I’ve been noticing the conflicting messages too. No doubt that we are living in the “interesting” time.

It’s very hard to discern the directions right now in all markets.

One thing is for certain in my opinion. If the market does NOT fall, then it MUST be supported by massive liquidity. Liquidity would be good for all assets. If the market falls, supposedly gold would not be correlated to stock market and should rise. However, this has NOT been the case in the recent years (2 to 3 years).

Therefore, based on this information, I think if one is not too greedy, one should probably place bets in gold AND cash. If the liquidity or gold un-correlation turns out to be right, then you gain some. If everything falls, then you still have cash to double down (hopefully on the right asset class).

Gold should be safer than energy play here, since energy may be dragged down by “recession” talk. On the other hand, BOTH gold & energy seems to have built a VERY solid long ranged base. In the next big move up, you do NOT want to trade it. It should be a RE-evaluation of the whole sector.

Of course, I have been waiting for the next big move up for quite a while. But I’m determined to out-wait the consolidation period. I know I’m not smart enough to time every up and down wave. But I sure don’t want to miss a ramp up.

Looks like you’ve got your plan all figured out.

On the subprime, you are right about it being a smaller percentage. However, combining both Alt-A and subprime markets, they are significant. These Alt-A where they packaged loans from 90% to 100% LTV (neg arm or not) loans from people who have good credits but won’t have the ability to repay at the full amortization schedule, I’m not so sure how good credits can help them pay $1000 more in mortgage payment. Of course, as long as the refi market is still opened, then the Ponzi scheme can continue.

It does look like taxpayers are going to pick up the tab again through the backdoors of FNM and FRE who will be buying up these toxic loans.

Frugal

As far as what I’m buying? I’ve been bullish on the market and will continue to be for the rest of 2007, and probably into 2008. I’ve still heavily waited overseas where my JAOSX has performed marvelously over the past few years. Some other funds which I own are EUROX, BGRFX and EUROX. The ETF of XLF or IYF which is a basket of financial stocks should show if the bullish rally will continue. In the healthcare sector you have VHT or PPH, which have underperformed and should see gains.

In the highly speculative area I’m investing in hurricane stocks which can easily bring 50% returns up to 200%+. I do not own all of these, but I do at some point own some or have own some of these stocks. As I mentioned they are highly speculative and thinly traded with small floats, but can bring a lofty return if you are not greedy. These are mostly pinks or otcbb stocks. Here is the list in no particular order: NSMG, BUGS, RMGI, ECCI, IPII, and WEGI – As you can already see all of these stocks have seem gains since Jan. They all move based on speculation tied to the hurricane season. Another speculative stock for 2007 into early 2008 is SUPG. I have some Jan 08 calls, and this has the opportunity to bring in a nice return. Once again, these are all speculative plays.

As far as shorting the market at this time, I am staying away. The overall market could see another correction which is fine, but I still see the overall market profitable in 2007 and 2008. When pullbacks occur, you should have cash to buy on the dips.

With the Chinese economy growing at a 11% clip, I’m sure the Chinese will raise interest rates, which will help to slow the economy, but only for the good. It should only have a small temporary hit on markets.

Lastly, I see oil prices continue to rise. This is the time of year when prices normally pull back before the summer season hits, but long term I see no reason for the price of crude to fall back to the 40s. I think we will see 2007 avg close to $55-$60. I only see the prices of crude to continue to rise for the next few years unless a dramatic breakthrough occurs. One of my personal holdings is SLB which has recently had a dramatic rise, but pulled back yesterday partly due to a downgrade, but SLB is currently trading around 24-25 P/E which, and has historically traded in the high 30s. I believe SLB will be a buy until the high 30s for the P/E.

It’s been a long time since I’ve posted, so this was a makeup I guess. Let’s see how the markets take in the Chinese markets and interest rate hike talk. It should be anything but boring. =)