Some Bull Is Better Than No Bull

It is a tough to find a bull market right now other than in the metals and energy. The gold trade is already outperforming and I am crossing my fingers that things continue positively over the coming weeks and months.

One of the toughest calls I have had recently is how to evaluate my own positions and plans. My investment ideas during the past 12 months have gone almost full circle. I began the year speculating in oil tankers, gold, and sandisk. As things have progressed I have found myself increasingly bearish, expecting a housing market crash, stock market crash, and collapse of everything as we know it around me.

Obviously this change is probably over exagerratedly negative. The problem is that so far this scenario is playing out before our eyes. Today another negative accounting report was released on Fannie Mae (FNM) causing the market value to drop 11% in one day - it lost over $5 billion dollars of market cap in an afternoon. If this was Google, I would say big friggin deal. The problem is that Fannie Mae and her brother Freddie are the lifeblood and liquidity for our entire economy - i.e. real estate and mortgage debt. If the capital of Fannie is depleted the repercussions in the mortgage market will affect not only interest rates, but probably also lending guidelines.

Most of my earlier calls for Puts - re: Wachovia, Pulte, Best Buy are all capitulating before my eyes. The temptation to buy the Puts is immense, but it is playing with fire as well, because as bearish as I am - everyone around me is mildly bullish to excited about the economys prospects. How can I balance the disconnect moving forward? I think the best call is just to do nothing until more conviction is gained.

The gold trade has been working out - but even there I believe in a fundamental move over the next several years, but have little reason to expect a huge bull run in the immediate term. Hopefully things will continue to clear up going forward......but I doubt it. Anyways here is the portfolio snapshot as of the closing today. Hopefully we can follow through for a while longer:

Regards,

BG