In This Issue:
**What Jim Rogers Told Me About The Markets…
By Keith Fitz-Gerald
Investment Director
The Money Map Report
Legendary investor Jim Rogers put it to me this way recently:
“Bernanke and his boys came to the rescue. Which is going to cover things up for a while. Then we’re off to the races again.”
His point – don’t lose sight of the bigger picture.
Which is, of course, exactly what we’ve been saying for months now, too. It’s also why our recommendations, like his observations, have not changed even though oil has dropped, commodities in general have corrected and U.S. equities have moved sharply higher over the past few days.
So stick with them.
The fast-moving declines (and advances) we’ve witnessed in recent days are symptomatic of a market that still has fundamental structural problems and could go far lower before it goes higher.
We know that is hard to believe after witnessing a 331-point Dow barnburner rally on last Tuesday – followed by a 301-point rally on Friday. But it’s true.
That’s why we’d like to point out that for the last 10 years, such massive rapid updrafts are more typical of bear market short covering than they are indicative of a new bull market on the horizon.
Here’s something even more startling. According to our research and seconded by Merrill Lynch’s David Rosenberg in a recent report, there’s never been a 300 point rally during a bull market. Obviously, there have been higher proportional gains in the past, but they’re not really applicable in this context because the markets were much smaller in terms of absolute numbers.
That suggests, to Jim Roger’s point and our own, that it’s more important than ever to remain focused on what we know to be true – companies reflecting global growth and that have the best risk/reward ratios will outperform over the long term. Even if they take a few hits in the meantime.
Until the rebound reflects stronger earnings growth, sales and a generally improving economic scenario, rapid market upside moves like Friday’s reflect king-sized bear traps ready to snare the unsuspecting.
We’re working on our September issue now and will have more insight to share with you shortly.
Until then, tread lightly.
Best regards,
Keith
Market Watch
NASDAQ
1462.11
0.00
SP 500
778.12
0.00
DJIA
7395.70
+178.73
