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

I’m not too sure why Mark Hulbert at MarketWatch.com has been putting out so many more bullish posts versus bearish posts this year. Regardless, his latest post Partying like it’s 1998? is interesting. Getting the correct big picture going forward is extremely important for investing. So is it 1998 or 1970 now? Actually, I believe that this answer may depend on which country you’re talking about.

With the housing bubble bursted, I tend to believe that US stock markets will be under-performing to foreign markets. Although asset deflation is a distinct possibility, I believe that there will be enough paper money supporting the stock market in general (but possibly not all the time on a short term basis). The question for every investor then is which stocks should one buy to maximize the ROI. I personally believe that foreign stocks, precious metals, and energy would continue to out-perform the general stock markets.

Despite that some foreign stock markets have gone up a lot, I think the time is more like 1998, a short pause before the final height. With paper money continued to devalue against precious metals, I think precious metals will continue to out-perform. Energy sector is the more tricky choice. With a potential slowdown in US (and possibly global) economy, energy demand is “supposedly” to decrease. I think between now and then, there may be a dip before energy sector out-performs again. With this in mind, I have been under-weighting energy sector since the beginning of this year.

If you’re not in any of the above markets, I think there should be still chances to get onboard. Although short-term wise the market can continue to go up further, it can’t go up without regrouping and consolidating the gain. Investing is about being patient. Don’t buy when the time is still not right.

Why do I think majority of the global stock markets are more like 1998 rather than 1970? It’s evident from many individual stocks that hot money is trying to find a home. Apple (AAPL), Garmin (GRMN), Google (GOOG), etc. have gone up substantially. As long as the story doesn’t change the pitch, hot money does not leave. And you bet that there will be more hot paper money trying to find a good home. The key is obviously to be one step ahead of it.