AFUND 2004 Stock Market Forecast
2004 MARKET FORECASTS
It is NOT
WHAT you know, but
WHEN you know it.
© Henry Weingarten Last Updated:
Much of the following material has been serialized in
WALL STREET, NEXT
and our subscriber
premium channels. This will next be updated
in May after our
11th Astrology and Stock
May 14-17, 2004 in New York
Notes: Hyper links
that are prefaced with a S:
are restricted toWSNW Subscribers.
This forecast was posted on our web site in
October in our premium channels for WSNW subscribers.
WILL US POLICY PREVENT A JAPANESE OUTCOME OR
JUST DELAY IT?
HOW LONG WILL ENERGY PRICES
WILL THE US DOLLAR FIGHT
BACK OR TAKE A DIVE?
Many advisors suggest
investors fight the urge to be bearish and enjoy
the run-up in the stock market. I wonder what these same
advisors were advising in March and April 2000? While
the internal Stock Market astrology, as in 2003 is mixed, the
external risk potential is horrific! We consider the long term
economic fall out of the US Iraq invasion quite severe and
believe that global markets can retest or break their 2003
Stock selection is paramount and will count more than
sector rotation and even
stock market timing!
Given that the traditional "Buy and Hold"
investing strategy will continue to
under perform, we again recommend trading 50%
in "investing" portfolios in 2004.
TAKE/PROTECT PROFITS CONTINUOUSLY.
For 3 years we warned: LEARN
THE MARKET LESSONS OF 2000, BECAUSE
THEY WILL REPEAT IN 2003. Now that the
forecast is true, come June 2004, many investors may be
berating themselves with why didn't they sell when the Nasdaq
was circa 2000? Why didn't they learn their lesson in March 2000?
DON'T BUY AND HOLD. THE
STOCK MARKET IS LIVING ON BORROWED TIME. I ADVISE KEEPING
A BALANCED AND DIVERSIFIED PORTFOLIO, ELIMINATE MARGIN DEBT
AND BE CASH RICH.
MARKET NEUTRAL INVESTING FOR EXPERIENCED INVESTORS
In order to sleep soundly
at night, I recommend a Hedge Fund style Market Neutral
Strategy in 2004. This involves both buying under valued and
selling short overvalued stocks. This is best done in industry
pairs as it involves the smallest risk, although the most work.
Alternately, stocks can be hedged against their individual sector
membership or the overall market: Buying a stock and selling its
sector or broad market index, or Selling a stock and buying its
sector index or the overall market.
If you are bullish, I would
recommend a long/short ratio of 2-1.
If you incline more to the
bearish camp as I do, then a long/short ratio of 1-2
There are five primary celestial and terrestrial phenomena affecting world
global markets in 2004:
- October 13,
Eclipse; 2 Total Lunar
Eclipses May 4 & October 28, 2004,
- Saturn in Cancer and Uranus in
- The World War on Terror,
- 10 countries
joining the EU May 2004,
- The 2004 US Presidential Election.
Three Big Investing
1. US DOLLAR REMAINS UNDER PRESSURE IN 2004
Everyone knows now that the US dollar
has already peaked. Smart money players
Warren Buffett and George Soros are making huge bets the dollar will
continue its slide to new lows all next year. Many currency
analysts predict a further 10% drop in the dollar's value versus major
currencies. US Treasury Secretary John Snow shocked
currency traders by stating that the U.S. government
no longer measures the dollar's strength by its market
value against the other major currencies. Instead, Snow
said "strong" refers to such aspects of the dollar as the confidence
it inspires in the public and its resistance to counterfeiting.
This plus the G7 call for more "flexible exchange rates, has most
benefited the Euro and Yen. as well as secondary currencies such
as the Canadian and Australian Dollars and gold. All investors
need to diversify their investments globally.
The average American has less than 5% of his
assets in foreign holdings. The decline in the
US Dollar's value has made foreign investments more attractive.
Stock prices are cheaper by most valuation measures:
price to earnings, price to sales and price to book.
Due to the November 8th 2003 Lunar Eclipse 2003, global interest
rates reversed course, first rising in Australia and then in the
UK. In 2004, we also expect US interest rates
to rise due to a lower US dollar and future
inflationary worries. Our US dollar Index Fair
Value has dropped to 88.80 with .85 to .82 increasingly possible
in 2004. One lurking possibility is that
it may become necessary for the FED to defend
the US dollar or that outright intervention from the US
Treasury in the currency markets may be necessary. However, Winter and
Spring 2004, we could also see the US dollar as high as .94-.95. If
so, this would be a MAJOR sell signal for us.
Our recommended US equity portfolios
international stock allocation has been
raised to 50%.
2. A WAR TIME ECONOMY: GUNS AND CAVIAR REDUX
Progressed Mars (War) was increasingly
prominent in 2003 = an expansion
on the war on terror. Saturn is also
transiting the US Sun. As Saturn represents
"reality", paying the piper is not likely
to be overly favorable for US markets, given
the US budget deficit from a weakened economy, the
War on Terrorism and Tax Cuts. The violence level on the
War on Terrorism, unfortunately, is likely to increase
in 2004 given prominent Mars aspects in both Bush's and the USA
horoscopes. It is possible this could be US global trade war(s),
instead of a new/expanded hot shooting war on terror then. Homeland
(Cancer) security (Saturn), defense (Mars) and insurance will garner
even more public attention. As this will take money away from more
productive areas of the economy, we are far from bullish.
- Fears of deflation
and interest rate cuts left US and UK government
bond yields at multi-decade lows. Both suffer
however, from a sharp increase in supply, the former
more so due to massive tax cuts underway as well as military
adventures and increased defense spending. When things
do turn, we could see a very nasty bear market in bonds.
Bond markets believe the Fed will act as soon as March, but no
later than May, to raise interest rates. At some point, TIPS (Treasury
Inflation Protection Securities) will be the major buy in the
US bond market.
3. THE END OF THE HOUSING BUBBLE
Housing, along with Commodities and physicals,
is now viewed as an Asset Class along
with Stocks, Bonds and Cash by many investors.
Positively, there is the enjoyment factor:
most woman would prefer to have an additional
100K in a home than in a portfolio. Housing
also appeals to safety concerns in times of
trouble, but home buying is cooling. Record low interest
rates are ending. Other negatives include the fact that
the ratio of home prices to home rental rates is
too high, while the value of individually owned residential
property to disposable income is at a 50 year high.
Classically, Real Estate weakens 12-24 months after
a market collapse. Thanks to the Fed, this did not happen when individual
stock prices returned to pre-1998 pricing. I
still see the probability of a housing drop of 10-35% [depending
on location and individual property] over the
next 6-18 months. In June 2003, Saturn entered Cancer.
Let's not forget what Saturn in Gemini (Communications)
did to Telecoms. Hopefully it will NOT be that bad:
Favorable tax treatment, low interest rates, along with
continuing demand could make this a slowing market
with a soft instead of hard landing before July 2005 when
Saturn leaves Cancer [home] for Leo. Either way,
buyers will benefit more than sellers.
Global Stock markets in 2004 will be
determined largely by answering three
Q1: How will Bush's military
adventures affect Oil prices and help
or hinder the War on Terror?
Who will be helped/hurt
the most by the lower US dollar?
Q3: What P/e's
will investors be willing to pay for modest
HOW HIGH IS UP? HOW LOW IS LOW?
7816 to 10848**
VALUE WITH GROWTH
most important for global investors; hence,
we stress caution. Previously, we recommended
an investment strategy paradigm
of BUY and HOLD Growth stocks with at
least reasonable valuations based
on current and future profits. International
money flows no longer exclusively favor
the US, with Asia, Europe and even emerging
markets garnering more global interest.
In 2004, both Value and Growth will periodically outperform
and under perform. Market timing will be the key.
Classic "Buy and Hold" is passé: Stock picking, more than
sector membership, and Market timing will
rule in 2004. Successful investing will
depend on knowing:
When all the
good news has already been factored
into the share price, at
what price is the valuation just too
the bad news has already been
factored into the share price,
at what price is the valuation too
Any and all investing profits need to be protected against
assaults in 2004.
Trade more (50%
and take/protect profits at 10%-20%
profit points for long term non-core
LEARN THE LESSONS OF 2000, THEY REPEATED IN 2003 WITH EXCESSIVE SPECULATION:
INVESTORS SHOULD ONLY BUY
AND HOLD STOCKS IN 2004
1) Buy carefully
and when stock valuation becomes
super frothy again, SELL.
2) Be careful about owning
stocks that are “priced to perfection”,
they can only disappoint.
3) It is NEVER “different
4) Ultimately, profits matter.
1) Profitable, well managed companies,
2) P/E* under
17 for Growth and under
14 for Value or.
3) A PEG
<1.4, or undervalued
by 10% or more, or dividend yields
of 4% or more.
allowing for pension liabilities and
** Our October forecast was exceeded in December 2003 due to Saddam
capture, making a possible up DOW target as high as 10848. Similarly, our
SPX early projection of 1090 was met. Accordingly these numbers have been
I GLOBAL INVESTING
UK & HOLLAND
TRADE THE UNITED
HOLD SAFETY: BERMUDA, LUXEMBOURG, SWITZERLAND
The Horoscope is a MAP of TIME and PLACE - here is a brief overview of
selected global markets:
Country risk is re-emerging as a corollary
to anti-globalization forces. Sophisticated
investors today are rightly concerned about
being overly invested in any one country or currency.
EUROPE - A stronger global
to the US
have a 25% discount to valuations compared to stocks
in the United States and domestic demand is growing. Some exporting
companies' sales are being hurt by the dollar's drop against
the Euro. A further surge in the euro above 124 against the dollar
would hit some euro zone based export firms hard. Despite this,
on a global basis, Europe is still undervalued and more reasonably
- GERMANY- No view.
- HOLLAND - Market
Out Perform Q2/Q3 2004.
- ENGLAND - In
2004, the City will Out Perform Wall Street.
- FRANCE - No view.
- LUXEMBOURG- Hold
- SWITZERLAND: The worst is over.
- EU EXPANSION
countries, the Czech
Republic, Poland, Hungary,
Cyprus, Slovenia, Latvia, Lithuania
and Estonia remain on Watch
as they are likely to compete inside the EU's
single market from 2004 on. However, there is little
for foreign investors to buy outside of
the banks. In the non-financial area, many of the
best companies are likely to be bought out, rather
than going public. Finally, shares prices there
already reflect European entry which means the
"easy" money has already been made long ago.
Note: WSNW subscribers
can review our favorite
Jones Stoxx 50
- We correctly
forecast Canada would no longer lead the G7 economies
last year and downgraded it to market perform. The Loonie
is no longer undervalued and this is affecting some of its
export driven economy. In 2003, its economy was pummeled by SARS,
the Iraqi war, the mad-cow scare, the Aug. 14 blackout, a stronger
Loonie and weaker US economy beginning of the year. A strong loonie
into 2004 will result in more layoffs in export-oriented
industries such as forestry and manufacturing. Fortunately for
Canada lovers such as yours truly, 2005 will be stellar for
Canada beginning almost immediately after the US presidential
elections. Does this mean Howard Dean, a great
friend of Canada, will be elected? It is a distinct
possibility! In 2005, the loonie will be .80.
- S: MEXICO
- Last year, we recommended
only stocks likely to be a takeover
targets like Banacci was by Citibank,
AHISA by MetLife or Bital by HSBC or those with
domestic strength such as COCA-COLA FEMSA (KOF). In
2004, I would only look to potential take over targets
sporting reasonable valuations or companies that can
compete in the US for the rising Hispanic consumer market
- UNITED STATES
- Still overvalued versus
global counterparts. Our current Dow Fair Value is
only 8200. Many former investor
favorites will disappoint as investors
sell rallies to "get even".
US Bonds are by and large unattractive except for Treasury Inflation
Protected Securities or a similar alternative I Bonds. The
US Dollar remains a potential time
bomb: It is no longer as safe a haven given budget
deficits and the War on Terror. Positively, thanks to the weaker
US dollar, intermediate term, select US exporters will out perform.
Additionally, more American firms will become take over targets
e.g. Henkel buying Dial or AXA takeout offer for MNY. Given one can
trade stocks here for 10-25% appreciation/depreciation
a day/week, this remains TRADERS
term investment opportunities
China and Asia could be the fastest growing
area in the world 2010-2030. It is only
a matter of time before Asia is no longer so dependent upon
American consumer markets to thrive.
- S: JAPAN
-Until recently, Japan's economy
was hindered by lifeless personal consumption due to severe employment
and wage conditions. As forecast for 2003, there has been a
recovery in the Japanese economy. The Nikkei
as a long term buy on weakness
to 12,000+ using a 2004-5 time horizon. Note: The
Bank of Japan is likely to maintain its ultra-loose monetary policy for
the foreseeable future. When the Yen is strong [< 107 -
Fair value ~110], we intend to join its government in selling
it. Whatever the Yen's value, we believe domestic
industries are no longer to be shunned. JAPAN INC. [EWJ]
is one of our two favorite 2004 country buys.
Our mantra on JAPAN INC. is "You
have Japanese products in your home; why don't
you have Japanese stocks in your portfolio?"
KONG/CHINA - Capital continues
to pour into China to take advantage of low productions
costs. In terms of potential, there is no country like China with its
1.3 billion people and above 7% annual rate of economic growth. This
has been the well spun story that everyone and his grandmother
has been buying. That and the 2008 Olympics not withstanding,
too many of the mainland's industries
are a mess and its stock market is overloaded
with poor quality state owned companies.
is rightly addressed and Chinese leaders make
dramatic moves to reform the country's financial system,
we continue to recommend great caution.
At the minimum, I would expect the merger of A and
B share markets and most important, the move to float
the Chinese currency. On the plus side, sooner, rather than
later, the Yuan is going UP, whether a free float or just a one time
appreciation. China is booming, with growing exports and
domestic demand. It will be the third largest economy in the
world before 2020, after the US and Euroland.
Yet its public debt is over 100% GDP if you
include "off-balance sheet" accounting.
Non-performing loans held by China's banks are 25%-to-50%
of GDP making China highly vulnerable to an economic
downturn. I prefer to wait and buy AFTER the collapse or take over
of a big four bank, given my predilection for sound sleep.
Hong Kong is not attractive,
especially as fundamentals often
seem to matter little on the Hang Seng, and
its stock market acts as close to legalized gambling
more than any other major one in the world. On
the bright side, Hong Kong benefits from a spill-over
effect from Chinese mainland's trade. The coming positive
for Hong Kong is China’s qualified domestic institutional
investors (QDII) scheme. When approved, this will allow
mainland Chinese residents to invest in the territory adding
Despite a far better
economy, we also remain reluctant
to invest in Taiwanese markets
unless compensated for potential "war
like" conditions in the future.
- KOREA - We
continue to like blue chip giants
Korea Telecomm (KT), LG Electronics and
Samsung Electronics (SSNGF).
We expect a MAJOR peace dividend in
2004/2005. Like Taiwan, this
is a largely a bet on the US technology sector.
- The story is now much bigger than just computer
and pharmaceutical blue chips.
Global investors have finally noticed the giant sucking
sound of thousands of US and UK jobs being outsourced to
India. The Indian government reports a return of 19.33% on foreign
direct investment in India, which is higher than the 14.25% for China.
Goldman Sachs predicts that India will be the third largest economy
by 2035. IIF or IFN are two closed end India
funds, and the best way for US investors to invest
(not trade) in India in 2004.
- We remain mildly bullish
for 2004 given our forecast for a strong
Aussie $ and maintain our "out perform" rating
country rating. Billionaire
investor George Soros is backing the New Zealand dollar - It can strengthen
further against the stubbornly flaccid US greenback. Then again,
so is almost every other global currency not pegged to the US dollar.
However if you wish to retire, NEW ZELAND has it all:
natural beauty, friendly people and great food.
TIGERS AND DRAGONS - Between SARS in 2003 and future
terrorism threats, we would avoid for the time being
any sizable investments in Thailand, Malaysia, and especially
Indonesia and the Philippines.
for savvy investors
- BERMUDA - Bank of Bermuda
(BBDA), LOM (Holdings) [LOM:BH] and RenaissanceRe
- Israel's technology
sector is desirable given
its highly skilled labor
force and favorable tax treatment.
Unfortunately, it is best to buy only
when there is blood in the streets,
which happens all too often. Happily, we see the
possibility that this market could enjoy more than
one tradable peace dividend rally ahead.
- RUSSIA - Many
high risk investors primarily bet on the
oil sector here. Later, when foreign investors
were motivated to buy further a field due to
positive economic performance and more rule of law,
we correctly advised caution ahead of the March 2004 presidential
election, c.f. Russia Central
Bank Deputy Fears Capital Flight after the arrest of
the boss of oil giant YUKOS.
- S: LATIN
AMERICA - Accumulate on weakness
only for appropriate multi-year
long term investment portfolios
and longer term for multi-national corporate
We continue to advise caution for emerging
markets unless you monitor
them very closely. They "behave like rich-country ones
on speed, both up and down". It is very important for investors to
distinguish between high and low risk countries.
Current AFUND ratings on the
BIG Four Emerging Markets are: Brazil (Watch), China
(Wait), India (Hold) and Russia (Avoid). Later in
2004, the global investing
landscape may be dramatically
WSNW subscribers should periodically
S: AFUND GLOBAL 12
- for our
favorite global blue chip long
believe "Making money in
the market is all about
Timing". The "Buy And Hold"
climate we used to have in the US stock market
is long PAST HISTORY. Since 2000,
it has become a "Market Timing" and
“Stock Picking” environment.
Markets reward best stocks that
have Value AND Growth. Corporate profits
for more well managed and sufficiently capitalized
companies should rise modestly, helped by the
low interest rates.
Despite the fact that we do live in interesting
times, short term we repeat
last year's mantra:
GROWTH is BEST and
Trade for short term profit 10-20%
The current Zeitgeist of Minimal
buying enthusiasm, then slight profit taking
will later see the usual January effect Nasdaq buying,
the usual April tax rally and reversal, a very tough summer
and then a "surprising" strong September UP election buying.
- Public enthusiasm
to spend, spend, spend will
be subdued as the US job market continues to go
through structural changes and more better paying jobs are
exported to China and India. Consumers are still in a financially
weak position with little pent-up demand.
2004 will bring a rise in interest rates that is likely to dampen consumer
willingness to spend and borrow. If/when the US housing markets
corrects, the question will be whether the US enters a recession
or worse. The bottom line: Our advice to individuals
and businesses is to increase cash flow (profits/income
- expenses) 10% next year.
Stock markets will benefit
less from low interest rates. Saturn transiting
the Sun of President Bush and the USA Independence
Horoscope cosmically demands "paying the piper".
Uranus reenters Pisces in late December which refavors
the biotech industry innovation over the next couple
of years. Jupiter leave Virgo and enters Libra September 24, 2004.
This plus medical electioneering will change profitability models
for many companies in the health care industry. Q4 2004, we expect
M&A activity to accelerate in the Financial sector. We will
talk more about which sectors such as the fashion industry will benefit
H2 2004 from Jupiter's move into Libra in our May 2004 update.
The next key astrological
event for the US is Pluto opposite the US Mars in January, May and November.
This is likely to intensify (Pluto) conflicts (Mars opposition) and we
unfortunately will remain a nation at war. The 3 biggest outer planet aspects:
Jupiter Square Pluto (8/6), Jupiter 135 Neptune (9/15) and Jupiter trine
Neptune (11/29) are quite brief in duration and intensity and may have little
market influence outside of the energy and financial sectors. Of considerable
consequence may be the pre-US election Solar Eclipse of October 13, 2004.
More on this in our May 2004 update.
2005: The fifth year of each decade has been positive since 1881.
We see no
reason at this moment to disagree with history.
29, 2006 is
a Total Solar Eclipse. Also in 2006
Jupiter squares Neptune 1/28, 3/16 and 9/24.
2007: Jupiter Square Uranus: 1/22, 5/11, 10/9 and then in December 2007:
Jupiter will be conjunct Pluto.
The low point of the nodal cycle is reached in 2008 and
Pluto ingresses into Capricorn..
Jupiter conjunct Neptune in 2009:
5/27, 7/10, 12/21.
The next epic shifting planetary configurations
in 2010/2011 of Jupiter conjunct Uranus AND Jupiter
Saturn as well as Uranus entering Aires
and Neptune enters Pisces. ALL precede the
December 21, 2012 Mayan end date.
Sector based investing, while
no longer replacing country
based approaches to global investing,
still is very important.
Favorite 2004/2005 future
themes are: Biotechnology,
Hydrogen/Solar Energy, Nanotechnology and
of Technology, Communications
and Health Care continue
subscribers: please note we update
our coverage on the following
industry sectors on our premium Silver
S: ENERGY, S:
S: REITS and S: Leisure.
Our 2004 favorite sector themes
- Aging, Biotechs, S: Healthcare
- Employment &
Career Development (H1 2004)
- Homeland Security
- Life Essentials:
Energy, Food, Shelter and Water
- US health care expenses
are $1.5 trillion, or more than 14% of the total
U.S. economy. This is more than Americans spend
on food, housing, or automobiles. We expect major political
fireworks into the 2004 election over this issue and
we be downgrading this sector ahead of Jupiter's exit from Virgo
in late September 2004. Uranus will re-enter Pisces in late December
2003 which will help Biotechs. The best biotechs
to buy are those with revenue generating
products increasingly close to launch.
The easiest way to play this sector is to
either market the market leader Amgen (AMGN) or to buy
a basket of 20 with the Merrill Lynch Biotech
HOLDRS (BBH). Long term investors should look for companies
that will benefit from the increasing baby boomer
aging population: a baby boomer becomes a senior citizen every 7.5
seconds! Healthcare, especially for retiring babyboomers,
will receive more attention and money as time goes
by, e.g. Sunrise Assisted Living (SRZ). These range from assisted
living communities, to laboratory testing companies to companies
that provide orthopedic care and dental products. Drug companies
such as Novartis (NVS), but especially generic ones such
as Israeli Teva Pharmaceutical (TEVA), the largest producer of
generic drugs in the world and India's generic-drug makers Dr. Reddy's
Laboratories (RDY) and RANBAXY LABS (RBXLF) will benefit. Perhaps most
important, and certainly closer to my heart and soul are traditional
SRI favorites such as Herbs, Natural Foods, Vitamins and Natural
Healing Therapies which will continue to grow market share
as Cultural Creatives age.
employers are turning to temps.
We will not comment on the obvious longer term social
implications of lower wages, lesser benefits and
job security. Instead, I will note how this trend is
likely to benefit employment agencies.
Given the "jobless recovery" as well as Jupiter
in Virgo, temporary employment agencies plus vocational
training schools stand to benefit. Five
favorites to watch and accumulate on weakness are: Manpower
(Man) and Teamstaff (TSTF) plus Career Education (CECO),
ITT Education (ESI) and Apollo (APOL).
- It is hard to find a more adpt astrological translation
for Saturn (security) in Cancer (Home) than homeland security.
Being SRI inclined, there is not too much I wish to buy in this
sector except a stock like Taser International (TASR). Other possibilities
include Kroll (KROL), London based Securior (LSE:SCR) and
microcap Command Security Corporation (CMMD).
- Our favored financial sector
for 2004 is Insurance over Banking and Brokerage, given
our forecasts for both higher interest rates and the specter
of a stock market decline. Since 911, more Americans see value
in having insurance. Even though industry pricing power is beginning
to wane, throughout the world, governments and private companies
will also have to spend a lot more on insurance. Throughout
the world, governments and private companies will also have
to spend a lot more on insurance. Our four favorite North American
insurers are: AFLAC (AFL), Allstate (ALL), Metropolitan Life
( MET) and SunLife (SLF). Our four favorite foreign insurers are Aegon
(AEG), AXA, RenaissanceRe Holdings (RNR) and Swiss Re (SWCEF).
- In future, we hope to
see SRI favorite Fuel Cell, Solar and Wind companies
as suitable intermediate term SRI investments.
Personal care companies Church and Dwight (CWD) and global
giant Unilever (UL) are safe and boring buys, but along with
many natural food companies shares, are expensive, e.g. Hain
Celestial (HAIN) and Whole Foods (WFMI). They should
be considered when their share pricing again intersects with
reality. As for shelter, most of our money in this sector is long
term invested in our client International
Hi-Tech Industries. The
number three and fastest growing beverage
is Water. Big Euro food groups,
Dannone [DA] and Nestle [NSRGF], own the largest
brands and remain conservatively
profitable. German RWE and French SUEZ are
serious global players, while American Stat Water
(AWR) and Aqua America (PSC) are good alternative domestic
choices in conservative portfolios. Treatment stocks
Calgon (CCC) and Ionics (ION) are safe long term holds.
- The Nanotechnology Research and Development Act authorizes
$3.7 billion in federal funds for nanotechnology, the science of building
new products and devices by manipulating molecules and atoms.Today,
most Nanotechnology investments are largely venture
capital plays or early stage R & D developments.
However, the hype will grow shortly, if not
the reality. The prefix "Nano" in a company name will have a similiar
effect to the suffix ".com" last century. We will cover this
sector more in our May 2004 update.
- The cheapest long term protection against
the continuing US Dollar decline is GOLD. Geopolitical uncertainty,
war, global economic sluggishness and a weak U.S. dollar
are good for gold companies. The major factor providing intermediate/long
term support for gold is that a further decline in the US dollar
is practically inevitable. However, as 2004 is a election
year, don't be surprised if Gold is "surprisingly" weak at
times. Just as IBM and GE are DOW bell weathers for DOW, so is Newmont
(NEM) for gold in BIG money portfolios. FYI: Last century, it
was ABX, when hedging wasn't such a dirty word. My favorite major
is Placer Dome (PDG). We continue to underweight gold midcaps as investments
given they already have built in a gold price of $450. If you prefer
the adventure of finding buried treasure as I do, there are over
1000 mining exploration or development stage companies on the
TSX alone. I recommend putting from 10% to 20% of one's gold allocation
[not total portfolio, but of commodities allocation] into a group
of 5 microcaps, which, with obvious bias, includes one AFUND client
will again be more a stock pickers market, than
a sector based one. However, less important
will be the need to research closely for skeleton's hidden
in the closet. They have already been mostly discovered.
Having my Moon in Libra,
my Stock Selection
individual stock and
: strong astrological
I like to begin with one or more of the following 4 criteria:
A: CASH RICH, WELL MANAGED AND PROFITABLE,
B: UNLOVED BUT UNDERVALUED,
C: POSITIVE MOMENTUM AND MONEY FLOWS
D: GOOD HOROSCOPE OR IN AN ASTROLOGICALLY
1) Jupiter in Virgo until Q4
when Jupiter enters Libra.
Our first choice this Winter will
be cash rich dividend paying global
blue chips. These are companies
that are prospering by gaining
market share and buying "cheap"
assets during this economic
slowdown over small and midcaps.
These are companies
that will become far stronger in the
long term. Our game plan is to
invest conservatively, but due to recent
high market volatility and increasingly
compressed market cycles, we now
advise trading all
accounts more actively, at least 50% of portfolio
holdings! Note: European and Asian stocks
may NO longer rise and fall fully in sync
with US markets as the US dollar is now generally
recognized to be in a secular decline.
subscribers should periodically
S: AFUND GLOBAL
- for our favorite
global blue chip long term investments.
2004's favorite strategy will be Market Neutral
Hedging: Buying a strong stock while shorting an appropriate
index (SPX or Nasdaq), or Pairs Trading - buying
a strong company and selling a weak one in the same sector
usually makes money whether the market moves up, down
or sideways. Over the next few months, we will not so much
be investing as doing short term trades such as shorting Nasdaq
Investing themes follow.
For more and updates,
may visit our AFUND
1. The US dollar will fall
still more, select Country
I-Shares or Foreign Blue Chip companies
2. We always like
undervalued stocks, especially if
coupled with a yield greater than
the classic value buy signal
of 5%. However, for H1 2004, we are happy with 4%. Thereafter, we
will be demanding at least 5%. Given Saturn's entry into Cancer,
we reduced our previously favored REIT exposure
while we wait for more of a downward real estate price adjustment.
We also recommend stocks that
are 10% or more undervalued or potential M&A
acquisition candidates. WSNW subscribers may wish to
read our S: Income&
Dividend stocks post for more.
- Canada (EWC):
Accumulate H2 2004.
- Japan (EWJ):
Honda (HMC), Shiseido (SSDOY), Sharp (SHCAY)
and Sony (SNE).
H1 2004 outperformance for Aegon (AEG),
Heineken (HINKY), Royal Dutch (RD) & Unilever (UL).
- UK (EWU):
H1 2004 outperformance for Allied Domecq (AED), BP
(BP), Cadbury Schweppes (CSG) and HSBC (HBC) and International
- Switzerland (EWL):
Novartis (NVS), Nestle (NSRGF), STM
Microelectronics (STM) and SWISS RE (SWCEF).
S: AFUND GLOBAL 12
3. S: DJIA
FAVORITE 2005 stocks are American Express (AMEX)
and surprisingly ATT (T). The latter I presume is
due to a buy out, merger or new management strategy. Caterpillar
(CAT) in December 2003, IBM and Johnson and Johnson
(JNJ) will also be rebought in 2004 for long term buy and hold
investment portfolio allocations. However, even Blue
Chip stocks have to be traded, not "buy and
held" for better than 10% returns in 2004. Our
least favorite Dow Dog remains Eastman Kodak, whose days in the
Dow is surely numbered.
FOR BAD TIMES
Gold, entertainment and
consumer staples often outperform in bad times. Such
stocks are to be watched and accumulated on weakness before
market bulls become concerned that the world economy is not
recovering as strongly as they hope and believe. Also considered
traditional safe havens in times of uncertainty are utilities
and property trusts. However, deregulation and future interest rate
increases will make them less attractive in 2004.
Our S: Stocks for Bad
Times is a defensive, lower risk value oriented
portfolio that allows one sleep better at night even
if there is more terrorism or the "recovery" takes time
and is not on "TV" time? Also included are income oriented stocks
as well as an SRI component to feel good about, even if one
is not making a ton of money. This, along with
Health care, are our two favorite sectors
to buy and hold during market
5. FUTURE TECHNOLOGIES
Even before we
became one of the first
Apple dealers in NYC,
we historically have liked
betting on emerging
technologies. This we
recommend doing in a basket of stocks,
because this is a high risk-high return investment
that is best done in a diversified manner. Also I don't like
to pay too much of a premium over value
for longer term holding.
Note: Given inevitable future boom-bust cycles,
the "safe" play is the equipment sellers who always make money.
After the Klondike and California gold rush, most miners went home
broke. The real money was made by freighters and merchants who brought
and marketed supplies. So too with Biotechs, the Internet and Nanotechnology
Our 2004/2005 favorite ET
BIOTECHNOLOGY: e.g. BBH and IBB or heavyweights Amgen
(AMGN), Cephalon (CEPH) and Genentech
(DNA) can be trading buys on strong pullbacks.
I prefer to invest in companies that have multiple
products in clinical development.
e.g. Vestas and Gamesa.
Watch: FuelCell Energy (FCEL), Hydrogenics (HYGS),
Mechanical Technology (MKTY) and Quantum Technologies (QTWW).
NANOTECHNOLOGY: Watch: Veeco Instruments (VECO) and
*6. AFUND CLIENTS
Astrologers know that
the best way to predict
the future is to create
Disclaimers and with an informed but obviously
biased view, I
am doing my best to help create
investor wealth for client
companies we now consult for including
High Tech Industries
[IHITF] and Gallery (GARQF).
May 2, 1988 I have established
primarily due to my knowledge
of financial astrology.
While not perfect as
some critics would demand,
my precision and accuracy
is appreciated by many professional
traders and investors.
As more of our forecasting is now
private and contracted to money managers
and institutional investors, it
is my intention to have other financial
astrologers and money managers
contribute more on my web site in the future.
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without the prior written permission
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