Posted 8:27 AM by Dil
JUNE 10

Well, I would say what we are in is kind of a water torture bear market. A lot of stocks peaked out already in 2005 like the homebuilders; then in 2006, the subprime lenders; then in 2007, all financial stocks. The stocks that have performed well over the last 18 months are material stocks and energy stocks and cyclicals.
And I think, the cyclicals and the energy and the material stocks, like steel and iron ore companies, they will now all become under pressure. Probably, the big downside in banks is kind of running out.
In other words, we have had a huge decline in financial stocks. I think they will go lower and I think they are unattractive. But I think other sectors of the market that have held up well are now vulnerable.

I think the question should be what sectors should be sold. I don't believe that investors should be buying all the time and that each time, the market drops a little bit, that gives a long-term buying opportunity. I don't see any compelling value in equities. I also don't see any compelling value in say, real estate or in the commodity markets, I think asset markets are still inflated.

I think it should correct, partly because international liquidity is now still growing but at a decelerating rate, and that usually leads to poor performance of asset markets including commodities. And so, my view would be that commodities will rather ease, as some have already done. Nickel is down 50 percent, wheat has been down 50 percent as well as lead, and lead and zinc.

I think that investors have to be aware that the price of oil has gone from $12 in '98 to now roughly $140. And so, the increase is a 12 times. I don't think that oil will go up another 12 times. Can it go up another $20? Of course, it can. But the big upside is now gone.

And so, I would be a little bit careful about blindly buying commodities, I think they are on the high side, the way the real estate was on the high side, and the way the stocks were on the high side. I am not saying this is?I would certainly be careful about buying them here.

Well, I mean I think in this environment, I was referring to a relative tightening of global liquidity because of the declining U.S. trade and current accounts that at the present time. Because of that, the dollar has essentially some upside potential here, it has, but of course, if Mr. Bernanke continues to play in commodity and push down the Fed fund rate to zero, then the dollar won't go anywhere. But as of today, I think the dollar is relatively undervalued with the euro. I feel like gold could (inaudible) gone up that much.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anZaBLQKisb8


Cambodia Investment is getting advice from Jim Rogers, who predicted the start of the commodities boom in 1999, and Marc Faber, who forecast Asian assets would decline before the regional financial crisis in 1997.

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