1. INVESTING BY THE LONG TERM…. NOW!
AFUND Fair Value DOW 8000; NAS 1500; SPX 825
While markets can go lower… perhaps to 6000 or below or NOT, TODAY many quality blue chip stocks sport serious long term value. While markets will remain very dangerous into May, we continue to accumulate Long Term Buy and Hold, both with high quality blue chips as well as some speculative microcaps. 

AFUND THOUGHTS
     WILL MARKETS END THE YEAR HIGHER THAN FRIDAY’S CLOSE? YES.
·         WILL MARKETS GO UP IN A STRAIGHT LINE? NO.
·         IS THERE EXTREME MARKET RISK INTO MAY? YES.
·         WILL OIL AND GOLD GO UP IN A STRAIGHT LINE? NO.
 

We are also prepared for any forthcoming panic selling.
We are not interested in trading such an event.  Rather, we will BUY boring low beta quality stocks such as JNJ and WMT by the end, and shortly after, any panic should it occur.
 

WHAT COULD TRIGGER A MARKET PANIC?

·         High profile bankruptcy (e.g. GM, C, ) although these are really positive events if done right

·         March 31 Hedge Fund redemption deadline

·        April 15 US Tax receipt short falls·         Next 2 earning seasons reporting

·         The usual assorted geopolitical time bombs

THE STOCK MARKET IS NEAR A BOTTOM IN TIME AND PRICE

Three primary elements need to be in balance: 
1.       WHERE SHORTS COVER- 6500? 6000? Lower?
2.       WHERE NEW CASH COMES IN FROM SIDELINES 6500? 6000? Lower? 
3.       BANK CRISIS UNDER CONTROL OR AT LEAST PROPERLY MANAGED.

 

 

KEY DATES:    MARCH 9, 10
DJIA:                6500 SUPPORT? R1 6735 R2 7000 R3 7500
SPX:                 680 PIVOT S1 666 S2 650 R1 700 R2 725 R3 750
NASDAQ:         1300 PIVOT 1250 SUPPORT 
XAU:                 110 PIVOT 
APRIL GOLD:    940 PIVOT S1 925 S2 900 S3 880   R1 960 R2 980 R3 1005
MAY SILVER:   13.50 PIVOT
XOI:                  760 PIVOT 720 RESISTANCE 860 RESISTANCE
DEC OIL:          50 PIVOT $46 SUPPORT $58 RESISTANCE  

The New Market Marker Sentiment is: Some worry, then bargain hunting, then return to worry.
2008 CLOSE:           DJIA   8776, SPX   903 & NASDAQ 1577
2007 CLOSE:           DJIA 13264, SPX 1468 & NASDAQ 2655
2006 CLOSE:           DJIA 12463, SPX 1418 & NASDAQ 2415
2005 CLOSE:           DJIA 10717, SPX 1248 & NASDAQ 2205
DJIA:                       17 ~ FV 9 UV; 16 offer 4%+ Dividends 11 offer 5%+ Dividends.
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK. 

2. Long term, we like stock markets so much that we are like kids in a candy store. 
See our Afund premium posts stock selections and accumulate slowly: We recommend 85% conservative, 10% aggressive and 5% speculative. 

If you MUST buy US Treasuries, accumulate Treasury-Inflation-Protected Securities (TIPS).

If you want an excuse to visit Hawaii, research the AFUND Hawaii 5: Hawaiian Electric Industries (HE), Alexander & Balwin (AXB), Barnwell Industries (BRN) All currently a Buy, while Maui Land & Pineapple (MLP) and Bank of Hawaii (BOH) a hold. 

Two current favorite financial stocks: GE & AXP.
 
While these are difficult economic times, some sectors will out perform and some companies will thrive/prosper.
Remember we always recommend long term investments in the 6ps-- Population [growth/aging], Pollution (e.g. global warming), Prevention (e.g. Health), Predictive, Personalization (Mass Customization) and Profitability (Special Situations).  

3. “Now, my technical reading shows good support between $900 and $910 — but a breach below this range could take the market down to $850 to $860 in a wink. 
It’s important for gold-market participants to remember that long-term trends are always rational but short-term volatility is often emotional and sometimes just meaningless noise.”
Jeffrey Nichols, Managing Director of American Precious Metals Advisors 

Short term gold is worth $895, Intermediate term $940.  Hence while we realize the risk, we are maintaining a short bias this week for physical gold and silver until a second or third test below $900.  However, by April, we begin to buy/accumulate PM stocks. 

4.”Buying stocks is a potentially good deal if you’ve got a long term perspective.”
President Barack Obama
HW: Right on!
 
“Everything is a buying opportunity because valuations are super attractive. We’ve never seen anything like it. But the problem is there is still the risk of declines. We’re still in a credit crunch and the outlook on the economy is negative.”
Jacques Porta, fund manager, Ofi Patrimoine
HW: Yes I agree 100%. 

“We are very near what could be the cycle low for the stock market but there will still be a lot of false starts. There has been a lot of hope that China can restart the engines again”
Steen Jakobsen, chief investment officer, Capinordic
HW: China is not as important as the fact there is significant value for the patient (Cosmic) Value Investor. 

5. VIX Premium Shows Bear Market Lasting Two Years in U.S. as Traders `Panic' 

The REIT Stuff
Forbes grades the biggest U.S. REITs on performance and value. 

How long can investors wait?
Investment advisers say it will be three years and possibly almost six before battered investors recoup portfolio losses. 

6. READER:  What’s coming next, from the ‘Man Who Saw It Coming’
HW: Maybe, Maybe not. 

READER: Will ^DJI 7000 hold? To me it looks it will hold as of now as it is in 'oversold' territory.
HW: Perhaps this week, although early next week markets can test down again.
We are mostly day trading and buying and very long term.
READER: BAD NEWS NEXT WEEK ONWARDS AS YOU SAY ^DJI 7000 WILL NOT HOLD. 

READER: My subscription started mid July last year, if I take the special [2 years for $360 by March 10], does it count for 2 years from mid July 2009 or from now?
HW: All renewals start from when your subscription expires.  So 2 years from July 2009 or July 2011! 

READER: I don't get it...VLO drops from 24 to $17 400 shares so $2.8 K gone after a $1000 loss on GE (I did not know I had to be worried about energy stocks too...did not realize I need to stop energy stocks too.
HW: These are NOT easy markets even for professional investors. If short term you are losing money instead of making it, then stay away until markets become more stable and/or use less of your investing capital so losses will be less.
You will make less but you won’t get slaughtered. Alternately, buy boring stocks with low BETA like JNJ. WMT, T or HE. They are far less likely to drop much more than 20 percent from current levels. 
PS Money management has two functions- to preserve capital and secondary to exit losing trades. Money Management is VERY different for Trading vs. LONG TERM investing. Still, there is no easy answer to the right stop, especially in extremely dangerous and volatile markets we are in now.  Generally, it is best to take a number of smaller losses than a big one, but even this can at times be wrong advice.  Even gold which we are soon to buy shortly for a big move UP could be slaughtered first on the downside! 

READER: Should I buy CITI below US $ 1.00 ? Say 10000 shares…. These guys in DC will never let CITI and AIG fail. It is against my principles to buy stocks which are near their fresh lows but these are 'extra-ordinary times' in USA. Looks a 'steal' to me below US $ 1.00 per share. Your views are awaited.
HW: I wouldn’t. If you want to buy financials, I prefer GE and AXP which can triple or double with far less risk. I would use that $1.00 to buy quality small cap gold and oil stocks instead:  Same reward but far LESS risk. 

READER: Could this have any validity?????????
http://mahendraprophecy.com/LatestFlash.asp?Pyear=&page=1#year
HW: Many believe SHORT TERM markets can rally 1000-1500 points as well are bearish on metals.
However Tuesday is a Full Moon and a potential critical day.  I don’t agree with his longer term forecasts on the Precious Metals as I am bullish.