Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

What My Gut Is Telling Me Right Now About the Stock Market

Wednesday, March 7th, 2012
By for Profit Confidential

economic newsThe single greatest threat to your investment portfolio isn’t a Greek debt default (although that’s a big one). The major threat is geopolitical and it has to do with the potential for war with Iranand, to a lesser extent, Syria. Investment risk in the stock market remains very high at this time. I repeat my earlier view that a conservative investment stance is warranted.

Of course, because the stock market has run so strong since the beginning of the year, it is due for a consolidation/correction. Reasonable equity valuations and help from the Federal Reserve have helped stock prices tremendously. If war breaks out in theMiddle East, you can bet that the Federal Reserve will print even more money.

 I’m actually a little surprised by the spot price action in gold, but gold’s weakness is mostly due to weakness in the euro currency, which is boosting the U.S. dollar. When the U.S. dollar strengthens, the price of gold tends to suffer. There has been a geopolitical risk premium in the spot price of oil, but so far, not really in gold. As I wrote previously, gold is worth buying, $1,600 or below. It should be a hedge position in a portfolio already.

 I just can’t say enough about the amount of investment risk that’s growing in capital markets today. It is an election year and that tends to be a positive for the stock market. But, all the structural problems in mature economies remain and economic growth in BRIC countries is slowing. Add in geopolitical problems and we have the makings of a real mess. I think stock market investors need to be extremely cautious going forward this year. I hope everything works out fine, but my “gut” is really talking to me.

 Anyway, gold is worth keeping an eye on here, especially if you don’t have any exposure. As a practical investment strategy, gold and silver should be in a well-balanced portfolio, even if just for the hedge against inflation. Gold mining stocks have been trending lower lately, following the price action in the spot market. Even though we’ve had a very good start this year, it’s a tough stock market in which to be a speculator. There is no real trend. Uncertainty about the near-term future remains very high.

 My outlook isn’t gloomy; it just reflects the landscape we have to deal with. We’ve seen some improvement in U.S.economic news, stock market valuations are fair, and the outlook for corporate earnings is low double digits. (See The Strategy for Capital Gains That’s Proven to Work.) Technology stocks have been strong (always required for a rising market) and so have retailers (meaning consumers are spending). But this doesn’t mean that the stock market won’t go down big-time if there’s a shock like a sovereign debt default or threat of war. It’s a pickle. If we didn’t have problems with Iran and we didn’t have to worry about the euro, the stock market would be a lot higher.

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. Add Mitchell Clark to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.