Is the stock market getting close to a bottom -- or is this just the beginning of the rollercoaster? Should you be hanging on to your stocks or ploughing into bonds? What about commodities?
A former stockbroker at Canaccord Capital and Bolder Investment Partners Ltd., Ian Gordon predicted the end of the equity bull market in 2000 and the beginnings of a major bull market in gold.
Mr. Gordon is particularly well-known for his analysis of the Kondratieff or long wave cycle, which shows that economic events repeat in a regular sequence every 60 years or so.
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Steve Ladurantaye, Globe and Mail: Thanks for joining us, Mr. Gordon. Before we get into the reader questions, perhaps you could explain your investing philosophy so people understand where we're starting from.
Ian Gordon: Simply, that during each Kondratieff season there is an investment medium that performs very well. For example, in the spring 1949-1966 stocks and real estate performed well because the economy did well. In summer 1966-1982 inflation investments, such as art, commodities, gold and silver did very well, because it was the season of inflation. In autumn 1982- 2000 stocks, bonds and real estate did exceptionally well. Winter is signalled by the peak in stock prices following the huge bull market - 2000 to possibly 2020, so it's time to get defensive because the economy collapses into a deflationary depression brought about by the collapse of debt. Under the circumstances cash and gold do well. Remember the cycle is a lifetime cycle of approximately 60 years, each season is approximately one quarter of the entire cycle.
John Cartier, Port Perry: I'm currently on the sidelines... 85% Money Markets, 15% precious metals (mutual funds), very nervous to re-enter the markets, based on current volatility. Without being a day trader, is there another strategy to invest in this market without trying to call a bottom?
Ian Gordon: The outlook for the general stock market is very bearish, although we may currently be encountering a bear market rally. The outlook for gold and silver equities, however is very bullish. It is here that you might want to position for the long term.
Leslie Erdosy, Toronto: In my opinion, the current market is most likely to be a classic bear market rally. The situation is still murky in the USA. The housing market shows no sign of price stabilty. Employment numbers are still shrinking. The effects of the stimulii packages is yet to be felt. I do know that the market is meant to be forward looking, but the view forward still looks menacing. I believe that the economy will only start to recover for good when John Doe sees that his house price is picking up finally. Do you agree?
Ian Gordon: The outlook for stocks and the economy is extremely bearish. I don't think we are anywhere near a bottom either. The bottom will probably be indicated when abject despair is prevalent and there is absolutely no interest in the stock market.
Rick Ferrato, Canada: For the investor that has under $10,000 to invest, are index funds a better choice than individual stocks and conventional mutual funds?
Ian Gordon: I don't think that one should risk investing in any medium with less than $10,000, particularly in the markets of today. Cash (money) is a exceptionally safe investment during these very difficult economic and financial times.
