article from a fund manager, for fun reading
precious metals/ dividend shares and physical gold are the most prudent places to put your money

Dear Traders,

Most market players are bullish- just count the bullish articles versus the bearish articles in the Star/ Edge and Straits Times. In the last 10 days, Bullish articles outnumber the bearish articles by 8 to 1.

Who is left to buy when the majority of news is bullish ?

Pessimism among market newsletter writers in the US is at the lowest level since end 2008 which was the top of most stock markets.

As a contrarian I consider extreem bullishnessness and a low pessimism reading as a sign of premature complacency and the stock markets will stop advancing under the theory that there are fewer bearish investors left to change their minds and buy shares.

The NYSE value in the 3rd Quarter 2008 was 13.5 trillion dollars. In March 2009 the value was 7.9 trillion. Now the market value has recovered to 10.7 trillion. This restoration of wealth has done wonders for consumer confidence even though the rally is based on superficial easy money.

If the US government should exit from its super easy money policy that could ignite a major stock market collapse- if however the Federal Reserve does not tighten this could ignite a major commodity rally including gold/ silver/ oil/ copper, and a major drop in the US Dollar.

Tightening rates would virtually guarantee that Obama would lose his powerbase in the Nov 2010 mid term election as his socialist supporters would be thrown out of office. My bet is they will not raise short term interest rates. I am positioned for this scenario. Bernenke, the Fed Reserve president is an Obama chrony and will rubber stamp whatever his political masters tell him to do

As a confirmation of the easy money scenario long term interest rates are determined by the market and they are rising. The yield curve has widened to the widest in over 30 years forecasting easy money and inflation.