My 1st Million At 33 – yes, you can do it too

Stock market again took a fall on Friday. The stock market looks to be gradually unstable. Frank Barbera’s fall date for Shanghai’s market is around Jun29. My own date for US stock market currently is first or second week of July. Even though this bull market is getting really old, and also crazy, it has surprised me so many times. I am quite doubtful however that it can last until August 1st.

Here is what I’ve collected from various pundits:
1. Puplava believes the market can go as far as late in the year or even into 2008. Regardless, Puplava is raising LOTS of cash in the managed accounts. In fact, this is the first time I see so much cash in my managed account. But the percentage level of cash I believe is entirely prudent given my own bearish stand.
2. Bill Cara is still pretty bullish on gold & goldminers. Although I can follow Bill’s reasoning, and am hopeful that he is right, I doubt that this stock market can last that long. I think Bill believes the high should be before October. That almost requires a rallying of PM right now or within 3 to 4 weeks. Again, I am not sure. But I won’t be selling out my substantial positions in PM either.
3. Boy Hoye is still conservatively bullish on PM miners. He has been bullish for a while without not much happening. His previous bullish call in Jan was knocked out of place within a week. Regardless, I believe his intermediate and long term bullish forecast for PM is correct.
4. Frank Barbera is bearish. Many ways of falling, but a big fall for sure in his opinion.

I will be raising my cash further, and possibly buying puts in the coming weeks.

Here is my own thoughts on various sectors taking a longer term view:
1. Precious metals: my own belief is that PM/gold sectors may have skipped a heartbeat this time around due to all the central bank selling. It looks to me that it’s more likely that PM will NOT go up too much BEFORE stock market takes a BIG tumble. I believe that PM may have another retest of low along with the stock market falling down hard. But PM would break new high after stock market correction is over and starts to rise again.

2. General stock market: I believe that once the stock market correction is over, one should be long aggressively on foreign stock markets (India, Brazil, China, etc), and aggressively long on energy sectors. The general stock market will rise too but probably will be a less stellar performer. I have stated previously that the secular bear market started in 2000 is over. By that, I mean US stock market will NOT break 2002 low in all likelihood. The Elliot Wave styled depression will not come before year 2032/33 (the peaking height of 51.6 or 309.6 economic cycle, which is a date within the calculated date of singular point from super-exponetial human and economic growth) if at all. It will continue to break new highs going forward with big/small corrections along the way.

3. Energy sector: this should be the best and safest sector to bet on going forward. Whether you believe in a new era of global economic growth or whether you are a peak oil believer, this is the sector to put your bets in. I will be AGGRESSIVELY long in energy sector once the stock market correction has taken place. I positioned myself with about 50+% in precious metals, and 35% in energy coming into 2007. I thought that US housing market will cause a big fall in the general stock market and therefore I want to under-invest in energy since it is more sensitive to the global economic growth. Whether global economic growth will slow due to US housing market implosion is very debatable. But I believed that whether it slows or not, the stock market will be scared into a big fall. That has not happened yet. Instead, markets have broken new highs all over the place. I will probably raise my combined energy/foreign sector holdings to 50% or more.

Basically, I will have 50% in energy and 50% in precious metals, and adjust the two holdings based on my relative bullishness in the two sectors.

I will probably be selling out of energy sector in year 2009/2010 to prepare myself for the next half-PI date in 2011. Those dates correspond to a big wave in negative ARM resettings started in 2004/2005 (by adding 5). The current wave of subprime mortgage is due to 2005/2006 (plus 1 or 2). But that timeframe of 2011 is too far out right now.

By the way, the failure of PI date for predicting the lastest stock market height was not unexpected. Taking the example from last height, it didn’t happen until one year and eight months later. But the bottom date was correct. I believe that will be the pattern given increasingly available fiat money which can boost the long side.

And don’t buy bonds and stay in cash for the long term. It is far better to take a calculated chance in (selected) stocks than a guaranteed loss in bonds (unless you are old enough, and can afford the short-term loss in buying power).