THERE'S SOMETHING TO BE SAID FOR standing firm in the face of opposition. Interestingly, most of the best stock decisions have come at times when the mainstream is saying precisely the opposite. Predictions like these can be valuable if one is to build an investment strategy around their view of the world.
The appraisal by the minority over the past few years that inflation would return (while most of Wall Street was bemoaning DEflation) has proven to be true. As we've pointed out in the past, it can be readily observed in oil prices, real estate, and dozens of other commodities where no source of cheap imports is available.
As Steve Forbes remarks in Forbes Magazine's May 23rd commentary, "oil became expensive because the Fed has been printing too much money." In an earlier article, I mentioned that what we're really seeing is just the effect of a falling dollar, rather than rising oil prices.
Some might wonder how we think of the dollar as a falling currency, because it certainly seems to have been rising against the Euro in recent months. Still, it may be more accurate to think of the Euro as simply falling faster than the dollar. Indeed, now that both France and the Netherlands have voted to reject the EU Constitution, the entire structure of the EU may be called into question, and while we don't foresee the collapse of that institution, we do believe it will weigh on the currency for a time. As we have said in the past, the attempt at unification is itself no more than a grand experiment, and the currency that accompanies it can be viewed as no more stable than the underlying structure.
Still, none of this makes us view the dollar as necessarily strong. In a world where the Indian Rupee, Romanian Leu, South African Rand and other historically undependable currencies are rising steadily against the dollar, its silly to think of our currency as anything but weak.
In real estate, many suggested in the past that a real estate bubble may be developing, but also that much of the rise in prices may be coming from inflation as well. Indeed, if any price collapse does occur, it may be some time from now, and some regions may hardly feel it. The gap in price between the large California cities and mainstream America is reportedly wider than ever before. It's best to use caution in the red-hot markets in Cali, NY, and Mass., but the rest of the country seems fairly priced. One should not be too worried about prices that have risen no faster than the price of oil. While others have predicted (endlessly, it seems) that homebuilders ought to fall apart any day now, a few have continued to recommend some of the best ones and seen sizeable profits result for our readers.
Recently, a few financial managers have decided to take a position on Harley-Davidson stock that differs from most of the investment community. While Harley's quarterly earnings were indeed below expectations, the minority rejects the investment community's hysterical suggestion that this is the end for the motorcycle maker. In fact, they firmly believe this will turn out to be a small blip in the longterm upward trend.
It is decisions like these that set these advisors apart from much of the investment world. It seems that many of the writers in "investment-land" are content to parrot the projections of corporate lackeys and government bureaucrats, without so much as a scintilla of independent analysis. Alas, as the demand for investment advice has grown, it may have outstripped the supply of quality analysts, both in news reporting and in the investment industry itself. This would explain the quantity of drivel coming from multiple sources these days.
We can occasionally find kindred spirits in the media: while it is invariably best to disagree with Business Week, Fortune, and most of the TV business news-trivia reporters, a few ? like Forbes, Barron's, or TV's Louis Rukeyser or Paul Kangas ? still provide thoughtful commentary from time to time. Overall, though, the U.S seems to have reached a distressing time in investment reporting.
Most reporters and publications are content to simply repeat what they've heard, play on emotions, and call it complete coverage. I suppose it makes sense that eventually coverage of business news would descend to the same level as broader news coverage.
In times like these, it is important to select a few good sources of quality information. It is just as important to wean ourselves from poor information sources. If your newspaper, magazine, or broadcast station has ceased offering thoughtful analysis, stop wasting your valuable time. Utilize your time more productively on the few meaningful sources of information.
In light of so much fluff in the media, it is increasingly important to stand apart from the mainstream. You need information resources that are willing to do so, as well. Contrarians (investors who have bucked the trends) have fared well in the investing quandary. Today, contrarians' biggest advantage is that they are willing to stand out and avoid falling for the latest hype. Mindless followers, in an age of meaningless information, will eventually get slaughtered by following mediocre advice once too often. Don't tolerate lackluster information resources. Seek out quality.
To send comments or to learn more about Scott Pearson's Investment Advisor services, visit http://www.valueview.net
Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide variety of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally, and in the U.S.
efficient cleaning crew Northbrook ..First let's see what protectionism is. According to Mr. Webster... Read More
Money management starts with protecting your capital, realizing profits and... Read More
The bulls and bears of the stock market are both... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
You've decided to try your luck at trading stocks or... Read More
If you're like many investors who squander those small dividend... Read More
Money: the most charged word in the planet. It means... Read More
I have a 2-car garage. There are nice shelves on... Read More
The stock market can present you with a lot of... Read More
You probably have been told that options are risky. Even... Read More
A 'stock option' is a contract between two parties giving... Read More
We keep hearing about this bear market and that the... Read More
If you were to find that you had some severe... Read More
It depends on your level of understanding of the market... Read More
The ABC's of Stock Trading SuccessStock trading success...why is it... Read More
Yesterday I received my monthly issue of MONEY magazine. This... Read More
One of the great truisms of Wall Street is "Don't... Read More
I receive emails from Morningstar. This company provides statistics and... Read More
You should ignore analysts on TV, the radio, the newspaper... Read More
Wouldn't it be nice if you were only in the... Read More
The recent criminal fiasco in the mutual fund industry is... Read More
After some forty years of banking and investments, I retired... Read More
We've all heard of the stock market and probably have... Read More
The gleam and bright lights of Wall Street lure in... Read More
As an investor you will want to check out any... Read More
cleaning lady near Wilmette ..TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This... Read More
Let's say you are interested in this one company. You... Read More
Robert Rodriguez likes to buy stocks at their lows. When... Read More
When purchasing mutual funds we are cautioned to read the... Read More
The greatest stock market myth is the idea that investing... Read More
If you have a pension plan at work you will... Read More
Do you have a nest egg? You know, a place... Read More
A PEG ratio cannot be used alone but is a... Read More
When it comes to mutual funds, there is a lot... Read More
The trading method you employ to approach the stock market... Read More
That sounds like good advice doesn't it? Don't lose all... Read More
IT'S REMINISCENT OF THE OLD children's tale about an old... Read More
Sometimes the best way of lowering exposure to risk is... Read More
Whenever I see mutual fund comparisons in the trade publications... Read More
The Surgeon General of the United States says that smoking... Read More
When an individual investor wants to roll up his sleeves... Read More
Well maybe that's overstating it a little, but it's certainly... Read More
Hedge current portfolio positions and gain access to capital resources... Read More
The single most expensive stock market trades are those made... Read More
Over the past few months, several investment professionals have brought... Read More
Forget making a profit; instead focus on the income provided... Read More
Right now there doesn't seem to be any "gold fever".... Read More
A colleague of mine just returned from a scuba diving... Read More
I love roller coasters. The steeper the better. High and... Read More
The stock market has not been very kind to your... Read More
Stocks & Mutual Fund |