It is NOT WHAT you
know, but WHEN you know it.
© Henry Weingarten Last
Much of the following material has been serialized in
and our subscriber
Notes: Hyper links that are prefaced with a S: are restricted to WSNW Subscribers.
This forecast was first posted on our web site in our
channels for WSNW
Wall Street, Next Week December 19, 2005:
news side: Starting
the Year with a Head of Steam, many pundits publicly proclaim
continued economic strength in 2006. And the really good news is that
will stop raising rates, stock buybacks will continue, and then what
LONG BEFORE THE US DEBT BUBBLE BURSTS?
have become used to spending more than they earn,
and to a great extent a lot of households are overextended. How long
debt bubble bursts? You can't count on the consumer to carry the
Peter Morici, economist,
University of Maryland
me count the debt: credit cards, second mortgages, home equity
lines of credit, student and car loans etc. Now that interest rates are
becoming less accommodative, more Americans face stagnant or declining
with less job security. Bankruptcy will indeed be a growth industry in
GOES GENERAL MOTORS, SO GOES THE NATION”
Is it any
wonder that I have been
lamenting that 2006
bleak? It is difficult to offer my forecasts for 2006. I am
least one disaster before the first half of the year is over. I will not speculate on
the mundane cause or
so called market trigger. It can be one or more of nearly 40 well-known
risks. I do wish to stress that the astrological signals are strong
I can forecast with 93% certainty that markets will be substantially
lower than they are now. Astrologically,
the key is the March 29th Solar Eclipse, coupled with
both a major T Square of Jupiter, Saturn and Neptune, combined with a
May 2006 Solar Return for of the New York Stock Exchange- All
don’t ask me before June
when one should begin buying. Think cash, precious metals, liquidity,
capital preservation and of course little or no margin. Aside from
situations, it really only makes sense to be buying when there is real
the street. Whether it should then be for a short-term trading bounce
style bottom will depend on how low markets drop below DOW 10,000 and
2,000. Our first 2006 Dow Trading Targets are P1 10150, P2 10,000 and
We could also see our second 2006 Trading targets P1 9500, P2 9200
8800 with a second disaster. As for the NASDAQ, with what rationale it
above 2000, or even the American patriot number of 1776, is often
like Churchill who
prepared for WWII many year in advance, the new Fed Chairman Ben
has studied the depression era extensively, is also well prepared for
of times in one or two generations.
Hopefully it won’t be so bad, and will be
remembered simply as the
“worst of times” in one generation and not
IT WILL BE BLEAK. BE PREPARED.
PRSERVE CAPITAL: FOCUS ON
AGAINST DOWNSIDE RISK.
markets decline in the form of a single or series of downturns, failed
attempts or even crashes? Even so, any market rise
accompanied by increased risk vs. declining reward attributes. If a
2006, we have identified close to 40 potential looming crises (Pluto
events). A partial
but not complete list
includes: China melt down, Yuan reevaluation after effects or Taiwan
global biomedical epidemics, e.g. Avian Flu, or bioterrorism outbreaks,
wars (China, EU), major hedge fund bankruptcies, a PBGC (Pension
Guaranty Corp.) shortfall crisis, major junk bond or emerging market
default, a bank derivative blowup,
plus possible assorted natural disasters. This list does not include
arising from higher interest in consumer credit, energy costs, and
consequences of the ongoing conflict in Iraq. The list goes on and on.
Greenspan and his soothing reassurances will be gone in 2006. The New
Fed Chairman Ben Bernanke can quickly expect a crisis to deal with as
Alan and Paul
before him. A deep student of the depression, he will find
help post the May 17, 2006
Stock Exchange Solar Return. 2006 is likely to have more wars, rather
The most ominous event we see intermediate
term is the US dollar decline ahead and “America for
hopefully not a
2006 unfolds, the
towards increased risk aversion. CASH WILL BE KING, with conservative
seeking safety. Remember, the path of capital conservation entails a
it is the conservative offset for the risk you are not wiling to assume.
R/R, i.e. greatest risk and lowest reward is with the Nasdaq market
we project less than Nasdaq 2000 by Summer? Why not!"
HYDE PARK SOAPBOX: Shadow
general, the broad economic outlook
has not changed. The 2005 to 2007 inflationary recession
deepen. This outlook is predicated on economic activity that already
place and does not consider any additional risks from exogenous
deterioration also will be seen in corporate profits and federal tax
receipts. Lower tax receipts will combine with disaster
and the ongoing war in Iraq to accelerate deterioration in the federal
growth will not surface in regular government reporting until at least
year, now that it is clear that Katrina's impact has been neutralized
official reporting, and that political manipulation of the GDP,
CPI is rampant.Risks of the current circumstance evolving eventually
hyperinflationary depression remain extraordinarily
Many savvy investment advisors believe the next few years will
decade of higher risk and lower market returns. I agree.
Long Term, we consider the long term
economic fallout of the
US Iraq invasion quite severe and believe that global markets
retest or break their 2004 lows. As forecast,
more and more savvy international investors are moving some of
money out of the US stock market to invest in countries that they feel
are in better shape than the US. International Equities will outperform
domestic ones We still recommend US
in 2005 have 50% of their portfolio outside of US dollar
denominated assets, or use gold and currency hedges for similar
increase use of Exchange traded funds [ETFs], which are passively
low-cost, efficient baskets of stocks that focus on
sectors, regions or indices. Even market bulls are concerned about
specific asset classes and betting on individual sectors they
prefer. My view remains that stock selection continues to be paramount
and counts more than sector rotation. It is also as important
ahead, my question is
whether 2006 will show slow growth of less than 2%, no growth, or turn
classical recession. America will be on sale then. Hence we advise PRESERVE
CAPITAL: FOCUS ON PROTECTING AGAINST
Given that the traditional "Buy and Hold" investing strategy will
continue to under perform, we again recommend trading 50% in
"investing" portfolios in 2006. TAKE/PROTECT PROFITS
DON'T BUY AND HOLD. THE STOCK MARKET REMAINS A RISKY,
I ADVISE KEEPING A BALANCED AND DIVERSIFIED PORTFOLIO, AVOID MARGIN
DEBT AND BE CASH RICH.
There are five primary celestial and terrestrial phenomena
world events and global markets in 2006:
Big themes include the aging of baby boomers, alternate energy, Triple
Blue) Value, and increased safety and security demands.
- March 29, 2006 Total Solar Eclipse
Saturn, Neptune T square with 3
Jupiter squares to Saturn December 17, 2005, June 22 and October 25,
2006 and Saturn
opposing Neptune August 31, 2006, Feb 28 and June 25, 2007
continuing World War on Terror
and the Iraq aftermath and US Debt crises
Bernanke becomes Fed chairman February 1, 2006
Charter November 1, 2006
key issue are:
1. The US Dollar will weaken significantly in 2006 as the deadline for Corporate Dollar repatriation ends in 2005.
term structural problem of the US current account deficit has yet to be
dollar should remain in a secular bear market for years due to its
negative fundamentals. Unfortunately, for Americans, US interest rates
may rise not only for future inflationary worries, but also due to a
lower US dollar. Our US Dollar Index Fair Value
today is 81.50, while .78 or lower is possible. As
previously forecast and increasinly ackowledged, the
US Dollar will no longer be the world's sole
reserve currency. To minimize this danger, it
has been necessary for the FED to defend the US dollar and
outright intervention from the US Treasury in the currency markets may
be necessary. Given the US dollar secular decline, we continue to
recommend that All investors need to diversify their
globally. Additionally, many blue chip foreign investments
attractive investments with stock prices cheaper by most valuation
measures: price to earnings, price to sales and price to
Our recommended US equity portfolios international stock
allocation remains 50%.
2. A WAR TIME ECONOMY:
GUNS & CAVIAR
REDUX Nobel Econ: Iraq May Cost US $2 Trillion
At least some of the real
war costs are being admitted, e.g. Veterans Administration and
interest, ignoring the longer term effect of misguided capital lost
These are extraordinary times, where geopolitical
outlook continue to outweigh normal stock market consideration
trends. As this will take money away from more productive areas
of the economy, we are far from bullish intermediate
term. US government bond yields may rise due to
weakening foreign demand, along with an increase in supply because of
massive tax cuts underway, as well as military adventures and
increased defense and homeland security spending. We could see a very
nasty bear market
in bonds. Remember: Life jackets, Deadbolts, Smoke and Fire
Alarms, etc. do NOT provide you with Financial security. Liquidity,
Global Diversification and hard assets such as gold DO offer some
houses are for sale and will be staying on the market
longer.The rise in home values will end in 2006 just as the average
size of homes is no longer increasing. We expect to see later
in 2006 and early 2007 house prices declining, with a similiar
astrological condition to 1989!
Housing, along with Commodities and Physicals, can be
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 have ended. 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. Will
this result in just slowing markets with a soft instead
of hard landing? It is largely a question of interest rates: When
mortgage rates increase, prices will fall. The question is how big will it
be and how
fast it will happen, not whether it happen.
Optimists believe strong housing demand
will help mitigate things, just resulting in a reversal of the McMansion
of bigger housing, lower quality homes and 40 year mortgages eventually
replacing 30 year ones. In other words, a housing slum and modest
decline and not a significant correction or crash
lies ahead. Pessimists believe positive factors such as
population growth, is already factored into housing prices, and shortly
increasing subprime defaults will be the harbinger of things to come.
buyers will benefit more than sellers.
4. INFLATION AND THE HOUR GLASS OR BIFOCAL ECONOMY
Stock markets will benefit less from low interest rates.
US Bonds will take a hit, unless there is
more terrorism. Spin it as they may, the economy is not only slower
than many Wall Streeters believe, but it will get worse before
it gets markedly better. Also the CPI has been significantly
understating inflation for years. Bill Gross of Pimco is quite correct
in pointing out the CPI
con job. It understates inflation (the cost of living as
well this year as well as last year). Commodities, especially
gold, will be an appropriate hedge for many portfolios. We
to see $800 gold by 2008. Despite healthy
dividends, we will continue
to underweight REITS in H1 2006. The emperor has no clothes. Investors
increasingly risk adverse and stop chasing yield. Over time, as the US
Dollar continues to depreciate, it will bring higher inflation, lower
real growth rates and a reduced standard of living for most American
wage earners. A sad but compelling reason to buy gold.
Private plans have an estimated deficit of just $465 billion, Public
plans of local, state and the federal government in the US are
estimated to have something like $1.6 trillion! Individual investors
are advised to reduce indebtedness as much as possible, as
quickly as possible.
WILL US FED POLICY PREVENT A JAPANESE
OUTCOME OR JUST DELAY IT?
HOW WILL FUTURE US MILITARY ADVENTURES HELP OR
THE WAR ON TERROR?
WILL THE US DOLLAR JUST RETEST .80 OR REALLY TAKE A DIVE?
Global Stock markets
will be determined largely
by answering five questions:
Q1: Will the US Dollar remain the
sole global reserve
Q2: Will Energy Prices Stay High?
Q3: Who will be helped/hurt the most by the
Q4: What P/e's will investors be
willing to pay for
modest corporate growth?
Q5: Where are interest rates headed and when and where will
Fed stop increasing rates?
KEY COMPANY TRENDS IN
- Buy stocks of blue chip companies that pay dividends
have active share buy back programs.
- Buy companies that will benefit AND not be seriously
from globalization. Companies that benefit from globalization are
properly hedged against currency risk.
- The best commodity and commodity stocks will be those
gold and silver sector.
SHORTING AND MARKET NEUTRAL INVESTING FOR EXPERIENCED INVESTORS
In order to sleep soundly at night, I recommend a Hedge Fund style
Market Neutral Strategy for H1 2006. This involves both buying
under valued and selling short overvalued stocks. This is often best
done in industry pairs: going long quality stocks and shorting lower
quality ones, as it involves the smallest risk, but 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 for
market neutral strategies.
If you incline more to the bearish camp as I do, then a long/short
ratio of 1-1 and 1-2 (depending on the short term astrological trend)
EIGHT, NOT THREE ASSET CLASSES
There are NOT three assets classes but EIGHT that savvy global
investors should semi-annually reweight. Beyond the classic Stock,
Bonds and Cash are:
Arts and Collectibles, Commodities, Currencies, Income Trusts and
Preferred Stock, and Real Estate/REITs.
Diversification among at least five, not just within each asset classes
HIGH IS UP? HOW
LOW IS LOW?
8880 to 11120
SPX: 1050 to 1280
We would be glad to be less
active traders and more
traditional buy and hold cosmic value investors if only....
In 2006, we recommend holding some [up to 20%] Blue Chip dividend
stocks which offer a greater total return beyond cash in the
bank. Additionally, we look to commodities [10%-15%], currencies [10%],
small cap trading [5%-15%],
depending on account risk profile for double digit 2005 portfolio
returns. The mania for M&A will gradually be replaced
for global investors; hence, we stress caution. Flat and range bound
markets will favor quality issues. Alternately, Market timing
another key to
above average returns.
Today most investors realize classic "Buy and Hold" is
Stock picking and market timing will continue to rule in 2006.
Successful investing depends on knowing:
When all the good news has already been factored into the
price, at what price is the valuation just too high?
When all the bad news has already been factored into the share price,
at what price is the valuation too cheap?
- We believe only 25% of
use the investment strategy paradigm of BUY and
or Growth stocks, with at least reasonable valuations based on current
and future profits.
- Any and all investing profits need to be protected
bear assaults in 2006.
more (50% of portfolio)
and take/protect profits at 10%-20% profit points for long term
INVESTORS SHOULD BUY
AND HOLD STOCKS
IN 2006 THAT ARE:
1) Buy carefully and when stock valuation becomes
2) Be careful about owning stocks that are “priced to
can only disappoint.
3) It is NEVER “different this time.”
4) Ultimately, profits matter.
1) Profitable, well managed
2) P/E* under 14 for Growth and
under 10 for
3) A PEG <1.3,
or undervalued by 10%
or more, or dividend
yields of 5% or more.
*After allowing for pension
ACCUMULATE ON WEAKNESS: CANADA, JAPAN, KOREA & SWITZERLAND
TRADE AND SELL THE UNITED STATES
The Horoscope is a MAP of TIME and PLACE - here is a brief
of selected global markets:
Country risk is real. Despite globalization, sophisticated investors
today are rightly concerned about being overly invested in any one
country or currency.
Unfortunately, there are no really good places to hide in Q2 2006.
- We recommended aggressive buying at 117.50 and continue to favor the long side of the Euros under 120, sellers above
Fair value is
122 but moves to 125 midyear. This is subject to upwards revision should the Yuan repeg more to the
Euro or Oil ministers accept [demand] payment in Euros or a similar
move by other countries to keep the
Dollar the sole world reserve currency. We plan to
trade accordingly. Note: WSNW subscribers can review our
Jones Stoxx 50 stocks.
Switzerland (EWL) 2006/2007 may be a good time to 'THINK LIKE THE SWISS": Stepping Up To Swiss Quality.
NORTH AMERICA -
CANADA -CANADA IS FOR WINNERS One
major reason is that
Canada's trade and budget surpluses
continue to contrast with large US deficits. We are delighted to have
our northern neighbor remain our favorite G8 country in 2006. Canada's Competitive Advantages-
Economist Intelligence Unit states that Canada will be the best
the G-7 to invest and do business between 2005-2009. We agree.As
investors diversify away from US dollar assets,
more US investors should look at Canada as one attractive alternative:
15-20% of their North American portfolio next year. Equities [EWC] are
cheaper relative to US markets. This should also keep Canadian
investors happy, at least relative to the US in 2006. Resource rich, it
will be the target of significant M&A to the extent allowed by
government. Fortunately for Canada lovers such as yours truly, 2006
will continue to outperform, and the loonie will reapproach .88+ in
2006 While a minority of Canadian economists forecast par with the US
dollar, the damage to Canadian manufacturing would be
too great. We recommend sophisticated investors buy Canadian Bonds and
Sell US Bonds as US interest rates will grow faster than Canadian ones,
as their Central Bank tries to stem the rising Loonie. Also,
I recommend researching Canada's Power Book of high dividend paying - 50
Top Income Trusts. Chasing
Higher Yields Up North
MEXICO - Mexico sends 90% of
its exports to the United States and its fortunes are increasingly tied
to its northern NAFTA neighbor. The amount of money shipped to Mexican
families from relatives in the United States today surpasses foreign
investment as the country's second most important source of revenues
after oil. In 2006, we continue to look for potential take over targets
sporting reasonable valuations or companies that can compete in the US
for the rising Hispanic consumer market share.
- UNITED STATES - AMERICA
SOON BE GOING ON SALE! Is a new era
of low growth or a protracted
Japan-style recession awaiting the US? Unfortunately, the US remains a
nation at war,
with terrorism concerns likely far into the future. THE US IS SIMPLY
NOT AS ATTRACTIVE TO INVESTORS AS IT ONCE WAS! GMI
WorldPoll shows that unpopular U.S. foreign policies
and global market share for many American based companies such as
Airlines (AA) and McDonalds (MCD). Today, 20% of international
are less likely to travel to U.S. or purchase American
services due to U.S. war in Iraq and unilateral foreign policy. This
of US brands will increase in 2006. Also record budget deficits makes
further tax incentives for consumers unlikely. The enormous US twin
trade and budget deficits make the US Dollar a potential time bomb: It
is no longer as safe a haven given massive budget deficits and the War
Positively, thanks to the weaker US dollar intermediate term, select US
exporters will benefit. Additionally, more American firms will become
M&A take over targets. Ultimately, US stocks will appear to be
global bargains when the US dollar has
dropped further and/or the currency risk has been reduced. This could
happen as soon as H2 2006. Still, overall, many former investor
favorites will disappoint as investors sell rallies to "get
even". Corporate earnings
are decelerating, energy prices are likely to remain high and interest
rates are on the rise, However, given one can trade stocks
for 10-25% appreciation/depreciation a day/week, this remains TRADERS
HEAVEN. Forthcoming 2006: AMERICA
SALE by which time Americans will have come to realize they are not as
rich as they once were.
ASIA/PACIFIC - Intermediate term investment
India and China.
Long term, China and Asia could be the fastest growing area in the
world 2010-2030. In 1820 China and India were 50% of the world's GDP.
Intermediate term, the trends are indeed favorable for a return to such
global weighting. It is only a
matter of time before Asia is no longer so dependent upon American
consumer markets to thrive.
JAPAN - For too long, Japan has depended on the US consumer
now partially substituting the Chinese consumer instead of domestic
consumption. At the same time, expansion of Asian operations into China
and Korea from today's base in Japan Our mantra on JAPAN INC.
"You have Japanese
products in your home; why don't you have Japanese stocks in your
portfolio?" Most believe that the Yen
will strongly benefit from a Chinese reevaluation of the Yen. So there
is also a strong currency kicker benefit here in 2006. Japan
will continue to out perform.
- HONG KONG/CHINA - How strong will the Chinese market be
after the 2008 Olympic Games in Beijing? More to the point, will its
current slowdown end in a soft or hard landing? 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.
Increasingly, Chinese companies are being listed on the US stock
market. I find this somewhat ironic. Until this is rightly addressed,
we continue to recommend
great caution. On the plus side,
Yuan will continue to move UP.
China will be the third largest economy in the world before 2012, after
US and Euroland. Shanghai World Financial Center, with 101 floors, is
expected to be the tallest building in the world when
brand names prepare to go global. “The
has said it wants at least 50 Chinese firms in the Fortune 500 list of
the world's largest companies by 2010.”
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
to wait and buy AFTER the collapse of a big bank or two, given my
predilection for sound sleep.
Abuses on China's stock
listed companies have long struggled with abuses by their controlling
Hong Kong is slightly more attractive, although fundamentals often seem
to matter little on the Hang Seng, and its stock market acts closer to
legalized gambling 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. As for buying directly on the Shanghai and Shenzhen
stock exchanges, good luck or should I say "good connections" matter!
Bottom Line: There are two primary ways to play China- Buying
what China Sells and Buying what China Buys. I prefer
- KOREA - Even though growth is slowing, long term,
we continue to like blue chip giants Korea Telecomm (KT), LG
Electronics and LG Philips (LPL). We still anticipate a peace dividend
in 2006 and a MAJOR benefit from Chinese Yuan appreciation.
way for US investors to buy is through the Korea Fund (KF) or Country
Ishare (EWY). Like Taiwan, this is largely a bet on
story is now known to be much bigger than just computer and pharmaceutical
blue chips. Growth of 7.5%+ is likely to make India the world's fastest
growing economy after China. Global investors have finally noticed the
giant sucking sound of thousands of US and UK jobs being outsourced to
India. Goldman Sachs predicts that India will be the third largest
economy by 2035. IIF or IFN are two closed end India funds,
the best way for US investors to invest (not trade) in India. .
- AUSTRALASIA - Australia's growing trade deficit and the
weakening housing market will continue to slow economic growth
in 2006. However, resource rich, there are a record number of
advanced development projects under way in Australia's mining and
This combination makes this a slightly out perform country
rating, but no longer a buy, for a much stronger Aussie $ as was the
case until recently.
- OTHER TIGERS AND DRAGONS - We prefer Singapore,
Thailand and Malaysia to Indonesia and the Philippines.
OTHER- Opportunities for
ISRAEL - Israel's technology sector is desirable given its
skilled labor force and favorable tax treatment. Unfortunately, it is
best to buy only when there is blood in the streets, which happens all
LATIN AMERICA - Accumulate on weakness
for appropriate multi-year long term investment portfolios and longer
term for multi-national corporate investments.
We continue to advise caution for emerging markets unless
monitor them very closely. There is always an uncomfortably large
possibility of shocking negative "surprises." They "behave
rich-country ones on speed, both up and down". It is very important for
investors to distinguish between high and low risk countries. In
addition to the obvious political and currency risk, many are too
loosely regulated. By the end of this decade, many forecasters believe
we will see greater economic growth coming from a combined India,
China, Brazil and Russia, than
from the established economies of the US, Canada and Europe.
Until then, one can expect plenty of geopolitical risk. For
the actions against Yukos and Khodorkovsky should be an investor red
flag about Russia's commitment to rule of law and protection of
shareholder and investor rights.
Global analysts are forecasting high growth of the
Russia, India and China--over the next half century.
Many believe China will overtake Japan as the world's second-largest
economy in 2015, and become the world's largest around 2040. In H2 2006,
the global investing landscape is likely to be dramatically
Current AFUND ratings on the BIG Four Emerging Markets are:
(AVOID), India (Watch) and China (Wait).
WSNW subscribers should periodically review our S: AFUND GLOBAL 12
our favorite global blue chip long term investments.
Traders believe that "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
"Market Timing" and “Stock Picking”
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.
For H1 2006, Be highly liquid and Trade for short term profits- 10-20% moves.
In the 4 year presidential cycle, this is often a down year
(e.g. 2002, 1998 etc.). March
29, 2006 is a Total Solar Eclipse in Brazil, Africa, Turkey,
and Asia. In 2006 Jupiter squares Neptune
1/28, 3/16 and 9/24. Also we have the first pass of Saturn opposite
Neptune 8/31 and again in 2007 (2/28) and 6/25). This could be more
Avian Flu, Marburg, SARS outbreaks.
IS THERE REALLY TO LOOK FORWARD TO IN
am unsure at the time of this writing whether
this upcoming period will be the worst of economic times in one
generations. Appropriate press storylines could be. “Nero
fiddles while Rome burns”, “Ship of
Fools”, “Dancing on the Titanic”, etc.
the viewpoint of recommended APPROPRIATE
intermediate term stock market action, it matters little.
Consider the three major upcoming so-called
decline in Oil prices,
to be spent on the Katrina/Rita fix up and
pause in interest rate increases.
are at best cups half empty.
1) This will be due to decreased demand; sustained
Oil price above $55 are detrimental to the broad economy sans the
2) Katrina/Rita is money that cannot be used
type of bad news is not
really that good. If it were, we would see DOW 13,000 instead of below
before Bush leaves office, given the likelihood of more upcoming
man made disasters in 2006/2007)
Interest rates are too
low from the viewpoint of inflation.
However, I see the real estate market will
decline even more.
(Note: 2007 is similar astrologically to 1989!).
Yet if rates remain low or are lowered, the US dollar
or can potentially fall out of bed!
on October 26, 2005, cosmically bestowing favor on the Business
Intelligence, Health Science, Mining, Nanotechnology, Robotics, Waste,
as well as grow
Bankruptcy - a
challenge for banking, business intelligence (spying) and
pollution [classic Scorpio themes].
- Jupiter is in waning square to Saturn December
(with subsequent passes in June 22 and October 25, 2006).
- The days of cheap US food and energy are long gone.
enthusiasm to spend, spend, spend will be subdued as
US job market continues to go through structural changes and more
better paying jobs are exported to China and India. This "wageless
recovery" in most G7 countries results in economic growth that has
failed to raise
worker's pay above the rate of real inflation: Consumers are
still in a financially weak position
with little pent-up demand. Further rises in interest rates
will dampen consumer willingness to spend and
borrow. If/when the US housing markets corrects signficantly,
will be whether the US enters a recession or worse. The bottom
Our advice to individuals and businesses is to increase cash flow
(profits/income - expenses) by
10% next year.
- There is the highest likelihood that the US
economy will start a recession in Q2/Q3 2006 and it will be "official"
2 negative GDP growth quarters sometime H1 2007.
2007: Jupiter Square Uranus: 1/22, 5/11, 10/9 and then in
2007: Jupiter will be conjunct Pluto. Two Total Lunar Eclipses March 03
and August 28, 2007.
The low point of the nodal cycle is reached in 2008, when
ingresses into Capricorn with one
Total Lunar Eclipse February 21 and a Total Solar
Eclipse over China
8/1/2008. This is also the time that the baby
boomers start to
retire in mass from 2008 on- taking more money out of the market. Couple
that with a practically non-existant US savings
Jupiter conjunct Neptune in 2009: 5/27, 7/10, 12/21. Total Solar
Eclipse July 22, 2009 (India/China).
The next epic shifting planetary configurations in 2010/2011:
Jupiter conjunct Uranus AND Jupiter opposition Saturn, as well as Uranus
entering Aries and Neptune entering Pisces, a total Solar Eclipse
11, 2010 and
a Total Lunar Eclipse December 21, 2010. We also have a rare transit of
Venus June 6, 2012. Then a Total eclipse of
the Sun 14
November 2012. ALL precede the December 21, 2012 Mayan
date. Also we have 7, yes 7 Uranus-Pluto squares from June 24,
2012-March 17, 2015--Wowie! Some of the more extreme forecasts made for
this time period include alien visitations/invasions, catastrophic
asteroid impacts, violent volcanic eruptions and massive earthquakes.
We will give our views here no later than midnight 12/20/2009.
Sector based investing, while no longer replacing country based
approaches to global investing, still is very important.
In H2 2006, we will be expanding coverage of BIG THEME
Aging (Health, Leisure), Alternate Energy and Environment, Safety and
Security, and Triple Gold (Black, Yellow and Blue).
Given our bearish views, we are also looking to Distress Investing and
Safe Haven Investing, e.g. Dividend and Income.
Favorite 2006 future themes are: Biotechnology, Hydrogen/Solar
Nanotechnology/Robotics and Wind/Water.
The themes of Technology, Communications and Health Care continue to
WSNW subscribers please note: we update our coverage on the following
industry sectors on our premium Silver posting area: S:
S: HEALTH CARE, and S:
Most of our 2006 favored sector themes are defensive:
- People are living longer and there will be growing demand
health products and care. US health care expenses total more than 14%
of the total U.S. economy. This is more than Americans spend on food,
housing and, or automobiles. The
easiest way to play
this sector is to buy the iShares Global Healthcare Sector Index fund
(IXJ). 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 baby boomers will receive more attention and money as time
goes by, e.g. Sunrise Assisted Living (SRZ), American Medical Alert
(AMAC), Candela (CLZR), and Lifeline Systems (LIFE). These range from
assisted living communities and medical alert notification to
laboratory testing companies to companies that provide orthopedic care
and dental products. Also look to select leisure companies such as
Jacuzzi Brands (JJZ).
Much 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. Personal care
Church and Dwight (CWD) is a safe and boring buy, but along with many
natural food companies shares, are expensive, e.g. Hain Celestial
(HANS), NBTY (NTY) and Whole Foods (WFMI). They should be considered
when their share pricing again intersects with reality as demand for
health foods and sustainable practices as part of a healthy lifestyle
fortunately continue to grow.
- Jupiter's move into Scorpio adds intelligence to holds in
sector. Four sector picks are Armour Holding (AH),
Lojack (LOJN) and Magal Security Systems (MAGA). A Graham and Dodd like
play is Lakeland Industries (LAKE)..
- Long-range energy trends remain bullish,
with expectations that demand from nations like China and India would
keep supplies tight. We see SRI
favorite Fuel Cell, Solar and Wind
companies as suitable intermediate term SRI investments. For
example the solar industry is currently growing at more than 50%
annually and is predicted to grow 300% to $18.5 billion by 2010. Investments
in global alternative-energy industry, including solar and wind power, are expected to grow to $
100billion over the next 10 years, according to the International
Energy Agency. One
reasonable long term play is Fuel cell supplier
Quantum Technologies (QTWW). Two interesting small caps we
continue to watch are: Day Star Technology [DSTI] and Solar
(WWAT). As for shelter, we remain hopeful about International Hi-Tech Industries.
The number two and fastest growing beverage is Water. Growth has been
spectacular in a number of countries, with bottled water fast becoming
the norm for in home and on the move hydration. Health and wellness has
been a big driver for the bottled water business. Also the demand for
providing clean water and recyling dirty water is
surging. Unfortunately, disputes over water are
possible causes for war in the 21st century. German RWE and French SUEZ
are serious global plays. One international niche player to watch is
Consolidated Water (CWCO). Currently, America's water systems are in
need of serious repair. American water plays Stat
(PNR), Southwest Water (SWWC), Vermont Pure (VPR) and Aqua America
(PSC) are good alternative
domestic choices in conservative portfolios. Treatment stocks Calgon
(CCC) and Watts Water Technologies (WTS) are safe long term
holds. [Environmental Power [EPG]
Nalco (NLC) and Waste management
(Waste) are both likely to benefit from Jupiter in Scorpio. Calling
as in Black and Yellow, may not be much of an exaggeration.]
- The Nanotechnology Research and Development Act
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, if
the reality. The prefix "Nano" in a company name will have a similar
effect to the suffix ".com" last century. Our big 2006 play
here is our client Dais
Analytic (DLYT). The
Company generates revenues primarily from its first commercial
HVAC [Heating, Ventilation and Air Conditioning] product that saves an
on energy costs based on pre-Katrina/Rita pricing, while improving the
indoor air quality. This represents only one of the several world-wide
its polymer platform, which extends to desalination, performance
breathable clothing, and Marine paints and coating.
- The cheapest long term protection against a US
uncertainty, war, global economic
sluggishness and a weak U.S. dollar are usually 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. These are the times when we like to buy. We reached
target in 2005 and expect $800 by 2008. Just as IBM and GE
bell weathers for DOW, so is Newmont (NEM) for gold in BIG money
portfolios. My other favorite major is Barrick (ABX). Our Favorite
Midcaps are Nova Gold (NG), Agnico-Eagle (AEM), and Meridian
Another way to play this theme is with Metso (MX) , a top global
supplier of equipment to the mining and forestry industries. Other
commodities may also do well as a hedge .
- REITS will be bought by the buckets but only AFTER there
blood in the streets in 2006 and/or 2007.
Markets in H1 2006 will continue to be
stock pickers market, than a
sector based one.
Having my Moon in Libra, my Stock Selection is both:
individual stock and
BOTTOM UP : strong
I like to begin with one or more of the following 4
A: CASH RICH, WELL
B: UNLOVED BUT UNDERVALUED,
POSITIVE MOMENTUM AND
D: GOOD HOROSCOPE OR IN AN
ASTROLOGICALLY FAVORED SECTOR:
1) Saturn in Leo
We again are looking to some 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
long term. Our game plan is to invest conservatively, but due
recent high market volatility and increasingly compressed market
cycles, we now advise trading all accounts more
least 50% of portfolio holdings! Note: European and Asian stocks may NO
longer rise and fall fully in sync with US markets as currency trading
brings more wild short term swings, and also when the US dollar resumes its
secular decline. WSNW subscribers should periodically review our
S: AFUND GLOBAL 12 - for our favorite blue chip long term
2) Jupiter In Scorpio [Alternate
Energy, Health Care, Precious Metals,
Nanotechnology, Robotics, Waste].
Our favorite strateges will be shorting or defensive Market Neutral
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. Until then, we will not so much be investing
as short term trading such as buying January effect stocks or
shorting Nasdaq Internut-like fantasies.
Nine selected Investing themes follow. For more and updates, WSNW subscribers
visit our AFUND
The US dollar will
fall again, select Country I-Shares or Foreign Blue Chip
companies to hedge:
2. Share buybacks and
dividend paying stocks
are always desirable in our eyes. Historically, we always like
undervalued stocks, especially if coupled with a yield greater than the
classic value buy signal of 5%. Companies that pay dividends posted a
total return of 18.35% vs. 13.65% for non-payers. We excpect the same
relative out performance in 2006.
We recommend only limited exposure to previously favored REIT
while we wait for more of a downward real estate price adjustment.
Instead we recommend ishares Dow Jones Select Divident Index (DVY) and
Canada's Power Book of high dividend paying - 50
Top Income Trusts. We also like stocks that are 10% or more
undervalued or potential M&A acquisition candidates.
- Canada (EWC):
Outperform. Barrick Gold (ABX), Encana (ECA), Enerplus
(ERF), Prime West (PWI), SunOptica
(SKTL) and TransCanada
- Japan (EWJ):
Honda (HM), Nippon Telegraph and Telephone
(NTT), Shiseido (SSDOY), Sony (SNE), Toyota (TM).
- Korea (EWY)- Outperform Korea Telecomm (KT), Lucky Gold
and Samsung (SSNGF)
- Switzerland (EWL) - Outperform ABB (ABB), Nestle (NSRGR),
Novatris (NVS), Roche (RHHBF),Speedel (SPDHF)
AFUND GLOBAL 12
WSNW subscribers may wish to read our S:
Dividend stocks post for more.
fully expect to see the Dow below 10,000 in 2006. The key
becoming which Dow stocks to sell, and which to buy and hold into 2006. Companies
such as Merck (MRK) will be highly challenged in
2006 as GM was in 2005 for obvious reasons. It is not surprising that
financials such as AXP will under perform or even Dupont
(DD), but that JNJ will be like
GE was in 2005, could be to many non-financial astrologers!
Saudi Prince Alwaleed bin Talal's astrologer is right that Citibank
(C) will outperfrom. Other Dow astrological outpeformers are ATT (T),
GE, IBM, JPMorgan (JPM) and Pfeizer (PFE) which is likely to
outperform H2 2006, although IBM may be a contrarian hedge as
early as Q2 2006. Note: Both MSFT and HPQ are expected to do rather
poorly in Q4 2006. Remember, these days even Blue Chip
stocks have to be traded, not "buy and held" for better than
returns in 2006.
STOCKS FOR UNCERTAIN TIMES
Gold, entertainment and consumer staples have often
times. Such stocks are to be watched and accumulated on weakness before
market bulls become concerned. 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 2006/H1 2007.
Uncertain Times is a defensive, lower risk value oriented
that allows one to 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. These,
along with Health care, are our favorite sectors to buy and
during market weakness.
5. JUPITER IN
Business & military Intelligence, Health Care, Mining,
Nanotechnology, Robotics, Waste Managment.
Big themes include the aging of baby boomers, alternate energy and
energy recovery, Triple
Blue) Value, and unfortunately, increased safety and security demands
FUTURE EMERGING 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
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
Note: Given an 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 today. For example
about 1,200 of the roughly 1,500 companies involved globally in
nanotechnology are start-ups, and obviously many will disappear.
Our 2006 four favorite FT sectors are:
BIOTECHNOLOGY: e.g. BBH and IBB or heavyweights Amgen (AMGN)
Genentech (DNA) can be trading buys on strong pullbacks. I
to invest in companies that have multiple products in clinical
CLEAN AND SUCCESSOR ENERGY: e.g. The WilderHill Clean Energy Index
[ECO], Vestas and Gamesa.
Watch: DayStar Technologies (DSTI), FuelCell Energy (FCEL), Energy
Conversion Devices (ENER), Hydrogenics (HYGS), Intermagnetics General
Corporation (IMGC), Mechanical Technology (MKTY), Quantum Technologies
NANOTECHNOLOGY: e.g. NNZ or Veeco Instruments (VECO), FEI
and watch Altair Nanontechnologies (ALTI) and Lumera (LMRA). Also you
can research either Harris & Harris Group (TINY) or its
of companies as well as its
microcap cousin Advance
Nanotech (AVMA) and of course client Dais Analytic (DLYT).
For some time, we have argued there is no labor shortage,
but a robot shortage. Long gone are labratory curiosities or
fantasies from Robbie the Robot to R2D2.. Medical Surgery
which is minimally invasive is one hot application. One winning company
has been Intuitive Surgical (ISRG). Their system allows
to perform the
complete reconstructive surgery laparoscopically with higher precision
than with the traditional laparoscopic procedure.[more] Also thanks
to three-dimensional imaging surgeons can perform
precise and complex surgical proceedures.
Another potential winner is iRobot [IRBT] which develops robots for the
consumer, military, government security and law enforcement markets
8. SRI STOCKS
STOCK OF THE MONTH CLUB PICKS
Given the increasing risks to global sustainability, we believe there
is a corresponding increasing need for increasing exposure to SRI
stocks in one's long term investing portfolio. One list to
to annually for an initial stock screen is SustainableBusiness.com's
annual list of the 20
World's Top Sustainable Stocks.
of the Month Club
pick philosophy is to look for a minimum
of 15-20% appreciation within four to six month. Thereafter, we take
profits or use trailing stop losses. Conversely, as intermediate term
investments (not trades), if there is a 15-20% loss, we either
double up or exit depending on any news, market conditions and
factors at the time.
These monthly stock picks are emailed in real time to all Wall Street,
Next Week Subscribers
and will be resumed sometime in 2006.
More aggressive investors and traders may wish to also follow our new SEASONED SPECULATOR
Business Astrologers know that the best way to predict the
and with an informed but obviously biased view, I am doing my best to
help create investor wealth for client companies we consult for such
Since May 2, 1988 I have established a
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, 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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