Special update from Puru

It looks as though the bear-market low is now behind us. Over the past couple of days, a number of leading stock markets have broken out to new recovery highs. Yesterday, both the S&P500 and NASDAQ also hit a new recovery high. This is very positive action and it seems as though the market is now looking beyond the weak US economy and it sees better times ahead. Remember, the market is rising amidst disbelief and skepticism; not many trust the rally - yet, the stock markets show no sign of correcting. The cyclical bull is climbing the 'wall of worry' and the longer the markets can stay firm, the lesser the odds of a dramatic plunge.

In our view, central-bank sponsored reflation seems to be working in the emerging markets and our preferred investment themes (emerging Asia and resources) are showing leadership. It is noteworthy that China is setting new highs on a daily basis and Hong Kong has also broken through its overhead resistance. Furthermore, South Korea and Taiwan have also reached new recovery highs. Over in Latin America, Mexico has climbed to a new recovery high and Brazil is about to play catch up. Given that the stronger markets are breaking to new highs, we will be very surprised if the markets resumed their bear-market.

Based on the bullish market action, we are parting ways with our defensive investment position and re-investing capital in our preferred companies. We are also re-investing capital in China, India and Vietnam. It is our contention that emerging Asia will provide stellar returns over the following months as more and more capital flows to this part of the world. So, we suggest that you ignore the apocalyptic forecasts and allocate capital to the strongest segments of the economy. If history is any guide, this cyclical bull-market should continue for 2-3 years and it will only end when central banks start tightening monetary policy. In the meantime however, investors in emerging Asia and commodities should be able to make some large profits.

Finally, it seems as though the 18-month consolidation in gold is nearing completion and if the bull-market is still intact, the yellow metal should rally sharply over the following months. We expect a break above $1,000 per ounce within the next 3 months and this will set the stage for a move to roughly $1,300 per ounce by next spring. So, this is an ideal time to add to your gold holdings.

My Comments: H's completely changed his tune and I agree with it...to be clear I have no idea what is going to happen and I don't "think" that we are beginning a 2-3 year bull market, but prices are moving higher and that's all that matters as long as you have an exit strategy...What if the market only runs for one year then crashes...or how about a new bubble that no even thought about gets blown up and popped...the markets change and we need to adapt to them...If you think your going to buy and hold any asset, your in for rough times...