ECRI's 2010 Cyclical Outlook

The Economic Cycle Research Institute's (ECRI) managing director, Lakshman Achuthan, appeared on CNBC’s Squawk Box this morning to discuss ECRI's near-term and longer-term cyclical outlook. His comments come at the beginning and end of the video segment and are summarized in text below the video.

========================================================================================

Summary of ECRI's Key Points:

• No "double dip" recession
• “chronically high” jobless rates
• Clear sailing for first half of 2010
• Global slowdown in 2h 2010
• Recessions in next decade will be more frequent.
• Duration of expansions will be shorter than we are used to
  

Lakshman was also a guest on Bloomberg TV where he said "buy and hold is dead" due to the frequent recession and recovery cycles. Of course, "core and explore" asset allocation strategies such as mine should prosper in this environment as we take profits when up and buy back when down. For details on how to prosper during a cyclical market that is volatile but goes nowhere, see my article:

• Using Asset Allocation to make money in a Flat Market

Lakshman's summary comments via email:

• No "new normal" of slow and steady growth! Rather, more frequent recessions ahead A la Japan, 4 recessions in 17 yrs with average expansion less than 3 years.
  
• Such an environment is bad for "buy and hold," mentality, but navigable with good leading indexes
  
• Frequent recessions = little chance of jobless rate falling back to 2007 lows for many years, maybe decades
  
• Key question in investors' minds today is Fed policy timing. The answer will be determined by timing of next downturn. ECRI's leading indexes are designed to anticipate this.
  
• Today too soon to tell, but mark my words, there is always another turning points out there, and my guess is we’ll be seeing more of them than we’ve become accustomed to in recent decades.
  

More information:

• More about ECRI
  
  
• July 31, 2009: ECRI Predicts End of Home Price Downturn
  
  
• July 21, 2009: ECRI Predicts The End of the Recession is Imminent
  
  
• April 3, 2009: Upturn in ECRI's WLI Growth Rate Says US Business Cycle Recovery Ahead
  
  
• March 28, 2008: ECRI Calls it "A Recession of Choice"
  
  
• January 05, 2008 ECRI Says Fed Has Room To Cut Rates Despite Fears of Inflation

Worst Newsletters of 2009

Peter Brimelow of MarketWatch wrote another great article about the worst investment newsletters for 2009. For the 2009 YTD period covered by Brimelow, the Wilshire 5000 Total Stock Market Index (VTSMX Charts and Quote) gained 27.10% with dividends reinvested.

1. Crawford Perspectives -7.2%
   Crawford was #1 last year so Brimelow included him this year by expanding the bottom 10 to a bottom-11 article.
   
2. Investment Models Newsletter -9.4%
3. Almanac Investor Newsletter -12.1%
4. Sy Harding's Street Smart Report -12.5%
5. Peter Eliades Stock Market Cycles -12.5%
6. Coolcat Total Stock Market Report -19.1%
7. Nasdaq Wizard Mid-Term Model -20.1%
8. Carnegie Management Group -24.4%
9. Nasdaq Wizard Long-Term Model -30.7%
10. Bernie Schaeffer's Option Advisor -33.09%
11. Doug Fabian's ETF Trader -49.2%

As of December 24, 2009, "Kirk's Newsletter Explore Portfolio" is up 34.3% YTD vs. DJIA up 19.9% YTD vs BRKA up 2.4% YTD

It is too bad Brimelow doesn't include the 10 year performance for the top and bottom lists. I'd like to see how many beat the markets over 10 years or more.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 161% (a double plus another 61%!!) vs. the S&P500 UP at tiny 9.7% vs. NASDAQ UP an even smaller 4.3% (All through 12/24/09) (More info - FREE Sample Issue)

Subscribe NOW and get the December 2009 Issue for FREE!
(Your 1 year, 12 issue subscription will start with next month's issue.)

Merry Christmas!

Merry Christmas, Happy Hanukkah, Seasons Greetings or all three if you are like me and like any excuse to be happy!


Reflections on a tough, but good year for me.

As of right now, my newsletter explore portfolio is up 34.4% YTD (now at 25% in fixed income 75% in equities) and my personal "core plus explore" investment portfolio is up 29.1% YTD with 33% in fixed income. (I still go with 120 less your age in fixed income and I'll be 53 in April.)

Up nearly 30% with only 2/3rds in equities is a heck of a good year... I am still not quite back to pre bear market highs, but it sure feels a heck of a lot better than at the end of 2008!

It has been a painful year for many of us in other ways if we saw loved ones or friends lose jobs or saw them go through foreclosure on their homes, but for some of us lucky enough to have funds to add to the market when it was lower, it has been a very good year investment wise.


Merry Christmas!

Warren Buffett Sells Moody’s Stock

Buffett's favorite holding period for stock may be "forever" but that doesn't mean he never sells. Today Reuters reported Warren Buffett's Berkshire Hathaway (BRKA Charts and Quote) sold Moody's Corp. stock (MCO) for the sixth time since July.

Dec. 23 (Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. cut its stake in Moody’s Corp. for the sixth time since July after the ratings company was hit by profit declines, lawsuits and criticism from regulators.

Berkshire sold 87,992 shares on Dec. 18 for $26.77 apiece and remains Moody’s biggest shareholder, according to a regulatory filing yesterday. Omaha, Nebraska-based Berkshire’s stake is down about 34 percent from the 48 million shares it owned at the end of June.

Remember that Moody’s, Standard & Poor’s and Fitch Ratings were blindsided by the financial meltdown when all three firms gave top grades to U.S. subprime mortgage bonds that caused the financial crisis.

Our Favorite holding period is forever.”
-Warren Buffett

As of December 23, 2009, "Kirk's Newsletter Explore Portfolio" is up 33.6% YTD vs. DJIA up 19.2% YTD vs BRKA up 2.4% YTD (FREE Sample Issue)

click charts courtesy of stockcharts.com for full size image

More Information:

• BRKA Charts and Quote

• FREE Sample Issue of "Kirk Lindstrom's Investment Letter"

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP at tiny 9.0% vs. NASDAQ UP at tiny 3.2% (All through 12/23/09) (More info)

Subscribe NOW and get the December 2009 Issue for FREE!
(Your 1 year, 12 issue subscription will start with next month's issue.)

As of December 23, 2009, "Kirk's Newsletter Explore Portfolio" is up 33.6% YTD vs. DJIA up 19.2% YTD vs BRKA up 2.4% YTD

NNVC NanoViricides Presentation Summary

CEO Seymour's 12/11/2009 presentation in .mp3 format, annotated.

Background. On Dec. 11, Dr. Eugene Seymour MD, MPH gave a presentation at the Equities Magazine Conference about NanoViricides. This article is a collection of what I think is the best information about this presentation. If you have more information, please post it in the comments section after this article.

From "No Attribution Requested"

I took the liberty of accessing the audio file of Dr. Seymour's December 11th, 2009 presentation to the Equities Magazine Conference that "leifsmith" so handily acquired and posted, and converted it from ".m4u" format to the more universally readable ".mp3" format. I also went through the presentation and pulled out and referenced what I consider to be some of it's most significant points.

The presentation runs 38:17, and has been uploaded to some server space that I rent:

http://www.MyDocsOnline.com/pub/DaysOnTheBeach/20091212-NanoViricides.mp3

While most of the material covered in the presentation is already known to those of us who closely follow the company, there are a few points that I don't think have been previously publicly disclosed (at least I'd never heard them before):

* The CDC has had initial success in it's testing of Rabicide, and additional tests are currently underway.

* The company intends to apply for uplisting off of the Bulletin Board exchange in the near future.

* The company is beginning a Hepititus C study soon.

* The prototype production facility has been physically built, and will begin production shortly. Guessing this is at TheraCour, with the money having been generated from the TheraCour limited share sales over the past year.

* Animal studies are already underway which hope to show whether NanoViricides has a "full cure" for HIV, not just a "functional cure" as has previously been reported.

* The "hint" that NanoViricides might believe they stand a good chance of getting a government grant relative to development of drugs for tropical viral diseases of Ebola, Marburg, and Dengue.

This is all pretty exciting stuff! Thanks to "leifsmith" for doing the work of obtaining the presentation audio!

Best to all.


Time-Referenced Annotation of Significant Points:

5:50 [Rabies and Ebola] "We've had very good success with a drug against Rabies, both in Vietnam and at the Centers for Disease Control [CDC], and we're currently working on the Ebola virus at the U.S. Army Medical Research Institute for Infectious Diseases [USAMRIID]"

6:58 [Description of how NanoViricides drugs might function to destroy viruses]

8:15 [Enumeration of past and ongoing animal pre-clinical studies] "... Swine Flu, Seasonal Flu, HIV, starting on Hepatitis, starting on Dengue, Ebola, Epidemic Keratoconjunctivitis [EKC] which is the Adenovirus, Herpes of the eye, and Rabies."

8:35 [Recap of results of recent in vivo influenza virus studies -- NanoViricides drug treated group superior to Tamiflu treated group and to controls]

9:43 [Recap of EKC in vivo studies showing significant therapeutic action in NanoViricides drug treated animals relative to controls]

10:38 [Reference to above EKC study] "We were able to eradicate evidence of [EKC] infection very quickly."

10:50 [Regarding HIV] "We're starting a big [HIV] study next month [i.e. January 2010]."

10:55 [Recap of HIV in vivo studies showing superiority for NanoViricides drug treated animals relative to "Triple Combo Cocktail" standard treatment group and to AZT control group].

11:50 [Regarding outcome of above HIV study] "We did extremely well."

12:00 [NanoViricides drug pipeline in development and in testing: Influenza-A, External viral diseases of the eye including Herpes and Adenovirus, HIV AIDS, Dengue, Rabies, Ebola, Marburg, and ability to rapidly create new drug in the field in response to novel infection or viral bioterrorist attack].

20:05 "Our plan is now to apply to a national exchange [i.e. uplist off of Bulletin Board]."

20:15 [Potential markets for Nanoviricides drugs] HIV $21B opportunity over next few years, and possibly much higher. Influenza [no figure given], viral eye drops $1B to $5B, Hepatitis C -- there are 175 million people infected with Hepatitis C. Mention of Dengue, Ebola and Marburg with no figures given.

21:45 [Plans for 2010] "We are applying to a national exchange, whether it will be NASDAQ or AMEX I'm not sure at this time." "We're working on an agreement for initiation of research coverage, we have no research coverage currently." "A new [web site] will be coming next month [i.e. January 2010]". "We've applied for a number of federal grants and I can't really talk about what the status of those grants are but you can see that the government is very interested in what we're doing and are doing a number of studies with our material in their [the government's] own laboratories."

22:40 [More Plans for 2010] "We're going to announce the results of various animal studies, a repeat of HIV, Ebola from the Army, and Marburg . . . and then Herpes Simplex infections of the skin and genitals, we have a study starting on cold sores, Dengue will be starting next month [i.e. January 2010], Rabies is underway [presumably at the CDC], Hepititus C starts at the beginning of the year [2010], Adenovirus / Herpes virus of the eye." "We have a lot of things in progress, and we've done this on a minimal amount of money. I think we've spent ten million dollars over four and a half years, and have nine drugs in various stages of [pre-clinical] animal trials."

23:30 [Toxicology Studies in Animals and Humans] "The important thing is [to] complete the first set of animal toxicity studies. We've already done 2000 animals [and] we've had no evidence of toxicity. We anticipate none in humans because the nanomicelle is made of a polymer that's been used in humans for years and it's non-toxic and biodegradable. We [our drugs] do not go into cells, we are not metabolized by the liver, because once we break down the virus this is just excreted by the kidneys. And then we have to set up our first meeting with the FDA."

24:05 [New Laboratory / Production Facility] "We have completed the physical space of a new 6,000 sq. ft. plant, and we're going to start our prototype manufacturing at the beginning of the year [presumably this is a TheraCour facility that was financed by recent TheraCour limited share sales as reported in numerous SEC Form 4 filings over the past year]."

25:30 [Audience Question -- Competitors and Human FDA Trial Length]

Q: "How large are our competitors?"

A: "We don't know anybody who's doing the same work we're doing in viruses using nanomedicine materials. There's a tremendous amount of work going on with cancer and nanomedicine . . . the problem with developing drugs for cancer is the clinical [FDA] trials run 5, 7, 8, 10 years, [while] a clinical trial for influenza could run a week, two weeks, you come to New York or the east coast during a flu epidemic and you can pick up all the cases you need, you treat half you don't treat [the other] half and you see who does what."

26:55 [HIV "Functional Cure"] "We have reported [previously] that we've achieved a 'functional cure' [for HIV] in the animal model, which is used as the model for all HIV drugs -- 'functional cure' means we've eradicated any evidence of the [HIV] virus in the circulation, essentially the people are now no longer contagious. The next step to go to a 'full cure' is to be able to eradicate the virus that's hidden inside what's know as the CD4 Lymphocytes, hidden within the lymph nodes, and that is now being tested during one of our studies."

27:30 [Regarding competition from other drug developers] "I'm not really concerned about competition, the [combined] market [for all of our target viral diseases] is well over $40B dollars."

27:40 [Audience Question -- Human FDA Trial Length]

Q: "You haven't done any human studies yet . . . you have to go through Phase I, II, and III, and that takes about ten years before anything's out on the market"

A: "It would take ten years if it were a cancer drug, but we can do the studies that we need to do for influenza in an extraordinarily short time because it's an acutely limited disease because it's an active infection. So, what you can do is combine the [FDA] Phase I [and] Phase II studies. . . . and then you go into an expanded Phase III trial. The estimates given to me by people in the industry is that we're looking at [potentially] no more than three years [to complete the full FDA approval process] but this is totally up to the FDA."

29:50 [Audience Question -- Timing of First IND]

Q: "What do you think will be the timing of your first successful IND and when do you think you would commercialize your first compound?"

A: "The idea is for our first meetings with the FDA to be next year [2010]. We're starting on the toxicity studies; I'm getting quotes right now. So, it depends on how fast they [the tox studies] go."

30:25 [Manufacturing Process] "I also have an agreement with a private pharma company who would be our manufacturing partners since we don't intend to manufacture . . . the way this is done it looks like a brewery . . . we estimate that four vats [12' tall by 8' in diameter] will make 150 million doses of whatever [NanoViricides drug] per year. . . if you want to make 3 billion doses you have 20 times as many clusters of vats. This is not a complex chemical type of manufacturing process. It's really adding various polymers into the mix and the nanomicelle self-assembles.

34:00 [Audience Question -- Funding]

Q: "Hopefully next year you are going to be beginning the process of moving into [FDA] clinical trials. That's very exciting it's also very expensive. What is your financial strategy moving forward?"

A: "Number one, partnering with a large phama. Our goal is to license each one of these drugs to a different pharma company in a partnership arrangement. Number two, the government is very interested in, for example with Ebola and Marburg, to take these through the FDA and get these approved because they're very concerned about this being a potential weaponized virus. I can't talk yet because I'm not really allowed to talk about it but let's just say that I have no interest in taking Ebola through the system personally and unless someone else pays for it, and we wouldn't do it, and you know who that 'someone else' is -- it's not a pharma company."

36:30 [Clarification on Drug Development and Pre-Clinical Trial Process] "We build the drugs, we design them using the computer, and we give you at the Army of you at Feinstein [Institute for Medical Research], you take the drug, we work on the protocol with you, you do the study and you report it to us, and then if modifications have to be made we modify it and give it back to you."

36:50 [Audience Question -- Financial Situation, Burn Rate, and Financing]

Q: "How much cash do you have on hand and what is your burn rate?"

A: "I think we had [in recent SEC filings] $4.2M dollars [cash], something like 18 months of cash. We burn about $200k to $250k a month. Obviously we're going to need more money. I'm looking for non-dilutive ways to get that money. The way to do it is through government grants or through partnerships with pharma companies. The problem with partnerships with the pharma companies is they want to take 85% of the sales revenue, on the other hand, if you have something that has value in the billions of dollars, then 15% of that number is not bad. For Gilead [pharma company] for example, they do $6B dollars in revenue from their AIDS drugs. Now, what if a product comes along that changes the game, makes it possible to eradicate the [HIV] virus, and their [existing] business goes away, you can imagine they'd be very interested in an acquisition."

/end

From Kirk on Friday, December 18,
In reply to: "No Attribution Requested"
Do you mind if I repost this elsewhere to spread the news of NNVC? Let me know how you want me to attribute this great work to you.
Thanks.

From "No Attribution Requested" on Friday, December 18, 2009
To: Kirk

The 'great work' was the presentation by Dr. Seymour.
Please feel free to copy, repost, edit, append, or otherwise change or use the text of my "presentation post", and the link to the .mp3 file, in any way that you feel serves the interests of the company and the shareholders. No attribution to me is needed, and I would prefer none.
best to you.

About Dr. Eugene Seymour MD, MPH, 68
NanoViricides Chief Exec. Officer, Chief Financial Officer, Principal Accounting Officer

Disclosure: I own NNVC in my personal and newsletter accounts with shares recently purchased at 56¢ and 46¢ for overall profits in my position as of this writing. I have targets to take profits on these shares listed in the newsletter should my price objective be reached. I will not announce buying or selling ahead of time here on the blog.

NNVC USD NANOVIRICIDES INC

Last [Tick]	$0.84[+]
Change	$-0.01

click chart courtesy of stockcharts.com for full size image

More Information:

• NNVC Charts
  
  
• FREE Sample Issue of "Kirk Lindstrom's Investment Letter"

Top Stock Offerings in History

The top five secondary stock offerings on record in the US according to CNBC and Dealogic are

1. $19.3B: Bank of America (BAC charts & Quote)
2. $17B: Citigroup (C charts & Quote) Today!
   
3. $12.65B: Wells Fargo Bank (WFC charts & Quote)
4. $12.25B: Wells Fargo Bank
5. $12.2B: General Electric (GE charts & Quote)

One way to get the banks in a single investment is with the exchange traded fund XLF (XLF charts and quote).

I added to my profitable newsletter position in Citi today when it was under $3.20. I sent an email to my subscribers announcing this buy when Citi was at $3.16. My last action before that was to buy shares at $2.95 when it was unclear if Citi would survive. With dividends included, I am on "house money" with Citi meaning that the sum of all my buys less money from selling higher priced shares and dividends is a positive number.

click chart courtesy of stockcharts.com for full size image

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 155% (a double plus another 55%!!) vs. the S&P500 UP at tiny 7.4% vs. NASDAQ Down 0.2% (All through 12/17/09) (More info & FREE Sample)

As of December 10, 2009, "Kirk's Newsletter Explore Portfolio" is up 32% YTD vs. DJIA up 18% YTD

Subscribe NOW and get the December 2009 Issue for FREE! !
(Your 1 year, 12 issue subscription will start with next month's issue.)

For more information, see:

• Kirk's Two Investment Letters

Disclosure: I own Citi, GE and XLF in my personal account and my "Newsletter Explore portfolio."

Citi To Repay Tarp; BofA Repaid Tarp

Today Citigroup (C charts) announced plans to repay TARP. This comes less than two weeks after Bank of America (BofA - BAC charts) announced it moved forward its equity offering to repay tarp due to high demand.

Dec. 14 Headline: Citi to raise $17 billion to repay U.S.
Excerpts:

• Citigroup laid out a plan to repay the money it owes the U.S. government, including issuing $17 billion of stock immediately, as the bank looks to end the executive pay restrictions that came with the funds.
• The government plans to start selling the roughly $30 billion of Citigroup shares it owns, and is ending its agreement to guarantee a roughly $250 billion pool of Citigroup assets against outsized losses.
• The government estimates it could see a profit of $13 billion to $14 billion on its investment in the bank.

Dec. 3 Headline: BofA sells $19.3 billion of securities for TARP repay
Excerpts:

• The bank had previously said it planned to sell securities next Monday, but moved the sale forward because of demand. The size of the deal grew to $19.29 billion of common equivalent securities, from an originally planned $18.8 billion, according to a pricing document sent to investors and obtained by Reuters.
• The securities sold at $15 each, about 5 percent below where Bank of America shares closed on Thursday. The securities will convert to common stock once equity investors approve an increase in authorized Bank of America shares. The bank's shares fell to $15.58 in aftermarket trading.

According to a document released today by Citi titled "Repaying TARP and other Capital Actions," Citi's Tier 1 capital ratio (a measure of a bank strength) will drop to a tie with #2 BofA while its Tier 1 common ratio will remain the leader at 9.0% compared to 8.4% at #2 BofA.

click for full size images

Today BofA and Citi are trading at $15.53 and $3.74, respectively. Current:

• BofA Quote & Charts
  
  
• Citi Quote and Charts
  

Disclosure: I own Citi in my personal account and have a profitable position in my "explore portfolio" with the last trade a buy at $2.95.

DOW Gold Ratio at 9.39

At 9.39, the Dow Jones Industrial Average measured in how many ounces of gold it takes to buy the 30 stock DOW is up 33.6% from its 17-year March 6th low of 7.03. Despite that impressive gain, the DOW-Gold ratio remains 79% below its 1999 peak of 44.77. See:

• Gold quote and charts
  
  
• DJIA Charts & Quote

Here is a chart showing the current Dow to Gold Ratio, the ratio of the price of the Dow Jones Industrial Average to the price of gold. When measured in ounces of Gold, the DOW has been in a secular bear market since peaking in late 1999.

lick chart courtesy of stockcharts.com for full size image

The markets, measured by the S&P500 (S&P500 Charts) and DIJA (DJIA Charts), may have recovered to new highs in 2007, but the DOW:Gold ratio told a different, truer story of just how unhealthy the US economy was.

• Back in 1999, it took 45 ounces of gold to buy the DJIA.
  
  
• On Friday March 6 of 2009 the DOW-Gold ratio hit a low of 7.03
  
  
• As of Friday (December 11, 2009) it only took 9.39 ounces of gold to buy the DOW
  
  
• Gold quote and charts
  

The scary part is the DJIA-to-Gold ratio got down near 1 in the early 1980s and was just under 0.2 in the early 1800s.

This 200 Year Dow/Gold Chart shows the DOW/Gold ratio from 1800 through August 2008.

chart courtesy of www.sharelynx.com (Click for full size image)

With the DOW:Gold ratio now at 9.66, it is trading below the green zone in the second chart. The ratio is oversold, but nothing says it can't get more "oversold."

CDs have been a "safe haven" for those wishing to preserve assets and get a small inflation adjusted return. See "Very Best CD Rates with FDIC" for a list of the best rates and terms.

US Treasury rates are so low, that they are paying less than long term inflation. See:

• US Treasury Rates at a Glance
  
  
• LIBOR Rates at a Glance

Disclosure: I own a very small amount of gold hidden in the house for bribes if we see Armageddon. For real inflation protection, I own and recommend in my newsletters TIPS, TIPS mutual funds and Series iBonds.

For more information, see:

• Kirk's Two Investment Letters
• Series I Bonds Explained (iBonds)
• TIPS Mutual Fund (VIPSX)

Question: Which way do you think the DOW-Gold ratio is headed?

Post your answer HERE.

US National Debt Passes 12.1 Trillion Dollars!

Check out The National Debt Clock for a sobering set of statistics.

As I type, the total nation debt is over 12 TRILLION 1o4 Million!

$12,104,298,636,666

It advanced over 30 MILLION as I wrote that down.

National

• Debt per citizen = $39,283
  
• Debt per taxpayer = $111,224
  
  
• Interest per citizen = $5,859

US Population = 308,129,449
Number of US Taxpayers = 108,834,743
Number of Officially Unemployed = 15,403,989

Number of US Workforce 138,584,486
Number of Federal Employees = 4,238,946
Number of US retirees = 37,500,533

Notes of interest:

Not all workers pay taxes since they fall below the threshold.

If you define "supporting" as you give more to government than you get from the government, then this calculation is staggering:

Us 108.8 million taxpayers are supporting 57.1 million people!

• 4.2M federal workers
• 15.4 M unemployed and
  
• 37.5M retired people!

The price of Gold at $1,113 (Gold quote and Charts) is probably reflecting the market's belief in how difficult it will be for US taxpayers to repay this debt without massive inflation.

As of December 10, 2009, "Kirk's Newsletter Explore Portfolio" is up 32.4% YTD vs. DJIA up 18.7% YTD
(More info - Free Sample Issue)

Subscribe NOW and get the December 2009 Issue for FREE! !
(Your 1 year, 12 issue subscription will start with next month's issue.)

=> Kirk's Investment Newsletter

• Testimonials
  
  
• Subscribe Now
  
  
• Difference between Kirk's Two Investment Letters
  

Jim Rogers On Dollar, Gold, Stocks, Sterling and More

Jim Rogers was a guest on CNBC's Closing Bell with Maria Bartiromo today.

On the Dollar, Rogers said:

• the Federal Reserve has run out of bullets and we don't have enough trees to print any more money.
• the dollar will probably have a short-term rally just because everyone is so bearish on it now.
  

On gold (Gold charts and GLD charts), Rogers said:

• Gold will reach $2,000 per ounce by 2019, about 6% a year gain.
• Gold's recent surge (to $1,351.50 Current Gold Quote) is due to large budget deficits
• Gold will power the great commodities run that he thinks will last for the next decade.

General comments by Jim Rogers.

Rogers has correctly been bullish on commodities over stocks for the past decade.

Rogers would rather own agriculture, silver or palladium over gold or copper since silver is still 70% below its all-time high.

Become a farmer. Learn to drive a tractor. We have a shortage of farmers.

Water is a spectacular opportunity.

He is skeptical of the economy going forward and the US market is up 70% so he'd not put money into US stocks. If the economy recovers, he feels his commodities will go up anyway.

He is not buying any stocks because they are all going up but he still owns some stocks in China.

"China churns out 15 or 20 times as many engineers as we do, every year." What Jim fails to mention is many of those "engineers" might be auto mechanics and other technicians here because they are not all design engineers. Still, even twice as many design engineers is a big deal and I think the rate is much higher.

What to avoid according to Rogers:

Jim says to avoid US Long-term US Treasury Bonds. He sees it as the next bubble since "everyone" is buying US government bonds. (except for me. I sold ALL my bonds and bond funds that are not indexed to inflation in my personal accounts and the portfolios I cover in "Kirk Lindstrom's Investment Letter.")

Jim sold all his British Sterling after holding it for 30 years. Jim said "it grieves me to see what is happening in the UK."

As of December 10, 2009, "Kirk's Newsletter Explore Portfolio" is up 32.4% YTD vs. DJIA up 18.7% YTD
(More info - Free Sample Issue)

Subscribe NOW and get the December 2009 Issue for FREE! !
(Your 1 year, 12 issue subscription will start with next month's issue.)

Past Jim Rogers articles of note:

• April 2009: Rally will fail.
  Jimmy Rogers comments on the bailout of Wall Street and his belief that we made a bottom but it is not the final bottom.
  
  
• March 2009: Jim Rogers Bearish, Likes Land on Larry Kudlow's "The Kudlow Report"
  "I don't think the bottom is here, maybe 'a' bottom, but not 'the' bottom. The economy is going to get worse. You can't have a good stock market without a good economy."
  
  
• November 2008: Jim Rogers Covers Shorts
  When asked where to invest, Rogers said China. He admitted he did not take any profits in China before the crash but thinks investing in China now is like investing in the US 100 years ago.
  

Nouriel Roubini Gold & Stock Market Outlook

Not only is Nouriel Roubini, called "Dr. Doom" by many, a stock market bear, he is bearish on gold. Gold (Gold quote & Charts) is currently trading at $1123 per ounce.

"I don't believe in gold," Roubini told CNBC. "Gold can go up for only two reasons."

"[the first is] inflation, and we are in a world where there are massive amounts of deflation because of a glut of capacity, and demand is weak, and there's slack in the labor markets with unemployment above 10 percent in all the advanced economies. So there's no inflation, and there's not going to be for the time being.”

Kirk's Comment: The price of Gold is probably predicting the future out to 10 years or more much as the very low PE ratios for banking and home builders in 2006 and early 2007 predicted the financial meltdown years before it happened. Even today, stocks like Verizon and AT&T have very high dividends with low PE ratios which tells me the market expects communication bandwidth to eventually become a commodity. Low PE ratios and high dividends often say more about the long-term future than the present just as the current high price for gold may be telegraphing the future unless we get our spending under control in the US.

In simpler terms, the price of gold is predicting we will need wheelbarrows to pay interest on our national debt if congress and the white house don't change their spending ways quickly.

The second way gold can go higher in this deflationary economy, according to Roubini, is a financial Armageddon. Roubini says we've avoided that risk.

Kirk's Comment: Have we? If US Treasury interest rates eventually soar to attract money to finance our huge debt, we'll have to borrow even more money to repay the debt. With the democrats and Republicans both spending more than we take in as fast as they can, the price of gold may be predicting a different, but very real financial Armageddon.

Roubini said gold can't move up 20% to 30% unless we end up in a world of inflation or another depression.

“So all the gold bugs who say gold is going to go to $1,500, $2,000, they're just speaking nonsense."

click for full size image from stockcharts.com

Nouriel Roubini is a professor at the Stern Business School at New York University, chairman of Roubini Global Economics and a weekly columnist for Forbes magazine.

Current Quotes (click for current quote and chart):

• Gold (quote & charts)at $1,123
  
  
• S&P500 at 1,103.66
  

My prior updates on Dr. Doom:

• July 16, 2009: Nouriel Roubini, Dr. Doom, Still Gloomy
  
  
• March 09, 2009: Nouriel Roubini, Dr Doom, Thinks DOW 5,000 is Possible

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 157% (a double plus another 57%!!) vs. the S&P500 UP at tiny 7.3% vs. NASDAQ UP at tiny 0.3% (All through 12/10/09)

As of December 10, 2009, "Kirk's Newsletter Explore Portfolio" is up 32.4% YTD vs. DJIA up 18.7% YTD
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Disclaimer: I have no position in Gold but I do have significant personal positions in TIPS, TIPS mutual funds and iBonds plus I hold them in my newsletter portfolios.

Kirk Lindstrom's Two Investment Letters

There may be some confusion because I write two different, but related, newsletters.

#1 "Kirk Lindstrom's Investment Letter" is $155 a year and uses the "core and explore" method to invest. It has two core portfolios plus an explore portfolio of individual stocks. My aggressive core portfolio has 80% equities while my "conservative" core portfolio has 50% in equities. My core portfolios are made of index funds and ETFs for the very lowest expenses.

I recommend people start by getting their proper core portfolio created THEN add individual stocks I cover in my explore portfolio to build your own explore portfolio for 5 to 20% of your investment portfolio total.

"Kirk Lindstrom's Investment Letter Explore Portfolio" gained 33.5% in 2009 This portfolio has 75% in equities and 25% fixed income with a beta of 1.0. For 2009, the DJIA gained 19.2% and Warren Buffett's BRKA only gained 2.4% (FREE Sample Issue)

I have target prices to buy and sell my explore stocks so I find I almost look forward to market declines to get really great prices for stocks I can sell later at higher prices. Of course, following this explore portfolio is more work than buying index funds and rebalancing once a year that I recommend for my core portfolios. Compared to "other newsletters" costing more, my core portfolios and general stock market coverage in the first 11 pages of the 35 page monthly letter offer significant value even for those who don't dabble in individual stocks.

#2 I write "The Retirement Advisor" with David Korn. We sell this for a very modest $99. We offer three model portfolios. We do not recommend individual stocks but we have articles that discuss current financial events such as economic data and Social Security COLAs. We also have articles to help you save money plus we find CDs with FDIC paying the highest rates. Our most aggressive portfolio has 50% in equities. Our most conservative portfolio contains no equity exposure.

Difference: The conservative (50:50) core portfolio in "Kirk Lindstrom's Investment Letter" is slightly more aggressive than the aggressive model portfolio #1 in "The Retirement Advisor." Over the very long term, you should expect the most aggressive portfolio to have the highest returns but at a price of higher volatility. When we started the "The Retirement Advisor" in 2007 we thought people like Bob Brinker were far too aggressive with equity exposure recommendations for retired people at such a risky time for the markets. If you recall, Brinker's Model Portfolio #3 was nearly 2/3rds in equities when the markets peaked. As our great returns show, we were right.

Summary:

"Kirk Lindstrom's Investment Letter" is for those who want to use individual stocks in an attempt to enhance their core portfolio returns. Some like to buy or trade individual stocks for extra return as they try to beat the markets over the long term as they build their investment portfolios to retire someday in the future. For those people, I recommend they place 120% less their age of their investment portfolio in my "core aggressive" portfolio and use remainder to follow some or all of my explore portfolio. For example, someone 40 years old would have 80% in my core aggressive portfolio and 20% in my explore portfolio.

For those at critical mass in retirement, there is no need to take a lot of risk so I recommend 95% of investment assets in my "core conservative" portfolio and the remaining 5% in some or all of my explore portfolio for "entertainment."

In sharp contrast, "The Retirement Advisor" has no individual stock advice. The portfolios are designed not to try and beat the markets but to help you sleep better at night in retirement with lower portfolio volatility. "The Retirement Advisor" also helps you manage your "living expense" or "emergency" account that is outside your investment portfolio. In addition to portfolio and living expense management help, "The Retirement Advisor" has articles to help you save money, understand Social Security, follow the basics of the economy and how it relates to our advice.

Many of my readers subscribe to and enjoy both newsletters.

____

From 1/1/1999 Through 11/15/09

Kirk's 80:20 Aggressive Core Portfolio is up 50.8%
Kirk's 50:50 Conservative Core Portfolio is up 67.3%
Kirk's 70:30 Explore Portfolio is up 146.1%
80% Core Aggressive plus 20% Explore is up 69.8%
90% Core Conservative plus 10% Explore is up 75.1%

100% Total Stock Market (VTSMX) is up 18.2%
100% Total Bond Market (VBMFX) is up 78.2%
80% VTSMX and 20% VBMFX is up 30.2%
50% VTSMX and 50% VBMFX is up 48.2%

YTD through 11/15/09

Kirk's 80:20 Aggressive Core Portfolio is up 23.0%
Kirk's 50:50 Conservative Core Portfolio is up 16.4%
Kirk's typically 70:30 Explore Portfolio is up 26.7%

100% in VTSMX is up 25.1%
100% in VFINX (S&P500) is up 23.7%
100% in VBMFX (Total Bond) is up 6.6%
80% VTSMX and 20% VBMFX is up 21.4%
50% VTSMX and 50% VBMFX is up 15.9%

12/8/09 update:

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09)

"Kirk Lindstrom's Investment Letter"

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The Retirement Advisor Model Portfolios all began with $200,000 on 1/1/2007

The Retirement Advisor Portfolios	Dollar Value on 11/30/09	Change
Model Portfolio 1	$207,652	3.8%
Model Portfolio 2	$224,330	12.2%
Model Portfolio 3	$240,903	20.5%
DJIA 12,501.52 on 1/1/2007	$9,712	(17.3%)
S&P500 1,418.30 on 1/1/2007	$1,057.08	(22.8%)

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