Commodities

The post-2001 great commodity super-cycle remains intact. Despite a brief but powerful bear market in mid-2008 triggered by the credit crisis, most commodities performed strongly in 2009. Still, the CRB Index remains 40% off its all-time high.

Montreal, Canada

Forecasting is largely a mug's game since most investors fail to get it right consistently – including myself. Market timing falls into this space and Warren Buffett refutes trying to time an investment. Yet it seems painfully clear to me that the "buy and hold" era has come and gone with stocks barely beating bonds since 1970, according to research courtesy of The Bank Credit Analyst.

Montreal, Canada

The U.S. dollar and interest rates are marching sharply higher this month as the market continues to favorably discount a strong economic recovery in 2010. Indeed, the yield on the benchmark U.S. ten-year Treasury has leapt from 3.20% on November 30 to 3.72% this morning. The more interest rate sensitive 30-year Treasury bond has seen its yield climb from 4.20% to 4.60%. By all accounts bonds are suffering a major drubbing this month.

Montreal, Canada

Buy currencies supported by positive budget and trade surpluses while avoiding those mired amid rising deficits. That investment strategy has produced solid long-term gains for investors over the last 39 years since Nixon broke the gold window in August 1971. Over this period the United States and other fiscally weak nations have produced big deficits while surplus countries have seen their respective currencies rise.

Montreal, Canada

Central banks have historically ranked as the worst investors in the currency and gold markets.

Montreal, Canada

With gold prices down 8% from their December 3rd nominal high of $1,217 an ounce, the bears are coming out of hiding this month predicting a "bubble" has cracked.

Some economists, notably Professor Nouriel Roubini – who accurately predicted the credit crash – is advising investors to run for cover.

Montreal, Canada

Over the last several weeks I've been warning about an imminent sovereign default as a direct consequence of profligate government spending since late 2008. Dubai and Greece are the latest victims threatening default. Abu Dhabi's $10 billion dollar rescue of Dubai has delayed its day of reckoning; Greece, however, requires some sort of major European Union bailout initiative if she is to avoid an outright default.

Montreal, Canada

As 2009 shortly draws to a close, U.S. stocks will log their worst decade of performance since the 1930s. Government bonds, on the other hand, have trounced stocks this decade. But the future performance of bonds is highly suspect ahead of rising deficits, additional financial crises down the road and the prospect of sovereign defaults over the next few years. Interest rates at this point can only rise.

Montreal, Canada

In 2008 investors earned big profits shorting or betting against global stock markets. Reverse index funds gained more than 40% in the United States last year; exchange-traded-funds, or ETFs, that employ 2x leverage surged more than 80%. Shorting emerging markets netted more than 65% in 2008.

- Dugald Malcolm

Montreal, Canada

My attention has been anxiously focused on the major US indexes for the last few weeks. The last time I wrote about the chart of the S&P 500, it was approaching a major downward trend line that had been in place since late 2007. Since that blog on November 11th, the price has continued to approach the trend line, but has yet to break it. This has been the case with the other major indices, as they have been indecisively moving sideways.