- which stocks you should sell if we go over the fiscal cliff; and
- why gold will head higher in the coming year.
A Fiscal-Cliff Strategy Posted at 8:30 a.m. EDT on Friday, Dec. 28 Let's say all goes badly and we go over the cliff. What do you do? Given the mercurial nature of politics, you need a plan that embraces the short-selling or put buying of the segment that would miss numbers anyway, even if the cliff were resolved, so that if we get a blip up on a solution the group can be re-shorted into strength. That group is retail. My preferred way to execute this strategy is to sell short or buy puts on the Market Vectors Retail ETF ( RTH). Here's why: First, we know that somebody's going to get hurt: the poor, the middle class or the rich -- maybe all three. They will all react by saving more until the coast is clear. That's terrible for retail, all retail, but especially the dollar stores, which have acted terribly, and the discounters -- think Wal-Mart ( WMT) and Target ( TGT). Second, the weather was so bad, and the psyche so negative -- look at retail correlative Consumer Confidence -- that you can't own the strugglers: Best Buy ( BBY), Bed Bath & Beyond ( BBBY), Kohl's ( KSS) or even good ones like Ross Stores ( ROST). I would point out that Macy's ( M) fares badly in this world, too, with a heavy-coat segment that must be discounted. Finally, I would not trust even the strong home themes, at least for now, because they have run so much: Williams-Sonoma ( WSM), Lowe's ( LOW) and even one of my big faves, Pier 1 ( PIR). I would be quick to cover this cohort, though, simply because it is part of a larger theme that will be hard to dislodge -- the higher price of homes. All of these would be short-term plays. And if you are worried, I would go long Costco ( COST) as a hedge because I believe it is the default play for shoppers.
Three Key Themes for 2013 Posted at 6:30 a.m. EDT on Thursday, Dec. 27 Three trends that weren't supposed to happen in 2013: a strong euro, weak oil and positive gold. These three trends have to be explored, because they are pretty difficult to fathom but must be fathomed if we are to understand 2013. First, the euro. We all know that the euro was supposed to be kaput by now, replaced by the mark, franc, lira and everything else, with the mark starting the trend. This was a total misread of history and of the denouement of World War II. There's no way that we could ever understand the depth of fear of another war or the guilt the Germans feel. They are simply not going to let this happen. We focused only on the economics of it, not the politics, and the richer countries are willing to lose money endlessly on Greece if that's what it takes, because Spain, Italy and Ireland are coming back, as is the European stock market. The bankers and hedge funds in this country are way too smart for their own good, because they know the numbers but not the history. The euro could go higher still, because I sense that no one large owns it. Oil is a function of supply. It is beginning to dawn on people that the statistics for the U.S. are far more robust than what the numbers and predictions indicate. Every month, numbers coming out of Texas and North Dakota are much better than people expect. Endless upside surprises, and yet most of the big interests aren't even drilling there yet. The major oils are slow of foot and let the independents in while they focused on unstable areas such as West Africa and Indonesia, both of which will perhaps be ... confiscated by poor countries that mistakenly gave them rights. The whole federal-lands thing is a big sideshow.