February 6, 2014

February 6, 2014

Guild Investment Management Market Summary 

We discuss the correction and make three new buy recommendations for our Gold Subscribers.  Is this volatility good for investors?  Find out our thoughts on emerging markets, commodities, and bonds.  Upgrade your subscription today. 

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Are Stocks In a Bubble?  Social, Mobile, Big Data, and Cloud — Beloved, But Bubblicious?

Last year’s bull market led some observers to start asking whether stocks were in bubble territory — and of course, the thing about bubbles is that they always eventually pop.  A question about bubbles is a question rooted in that fear: where is this going?  “Should I sell now, before the bubble pops?  Or should I hold on, because the stock’s price movement reflects real growth in its underlying value?”

Technicians and Fundamentalists

How an investor answers this question depends on their basic viewpoint and strategy as a participant in the markets.  Broadly, investors and traders fall into two camps: technicians and fundamentalists.  “Technicians” make their buying and selling decisions on the basis of stock charts, using history and the mathematical analysis of price and volume to give them clues about future stock price movements.

“Fundamentalists,” in investment language, are investors who believe that predictions of a stock’s price behavior can be made with greater accuracy when the investor knows more about its “fundamentals.”  That means: how the company works, how it generates profits, what its plans are for the future, how well its management can execute those plans, and how it is positioned in its sector and in the broader national and global economy.  So fundamentalists base their buy and sell decisions on a careful analysis of the company in question and of the economic environment in which it operates — and they work to spot occasions when the price of a company’s stock does not match its likely longer-term prospects.

At Guild Investment Management, we are fundamentalists — and we have spent decades engaging in the careful analysis of fundamentals.  We also apply technical analysis, which can help us in our investment execution.

In our premium commentary we discuss if we are in bubble territory, the fundamentals, and the stocks that warrant caution.  Upgrade your subscription today to read our full analysis. 


Coals to Newcastle, Gas to the Gulf

  • U.S. Shale Continues to Reshape Global Energy Markets and Alliances
  • Gulf States’ Rapidly Growing Populations…and Energy Needs
  • A Rock and a Hard Place
  • Show Me the Money

A Host of Applications Will Drive the Civilian Adoption of Drones

But Jeff Bezos’ Dream Is Still Far From Reality

Jeff Bezos, the CEO of Amazon, made a splash in December when he described his plan for Amazon deliveries to be made by drones.  And not just any drones — weird eight-winged “octocopters” resembling something from an alien attack.

Octocopters Calling
Source: amazon-drones.com

Even if it was a publicity stunt, there’s a lot of truth in Bezos’ idea.  Civilian drones have enormous potential applications, and it is likely that when the Federal Aviation Administration (FAA) finally clears the way, there will be a big growth opportunity for companies working in this space.

Estimated Spend and Economic Impact of Commercial UAVs: Next Decade
Source: Association for Unmanned Vehicle Systems International (AUVSI)

What are the applications for drone technology?

Guild Basic Needs IndexTM

Since 2000, prices of essential needs in the GBNI have increased over twice the pace of CPI.  Don’t dismiss the gyrations in the prices of basic needs.  The gyrations affect behaviors.

GBNI<br /><br /><br /><br />
December 2013 .jpg

Track our analysis in these letters at www.gbni.info.

It’s Not Rocket Science… the U.S. Public Wants Jobs

A recent poll conducted by TIPP/IBD and published in Investors Business Daily caught our eye.  It was actually quite encouraging.  When Americans were asked what the priority of Congress and the President should be, the answer was simple: jobs.

Source: investors.com

What is most striking to us is how far out of touch with the concerns of ordinary Americans both parties are.  Highlighted in the chart above are the two issues that party stalwarts seem to be pushing into the forefront as their new causes to rally their faithful.  Republican politicians are pushing immigration reform, Democratic politicians are vowing to tackle income inequality… and Joe the Plumber just wants a job.  This is true whether Joe is a Democrat or a Republican.

This is reflected in other aspects of the poll results as well.  22 percent of those polled had a family member looking for work, and 50 percent believed the U.S. is in a recession.  Four years into the recovery from the crash of 2008-9, that is a dismal showing.

We are actually very heartened, though not surprised, to find that the American public is apparently more practical than their leaders in Congress and the White House.  It improves the chances that some semblance of pragmatism must return to America’s dominant parties, if they want to sway the ever-growing and ever more important segment of the population that identifies as independent.


In Last Week’s Global Market Commentary, We Also Discuss:

  • Is This a Normal Correction?
  • The Chinese Banking Scare.  Is It Overdone?
  • Argentina:  Protecting Reserves, and Letting the Peso Crash
  • Can Japan Open the Doors to Foreign Workers?

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