Eric serves as an editor and Investment Director for The Sovereign Society's Commodity Trend Alert. Eric's talents include blending a dozen or more alternative investment funds to produce consistent returns to traditional asset classes and making commodity based recommendations with huge upside and limited downside.
The US auto industry is coming apart at the seams, says Eric Roseman. The ‘Big Three’ are bleeding profusely, and face bankruptcy without a government rescue. If one of General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler is allowed to fail, Eric says the stock market will crash through its 2002 lows. This means investors should stay underweight stocks for the time being.
We could be heading for the worst year for stocks since 1937. But Eric Roseman says US stocks are still not cheap… at least not compared to international equities or 12-month earnings and dividend payments. We are still in the throes of a bear market rally and the full impact of a deep global recession isn’t priced in yet. Eric says the Dow will soon tumble to its 2002 lows at 7,200.
Since July, the US dollar has converted into one of the world’s strongest currencies. Eric Roseman says the greenback could continue to rally if stock markets decline again. But this upswing should not be confused with fundamental strength in the US economy. The buck has been a “liquidity haven” as credit dries up, but the government’s spending blitz will eventually take its toll on this fiat currency.
Every asset class has been beaten down by the 2008 credit crisis. But a market downturn means big gains for reverse ETFs. Eric Roseman says these funds provide a simple, cost-effective hedge against a bear market. He says the bitter experience of this crash should make reverse ETFs much more popular among diligent investors.
Tuesday’s mega-rally will have many investors itching to get back into the stock market. But Eric Roseman says chasing a short-term bounce could be a big mistake. Similar up-crashes during the Great Depression were followed by prolonged downturns. But Eric says this could be a good time to “nibble” at some quality blue chips or non-Treasury bonds.
Crude oil prices have tumbled 55% since July. And oil stocks have been dragged down with them. But Eric Roseman says this is a great opportunity to buy into Big Oil at 2004 prices. These companies are flush with cash and pay out attractive dividends. And they are likely to recover over the next 12-18 months as commodity prices find a bottom.
There are only a few global-minded investors I really listen to when it comes to gaining insight on the markets. Most of today’s money managers are too mainstream and remain obsessed with beating their benchmarks. What a waste of time. My favorite market seers in Europe include Marc Faber and Felix Zulauf.
Eric Roseman says government intervention should shore up the global banking system in the short term. But the downturn in the real economy is going to persist. The long-term impact of massive public debt creation will be higher interest rates around the globe. Eric says investors should be preparing their portfolio for this post-bailout scenario.
Here’s a possible gold play.
The spread between gold miners and gold bullion has widened considerably since the beginning of the credit crisis in August last year.
Eric Roseman says this only happens in extreme market circumstances.
He expects gold stocks to double over the next one to three years because colossal global government bailouts will back fears over inflation.