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Where the market is headed

Posted on March 7, 2006 , Filed Under Stocks

The theme for the markets these days seems to be uncertainty. I see opportunity in semiconductor stocks and precious metals. Some readers have e-mailed me, asking why I am bullish on Semi’s. The answer is simple. Business for outsourced semiconductor fabricators is improving on a global scale. The positive outlook trickles up and down the food chain to all companies involved. Business for parts and material suppliers, such as WFR, MEMC Electronic Materials, Inc., to outsourced semiconductor companies is improving. The increase in utilization at outsourced semiconductor company’s, signals anticipated bullish retail demand from consumer electronics and computer equipment manufacturers.

I like precious metals, mainly silver and gold, as a hedge against a bearish stock market. I believe gold is in more of the public spotlight and offers more headroom to grow than silver. I believe we could easily see gold pass $600 in 2006 if worries over terrorism and avian flu persist. Before gold passes $600, I believe we will see several dips above and below $550. I will look at investing in gold mining stocks if the metal drops below $530 again.







There’s not much else I am looking at for the short-mid term at the moment. I believe much longer term, in the next decade, what will be hot is emerging alternative energy, alternative fuel, water and copper mining companies.

In alternative energy I see focus on solar energy and electric fuel cell technology. In alternative fuel I see continued development of hybrid electrical/gasoline based solutions and a focus on corn ethanol fuel. I believe water companies will take the spotlight in global emerging markets development, with conservation, distribution and filtering companies in focus. For metals, I believe copper will take focus. Copper is used in electrical wiring and many types of industrial applications. In the next decade prices will rise due to lack of new copper deposits, diminishing supply and increased consumption by emerging markets such as China and India.