Kiss, Kiss, Kiss the Gold

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Strongly bullish for the long-term

        Richard Geist: "We continue to believe that the combination of the internal dynamics of the market, the improving economy, seasonal trends, growing corporate profits, and a presidential year are all stars aligning themselves in a long term bullish pattern. Reinforcing this trend will be increased capital spending, slow but steady hiring, and, and replenishing of inventories.
        There will be bumps in the road. Currently there are enough red flags to make us cautious about a near term correction. But we would use any market retreat as a buying opportunity. We are strongly bullish for the long term."

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Bullish on 2004

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Stocks will continue to shine in 2004

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FREEMARKET GOLD & MONEY REPORT
P.O. Box 5002, North Conway, NH 03860.
1 year, 20 issues, $260.

Pan American Silver: Pure silver play
Minefinders: A speculative play

       James Turk: "As bullish as I am about gold, I am even more bullish here about silver. My bullish interpretation of the Gold/Silver Ratio chart is that silver is about to climb faster than gold.
       Now that everything appears to be lined up for silver, I would like to recommend Pan American Silver (TSX PAA; Nasdaq PASS, www.panamericansilver.com).
        I have mentioned PAAS before because I consider it to be the best pure silver play, with both production and good properties. This year they will produce 11 million ounces, and their mineralization is over 700 million ounces. With good management and a reasonable balance sheet, PAAS is well positioned to take advantage of higher silver prices (and they do not hedge production).
        As a speculative play, I recommend Minefinders Corp. (TSX MFL; AMEX MFN, www.minefinders.com). It is in the development stage, having discovered several years ago a rich gold/silver deposit in Mexico that is now very close to feasibility. So MFL is not producing any metal, and there is no cash flow. However, a recent financing has provided it with the cash needed to complete the feasibility for its Dolores property.
        With resources of 3 million ounces of gold and 160 million ounces of silver (and there is potential to expand these estimates), look for MFL to be bought out within the next 18 months by an established producer. The rise in the silver price that I am expecting will considerably improve the economics of Dolores.
        Information about these companies is available on their websites, and as always with my stock picks, I recommend that you investigate each company before you decide to invest."

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KEY-VOLUME STRATEGIES
P.O. Box 407, White Plains, NY 10602.
1 year, 24 issues, $449 (35th Anniversary Special).

Neither Bull nor Bear need to be left wanting

        Bob Conrad: "When we reach a milestone such as the start of our 35th year right now, we take a traditional look back at the last 12 months to see: which side has the market been more generous to, the bulls or the bears? This year's observation agrees with the one we made a year ago in: neither side should complain. The systematic investor, willing to work with signal in both directions, has done the best. To illustrate this, we begin our new year with features on two of our original investment products: Big Blocks/Key-Dates for market timers, a turn catching tool, and "NV" (Natural Volatility) for which 2004 will be the second year for improving the results of option traders. With many investors still preoccupied with the reduced market move sizes in 2003 compared to 2002, particularly since mid year, we offer these eye opening statistics, to raise investor resolve for systematic action in 2004:
        The frequency of short-term market swings more than made up for the reduced average size. Viewing the record of signals from our Big Blocks/Key-Dates timing logic, we're reminded that for bulls there were 15 rallies that sprang on or near key-date reversal target dates, for a total 6687 DJI points. For bears the corresponding total was 4221 points from 14 pullbacks. Total points available for systematic traders: 10,908. That's more, in a single year, than the value of the DJI achieved in its entire history!
        The way the points have been shared by bulls and bears justifies our headine. Neither bull nor bear need to be left wanting."

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THE LANCZ LETTER
2400 N. Reynolds Road, Toledo OH 43615.
1 year, 15-17 issues,$250.

Bonds - Weakening in 2004

        Alan Lancz: "As interest rates rise during the latter half of 2004, we expect further price weakness in bonds and bond funds. We still own some Treasury Inflation Protected Securities for those investors seeking fixed income but the majority of the gains are behind us in bonds. Short-term treasuries, select high-yield opportunities and special situation municipals are other potential vehicles of choice."

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THE CHARTIST
P.O. Box 758, Seal Beach, CA 90740.
1 year, 17 issues, $175. www.thechartist.com.

Follow-up on Bear Stearns and Clorox

        Dan Sullivan: "Bear Stearns Cos. Inc. (BSC) recently announced that its profits rose by 51 percent, surpassing analysts' estimates. The company reported fourth-quarter net income of $288.3 million, or $2.19 a share, compared with $190.5 million or $1.36 per share one year ago. Analysts had expected net income of $1.81 a share. Total net revenue rose 36 percent to $1.5 billion. Revenue from the fixed-income unit rose 40 percent. Investment banking revenue jumped 168 percent. The Company also recently announced that it will redeem all adjustable rate cumulative preferred stock, series A. The Board of Directors recently declared quarterly cash dividends.
        Clorox (CLX) reported $4.14 billon in sales for the fiscal year ended June 30. Shares of Clorox closed down $.65 to $47.38 on Dec. 17 after the consumer products maker announced a mixed earnings outlook for the second quarter and fiscal 2004. The Company reduced its second-quarter earnings range to 48 cents to 50 cents per share. This remains well within the average 49-cent analyst's estimate. The Company indicates that it sees low single-digit sales growth and gross margin declining between 200 and 250 basis points due to unfavorable product mix, higher-than-expected warehousing costs from increased inventory and some minor asset write-downs. Full-year earnings are predicted within a $2.47 and $2.57 range. Gross margin is expected to increase during sequential quarters over the year. If earnings per share and sales follow the company's outlook, they will have grown in the double digits and sales will have improved three percent and five percent from 2003."

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M.M.A. CYCLES REPORT
P.O. Box 250012, West Bloomfield, MI 48325.
1 year, 17 issues, $249. www.cycles.com

New Labeling in U.S. Stock Market

        Raymond Merriman: "The U.S. stock market has continued posting new highs following what I had thought was the 4-year and 50-week cycle bottom of October 10, 2002. I still think that was a 4-year cycle low, but I also now believe that this cycle formed a double bottom on March 12, 2003, and that later date is the correct starting point for all new long-term cycles of 4-years or less. I base this on the fact that we are now starting the 63rd week of the 50-week cycle if measured from October 10, 2002. We are now passing out of the normal 38 - 62 weeks time band for this cycle's low, and instead, we are still making new cycle highs! The time has passed from which this cycle should not only have topped out, but also bottomed. However, we could have allowed an orb of up to 67 weeks for a bottom (January 21), since 90% of historical instances of this cycle have a range of 34 - 67 weeks. But for the market to continue making new highs past the 60th week...well, the odds for that happening are only 2%. So, rather than forcing the issue, I think it is wiser to assume the starting point for the new cycle was the double bottom of March 12, 2003. Interestingly enough, most of the European stock indices did actually bottom in March, and with Euro starting to make its claim as the new world currency standard, maybe this fits.
        The good news is that this new labeling fits with what is happening now. The bad news is that this new count is now entering the time band when its 50-week cycle is due to top and bottom. December 22 begins the 41st week of this re-labeled 50-week cycle. Furthermore, it begins the 12th week of the third primary cycle within the 50-week cycle. There is an 88% rate of frequency for 50-week cycles to contain either 2 or 3 primary cycle. So the probabilities are greatest that this primary cycle will end with the 50-week cycle. Since this 50-week cycle has been bullish, we can assume that the steepest decline since that low in March will unfold once this primary cycle tops out. In fact, a 3 - 12 week decline, which the market will lost 8 - 20% of its value, would be our forecast. Also, I expect this primary cycle will distort with an expansion. That is, I expect this primary cycle to last 21 - 26 weeks, to bottom February 23 - April 2, concurrent with the "Pre-Presidential Election Year Trough" cycle."

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THE GRANVILLE MARKET LETTER
P.O. Drawer 413006, Kansas City, MO 64141.
1 year, 46 issues, $250.

Low-priced stocks: The place to be

       Joseph Granville: "2003 was an outstanding year as it was forecasted here to be. That forecast had been based on the charts of hundreds of low-priced stocks. Any technician worth his salt knows that when a new bull market starts the proper place to be is in the low-priced stocks. That is simple common sense. Buy low and sell high. Wall Street, not knowing how to read a chart, does the exact opposite. It buys at the top and sells at the bottom. The Street was bullish in the year 2000 right at the top and bearish in 2002 right at the bottom.
       Yet, it is amazing how ignorant so called market "experts" are when it comes to understanding low-priced stocks and the important role they play, especially in a new bull market. Listen to the garbage the public is fed when it comes to low-priced stocks. Brian O'Connell wrote a book called CNBC Creating Wealth. It is full of misinformation, especially when it comes to low-priced stocks. I quote directly:
       "According to Bill O'Neil, the founder of Investor's Business Daily, in his book, 24 Essential Lessons For Investment Success, the amount of stocks you own depends on your financial resources. If you have $5,000 or less, for example, you should own no more than two stocks. If you have $10,000, owning two or three stocks is appropriate. With $25,000, you should own perhaps three or four stocks; with $50,000, four or five; and with $100,000, five or six. Overall, says O'Neil, "there's no reason to own 20 or 25 stocks. You simply can't know all you should know about that many companies. You'll also dilute your results."
       "Real money is made first, by buying stocks of the very best companies in their fields, and then by concentrating your portfolio on a limited number and watching them carefully," he says. "I don't believe in the principle of wide diversification, or trying to reduce risk by spreading your money in too many stocks."
       I have no quarrel with much of that but when it came to the subject of low-priced stocks, O'Neil's lack of knowledge was glaringly apparent and accompanied by his terribly bad advice.
       "According to O'Neil, the almost "addition-like" attraction to low-priced stocks is at the top of his list of investor's worst habits. O'Neil believes that the strategy of buying a large bloc of a $2, $5, or $10 stock and watching it double sounds wonderful. The only problem: Your odds of winning the lottery are better. "The fact is, investing in stocks is not the same thing as buying a dress or a car on sale," he explains. "The market is an auction marketplace: Stocks sell for what they're worth. And when you buy cheap stocks you get what you pay for. Of the best performing stocks of the last 45 years, the average per-share price before they went on to double and triple or more, was $28 a share. That is fact."
       Now listen to this. I couldn't believe that O'Neil was serious. O'Neil doesn't buy stocks under $15 a share. "Of my few really big winners over the years, I started buying two of them at $16 a share and five at $50 to $100 a share," he says. The best companies, the leaders in their fields, simply do not come at $5 or $10. Many people want to get rich overnight, and that simply does not happen. Success takes time and willingness to objectively and honestly analyze your past mistakes in the market."
       Anyone following O'Neil would have missed the best play in low-priced stocks in 45 years."

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NATIONAL TRENDLINES
14001 Berryville Rd., North Potomac, MD 20874.
1 year, 4 issues, $85.

Trend Analysis

        Doug Jimerson: "In June we obtained a sell signal from a short-term warning trigger that committed us to the money market too early in the market cycle. When this occurs, our model awaits a dip to the long-term moving averages before a buy signal occurs. This prevents NIA from buying at a price high, so that we can buy funds at price levels lower than those that most investors obtain. Since the long-term moving averages are 7% to 10% below the prices of the major indexes, this is the approximate size of the price pullback required to generate a new buy signal. We expect a buy signal before March of 2004.
Bond and international bond funds have just crossed back above their long-term moving averages, giving us a fresh buy signal. We are now buying all government bond funds, while maintaining high yield bond funds in cash.
        The dollar continues to plummet versus other major currencies. The downtrend in the dollar has yet to exert its full impact on the financial markets. Investors can take advantage of the weakening dollar by investing in international bond funds.
        Gold has been a major beneficiary of the plunging dollar. Gold funds were the leading funds of 2003.
        The asset allocation accounts have been repositioned to 20% in government bond funds and 80% in money market funds."

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Roger Conrad's UTILITY FORECASTER
1750 Old Meadow Road, Suite 301, McLean, VA 22102.
Monthly, 1 year, $129.

Cox Communications has it in spades

        Roger Conrad: "Successful product bundling, a state-of-the-art network, protected markets and abundant free cash flow: That's what it takes to turn today's telecom chaos into cash, and Cox Communications (NYSE COX) has them in spades.
        After pursuing acquisitions in the 1990s, the multi-channel television service provider stopped growing its 6.3 million-customer base for cable TV. Instead, Cox upgraded its fiber/coaxial cable network to provide advanced services like digital cable, broadband, circuit-switched phone service and now voice over Internet protocol (VOIP) voice service. By late 2003 some 81 percent of its customers were taking a new service.
        As a result, Cox's sales continue to grow at a double-digit clip, combining with cost controls to generate some $350 million in free cash flow last year. That will rise to $500 million in 2004 as cash flow grows a projected 15 percent annually to late decade, allowing steep cuts in debt. That will slash costs and drive up earnings.
        Cox faces risks from competition and ambiguous regulation. Fortunately, most revenue comes from clustered systems in less competitive markets, most of which are served by Baby Bell basket case Qwest. Also, the company has negotiated a six-year deal with Fox Sports that should prevent a squeeze from Rupert Murdoch's DirectTV. Cox stock is a buy up to 36. The Income Portfolio's Cox 6.875 Percent Notes of 6/15/2005 are a buy under 104 ($1,040)."

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