Investment Contrarians

China


Oil Prices to Reach $80/Barrel?

By for Investment Contrarians | Dec 11, 2013

Oil PricesOil prices are heading higher on the chart with the cash West Texas Intermediate (WTI) crude rallying back toward the $100.00 level after threatening to test $90.00.

Steady economic signs in the United States, China, and Japan—the three largest economies in the world—along with some muted growth in the eurozone and Europe are adding some spark to the oil futures… But hold on; doesn’t the buying seem somewhat premature?

I’d say so, as I believe oil prices may have limited upside unless something dramatic surfaces in the Middle East that impacts OPEC oil.

The Organization of the Petroleum Exporting Countries (OPEC) has also come out and said it would maintain its current daily production quota and not cut supply in order to add support to oil prices.

I doubt we will see $130.00-per-barrel oil prices anytime soon—unless, of course, tensions escalate in the Middle East and a war breaks out across a wider region that would impact the flow of OPEC oil. The current nuclear agreement in Iran has also added some stability to the region.

And the futures market for oil supports my view, too. A look at the oil futures actually shows expectations for oil prices should decline back towards $92.00 by the end of 2014, drop below $90.00 in 2015, and continue downward to $80.00 by 2018. The December 2022 futures contract points to $78.00-per-barrel oil.

The chart of WTI oil below shows the downward channel and recent breakout, which I doubt will have much holding power as it nears the $100.00 level.

Light Crude Oil Chart

Chart courtesy of www.StockCharts.com

Now while the prospects over the next eight years don’t … Read More


A Safe Way to Profit from China’s 700 IPOs to List in 2014

By for Investment Contrarians | Dec 5, 2013

China’s 700 IPOs to List in 2014I pushed the “go” button on China a long time ago now, and I’m certainly not set to press “stop” yet, as I continue to feel the country is one of the top growth areas for investors worldwide. My contentions are contrary to those of many other analysts in the stock market, but I’m holding onto my bullish views.

The Goldman Sachs Group, Inc. (NYSE/GS) is now telling the market that next year (2014) will not only be the “Year of the Horse” in the Chinese Zodiac, but it will also be a buying opportunity in Chinese stocks. Goldman Sachs is predicting that the Hong Kong-based Hang Seng China Enterprises Index, which is available for investment by foreign investors, will surge 19% in 2014. (Source: He, L., “Goldman Sachs sees 19% gain for Chinese stocks in Hong Kong during 2014,” MarketWatch, December 3, 2013.) The index tracks the performance of Hong Kong-listed Chinese companies.

Goldman Sachs also predicts that the Chinese economy will advance by 7.8% in 2014, while the Organization for Economic Co-operation and Development (OECD) is even more optimistic, estimating 8.2% growth next year. (Source: Organization for Economic Co-operation and Development web site, last accessed December 3, 2013.) The OECD’s optimism is based on the rise in domestic consumer spending in China, which remains a clear focus in the mandate of the Chinese government.

Of course, there will continue to be some hesitancy due to the numerous frauds found in Chinese reporting in U.S.-listed companies a few years back. However, many of these issues have already been, or are currently being, dealt with by the U.S. Securities Exchange … Read More


Uranium Stocks for Long-Term Investing Success?

By for Investment Contrarians | Dec 4, 2013

Long-Term Investing SuccessMany times people ask me how I come up with my investment strategy.

Obviously, there is no one answer, but a common trick I use when developing any investment strategy is to look for areas where market sentiment still remains below peak optimism.

Following the tragic events of the Fukushima Daiichi nuclear power plant disaster in Japan, market sentiment for uranium dropped, naturally. As Japan halted all nuclear power plants, shareholders adjusted their investment strategy to get out of uranium mining stocks.

Now, the time when market sentiment is about to shift for the uranium industry, I believe, is close at hand.

The reality for energy use over the next decade is that it will grow massively around the world. Nations like China and India cannot keep up with industrial demand for energy, which is now causing huge amounts of pollution.

Chinese authorities are aware of the polluting side effects of conventional energy sources, such as coal, and are building several new nuclear power plants, which is a much cleaner energy source. Market sentiment will continue to shift in favor of uranium as more nations realize that nuclear power will continue to be with us for some time.

Adjusting your investment strategy before everyone jumps on board is important. Even Japan is now conducting analysis to re-open 14 nuclear power plants, as five utilities within that nation are requesting these energy sources be put back online.

If you’re going to look for a uranium miner to add to your portfolio, one well-established and smooth-running company to consider is Cameco Corporation (NYSE/CCJ, TSX/CCO).

Cameco Corp Chart

Chart courtesy of www.StockCharts.com

In the latest quarter, … Read More


Avoid Regret: Accumulate Gold Bullion Now

By for Investment Contrarians | Dec 3, 2013

Gold Bullion NowThere are many ways to try to get a handle on where the market is currently trading and what’s likely to come. For me, investor sentiment is extremely important, but not for the reasons many would think.

All markets have various factors pushing them. As a contrarian investor, you want to look at taking profits during periods when investor sentiment has become extremely bullish, and accumulate positions as investor sentiment gets too pessimistic.

Why are these turning points?

If everyone is bullish, then there is little new money left to pile into an investment. Conversely, when everyone is bearish and has sold their holdings, there’s very little selling pressure left, which creates a floor—at least over the short term.

Ultimately, the fundamentals of the market will come through, but the gyrations and oscillations are driven by investor sentiment.

Take gold bullion, for example. I recently read a very interesting article stating that currently, 18 out of 31 Wall Street analysts expect gold bullion to fall this week, continuing their negative investor sentiment outlook on the precious metal. As of the end of October, hedge funds held the lowest level of long positions in gold bullion since July 9. (Source: “Gold Bears Persist as Prices Near Year’s Low on Fed,” Bloomberg, November 29, 2013.)

Both the short-term prediction by analysts and the long-term forecast by hedge funds are expecting gold bullion to remain weak. It’s interesting to note that we are now getting a convergence in investor sentiment over a variety of timeframes. It’s also interesting that July was the last time investor sentiment was this low.

So what happened to … Read More


Is This Digital “Gold Bullion” Investment Worth the Risk?

By for Investment Contrarians | Nov 26, 2013

Investment Worth the RiskThere has been a lot of coverage over the phenomenon that is Bitcoin.

I’m sure many of you are asking yourselves, is this online currency for real? What does it really say about our financial system?

But for those who are unaware, Bitcoin is essentially an online currency that is completely decentralized. Simply put, it is the exact opposite of the U.S. dollar, which is managed by the Federal Reserve.

While the value of one Bitcoin started off being only a few U.S. dollars, over the past couple of months, investor sentiment has become euphoric and the price of a Bitcoin has gone hyperbolic, from approximately US$13.00 in January for one Bitcoin to US$100.00 in July, recently hitting a high of US$900.00 for one Bitcoin in the past few weeks.

Why is investor sentiment so bullish on this online currency?

The best way to think of Bitcoin is as an online version of gold bullion. This digital “gold bullion” has exploded in popularity around the world. In fact, some of the strongest investor sentiment in Bitcoins comes from China. Not only are the Chinese heavily buying physical gold bullion, but they’re now accumulating the digital version of gold bullion: Bitcoins.

Many find the appeal of a decentralized currency attractive in this day and age. With central banks pumping money around the world, owning a piece of something that can’t be controlled by a central bank is very attractive to many people.

However, the spectacular rise of interest in investor sentiment for the digital gold bullion is extremely speculative.

Actual gold bullion has been around for centuries. To place one’s faith … Read More