Trading Going Forward

Ok, we made money shorting the markets in the collapse this year – ok ok ok, thanks for the emails, but that is history now.
What lies ahead?
By now, the most spectacular dramatic freefall is over, at least for the Scandinavian markets and most markets that have fallen 50+%.
This might have been the lowpoint, but we are still convinced we will see new lows, pretty much all over, but the falls will not be as dramatic – save for a suicidal attac on Iran by Israel or the US.

So, the strategy of shorting long term and holding has played out most of its potential. Now we are back to a more volatile rolercoaster along the bottom.

Long term though there are some obvious plays.
– The dollar will eventually pull back dramatically.
This will be very volatile, and hard to play in the short run. A bit easier on longer term plays.
– Inflation will soar to double digits in the US and interest rates will follow to double digit levels.
This will hold back asset price appreciations significantly, one should not expect rallies in stocks or real estate anywhere like what we have seen during the last few decades.
Getting back to where we were two years ago could take decades.
– Gold will soar to USD 1000 – 2000 and beyond in our lifetime. But this is a hard play to play, even though it seems obvious enough.
The way to play it will be to buy a diversified portfolio of mining companies, senior and junior, possibly with leverage, to get tremedous leverage in the rise in the gold price – while making sure one is not oblitirated in the downturns, very hard indeed.
– Silver will be even more volatile. I see a case for silver comming up if it should fall significantly back towards USD 2-5. Otherwise be carefull with silver.
– Currencies going forward will be more volatile than we are used to.
The Euro’s inflation target protection will be tested hard, it will break eventually – but the testing and hammering phases will be dramatic and create opportunities.
– There will be great buys, from distressed sellers. But how to do that indirectly is more tricky, the fund business and pooled investements have deservedly gotten a big blow to its keel. Be carefull about doing something through a fund, a pool or a creative financial instrument – you will get burned.
The way to do it is to do it yourself with direct ownership.
– Oil, I belive, has a floor of USD 30-40-50, so anytime it fallst towards theese levels signals a buying opportunity.
– New York will fall back after Thanksgiving, so shorting it now is still a good idea.

On the BRIC investments, as allways – Buy when there is blood in the streets, and there will be more blood – rest assured of that.
Today is a great day to buy real estate in Mumbai, as the blood flows. Tomorrow it will be blood somewere else, do not buy anything but great bargains from distressed sellers when blood is flowing – patience my dear reader. The financial crisis will create social unrest and bloodflows on multiple locations in the east next year, and the year after – that is the time to buy.

There are still plenty opportunities, but the easy shorting is over.

27. November 2008 – Oslo, Norway. Hans Lysglimt

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