Just a few ruminations about the investment picture, amidst the Euro crisis and fears of sequestration and a possible descent from the fiscal cliff.
The past two months, certain commodities have nicely followed my predicted path. I entered the $CORN fan club a wee bit late, in early July at $43, but even so, the recent closes above $50 are gratifying. More importantly, there were several predictable buy/sell triggers along the way, as $CORN oscillated with the drought news. Now it appears that everyone is on board with rising prices related to droughted corn and other crops. Call it a broad corn-sensus... got it? $CORN is popping. Somebody stop me.
$GLD has also proven a worthy investment over the past few months; it had slipped below $150 with hardly a notice, even as it became crystal clear that the ECB *must* step in to contain the runaway bond yields of Spain and Italy. Now, a few signals of inflation could trigger a lot more interest in gold, but it's not going to be some unrestrained gold rush, because relative dollar strength will keep the gold price in check. I like this.
I briefly considered $COW but lost interest after I couldn't find reliable information on how feedstock prices ultimately affect the price of beef. The price could go up for some time and then perhaps collapse quickly as herds are sent to slaughter. Not interested in anything that complicated, it reminds me of critical behavior: you build a hill out of sand and keep adding sand and making it higher and higher until, wham, the whole thing avalanches down, and you can't predict when or how quickly.
$AAPL has been, as usual, predictably charmed for the past few months. For 4 whole months, we've been treated not only to a relatively high average value around $600 but also many beautiful little dips and rapid recoveries. The most recent such event followed the slightly disappointing earnings report on July 24 sent the price to an appetizing level of almost $570, which I (and many other faithful, I am sure) welcomed with open arms. Today, $AAPL again flirted with $600 and... my guess... the lid is off in advance of the debut of the iPhone 5.
Regarding $FB, as I said before, some of us know the difference between a product delivered well, and a concept delivered poorly. It continues to amaze me that $FB finds any support. Any.
I liked $FCX for a short while but quickly opted for $GLD as the purer play, as copper (tied to housing) remains iffy. I still like $CSX, $WM and $WMB for the long haul.
Ahead of sequestration, we should see US yields steadily rise... as long as the Euro crisis doesn't again run off the rails and generate a flight to safety. I'm cloesly watching for action from Draghi, which could signal an end of artificially low yields in the US. If all goes quasi-smoothly in Europe, then it appears that leveraged treasury bear ETFs may become attractive in the coming weeks, ahead of the inevitable sequestration / fiscal cliff speculation. Watch $TBX and $PST.
I'm currently looking at the possibility of speculative losses in major defense stocks, as the market begins to price in the possibility of sequestration. Offhand, it appears that fear of this threat will hit $LMT particularly hard, before rebounding robustly in the spring. The picture is anything but clear, but I really don't see how defense stocks can possibly hold up under the growing chorus of concern about sequestration. Hence a ~6 month strategy is forming.