard-hitting issues, all my flash alerts, and more!
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