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Getting Scared About the Markets? Here's What to Do...
By Dr. Steve Sjuggerud
November 21, 2007

My friends and neighbors are getting scared...

Stocks are down. Real estate is down. And instead of things getting better, it "feels" like things are accelerating downward.

So they're worried.

We've been worried before... On March 20, 2003, the U.S. invaded Iraq. In the preceding years, the dot-com bubble had burst in stocks and the Twin Towers were hit. Investors were extremely uncertain about the future.

Do you remember what happened in the stock market? Stocks rose nearly 40% from March 2003 to March 2004...

We had extreme fear and uncertainty in the markets back in March 2003. Smart investors recognized it, and capitalized on it. And how about last summer? Investors were as bearish on stocks as they had been in decades, and the stock market as a whole rose 14% in less than six months... an enormous gain in such a short time.

Today, investors are worried. I checked in with my friend Jason Goepfert, who tracks investor sentiment. Jason says his current indicators are as lopsided as they've been in the past few years. A quick rundown of his more than 100 indicators shows that 26 of them are in the "bullish" range, but only two are "bearish." (Generally for Jason's indicators, fear is bullish.)

I am not suggesting that times aren't tough... I see that they are. Times are tough for housing. But they will get less bad some day. And times are tough for banks. But they will get less bad some day. And when those days come, investors who were bold enough to buy when everyone was scared will make a lot of money. (I've been a little early in these calls, I know.)

Times like these are when you can set yourself up to make hundreds of percent returns. It's not often sentiment gets this unanimously negative in the markets. Again, everyone is scared.

Smart traders are the bold ones who are willing to go against the crowd. They know that when we reach an extreme consensus opinion like this, the "low-risk" trade is to actually do the opposite of what the crowd is doing. It feels uncomfortable, but it's the right thing to do. Now – or very close to now – is one of those times that smart traders make big fortunes in short periods of time.

More on Chris Weber

The Crowd is Bearish... So it’s Time To Get Bullish

Substantial Nasdaq Rally Ahead?

Are you bold enough to go against the crowd?

Being scared about the markets is typical. Having the courage to fight back your fears and buy at dirt-cheap prices is exceptional.

Do you want your investing to be typical or exceptional?

Investors are nearly unanimously scared. It's time to find where they're most afraid... and put a few chips there. In a few years, I expect they'll return you many times your investment.

Good investing,

Steve

Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.

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REAL ASSETS VS. LANDFILL STUFFING, VOLUME TWO

Our study of the real assets-vs.-landfill stuffing ratio continues with a comparison of coal vs. gadgets...

Today's ratio plots the share price of Peabody Energy vs. the share price of Circuit City. Peabody is the largest public coal producer in the world. Circuit City is one of America's largest electronics retailers.

Coal is by far the cheapest fossil fuel relative to the heat it generates, which makes it irresistible for countries that value cost above cleanliness. China fits into this category. It has doubled its coal use in the past five years - sending the price of some coal types up more than 80%. Peabody has ridden this trend to a 36% gain in 2007.

Circuit City on the other hand, sells "fun stuff," like computers, video cameras, DVD players, televisions, and stereos. Its share price has plunged 70% this year, which sends our ratio soaring toward hard assets.

We're not singling out Circuit City... We also used the merchants of hunting gear, scented candles, Winnebagos, ab rollers, and ridiculous golf pants for this comparison. The point was the same: As the trendline rises, real assets are increasingly the place to be.

Peabody Energy Corp./Circuit City Group

- Brian Hunt

Goldman Sachs Group Inc.'s Global Alpha hedge fund may lose about $6 billion in assets this year, a 60 percent decline, because of trades that went awry and client withdrawals, according to two investors.

Global Alpha, which entered 2007 with more than $10 billion, lost 37 percent on investments through Nov. 14, most of it in August, said the Goldman clients, who asked not to be identified because the fund's performance is private.

– Bloomberg

We know what young people are doing more of: watching television, surfing the Web, listening to their iPods, talking on cellphones, and instant-messaging their friends. But a new report released today by the National Endowment for the Arts makes clear what they're doing a lot less of: reading.

The report – a 99-page compendium of more than 40 studies by universities, foundations, business groups, and government agencies since 2004 – paints a dire picture of plummeting levels of reading among young people over the past two decades. Among the findings:

Only 30 percent of 13-year-olds read almost every day.

The number of 17-year-olds who never read for pleasure increased from 9 percent in 1984 to 19 percent in 2004.

Almost half of Americans between ages 18 and 24 never read books for pleasure.

The average person between ages 15 and 24 spends 2 to 2 1/2 hours a day watching TV and 7 minutes reading.
– Boston Globe

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