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XMFSinchiruna (27.48)

Don't Get Trampled on Black Friday - The Best Bargains are in Commodity Stocks

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November 23, 2008 – Comments (6)

Don't let this be you, Fools!

Given the state of the economy, I can't help but wonder whether the incidence of tramplings will be up or down this Black Friday. The sense of desperation to find the best bargains will likely be heightened, but I project that a big chunk of that wholly American consumerist mania will have diminished abruptly from recent years. If you do have to go shopping Friday, please remember to pick up the old lady on the ground in front of you before hurtling over her for that $300 laptop.

In any event, some of the best bargains I've ever seen are freely available to internet shoppers this year... and they're stocks. Personally, I feel that commodity stocks across the board have been sold off to entirely unsustainable levels that completely disregard the likelihood of some measure of recivery among the emerging economies as well as the impact of hyperinflation as the U.S. dollar tumbles under the weight of all these frightening interventions by the Fed and the Treasury.

If there is any follow-on Monday to the impressive commodities rally on Friday, then I think buyers will continue to come out in support of these insanely cheap stocks. Please do your own due diligence, but I think finding unbeatable bargains among commodity stocks is as easy as taking a cheap DVD player from a shopper with poor balance [joke too tempting to avoid, although I of course hope shoppers will instead exhibit some Christmas spirit]. I believe gold and silver miners are in the best position of all, but remind Fools to look carefully at balance sheets for some measure of protection from the credit crisis.

Happy shopping from home, and Happy Thanksgiving to you all!

6 Comments – Post Your Own

#1) On November 23, 2008 at 1:31 PM, starbucks4ever (97.36) wrote:

Oil is not cheap, it's about 300% above its average price. Don't follow this bear market rally.

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#2) On November 23, 2008 at 4:16 PM, Harold71 (22.92) wrote:

I think the gold/oil ratio is starting to favor oil up here at about 15.8.  Oil supply will tighten eventually; the dropping demand is just ahead of the curve.

The federal budget deficit is going to be huge, again, in the US.  I'm sure that will just continue forever without severe consequences to the value of the currency.

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#3) On November 23, 2008 at 4:27 PM, XMFSinchiruna (27.48) wrote:

Harold71

Tell my exactly how you expect the currency to withstand the ravages of a relentlessly ballooning deficit / debt. No econmoy in history has ever been able to withstand such conditions without consequences, so what makes you think the U.S. will be any different? Why does everyone seem so comfortable with presuming that everything is somehow different this time around?... that the consequences from past lessons of history are somehow irrelevant today? I just don't understand this line of thought.

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#4) On November 23, 2008 at 5:08 PM, johnw106 (57.80) wrote:

Debt is not a problem. 80% of the debt of the USA is owed to the USA. We borrow from ourselves. This part of our debt is secured as long as we remain the USA and are not overrun and taken over by a foreign power or sell our National parks and Federal land holdings. Care to guess what the real value is of all government owned land (minerals and resources) in the USA is? We have more than enough collateral to triple the size of our current debt load and have room to spare.
 The largest debt holder out side the USA is China at less than 5%. Europe combined is less than 3%. The rest is spread across Japan and the Pacific. The South Americas own very little of our debt. We could default on the foreign debt and it would have little to no effect on our credit rating.
The foreign powers know this and will do nothing to harm the value of the dollar. The debt we sell to them is for their benefit not ours. (Trade inbalances)
The deficit can be dealt with very easily in the future via manipulation of inflation through the federal reserves policys on the interest rates and modest cuts in spending and reform in the tax codes to increase revenue without actually raising taxes. The dollar will remain strong and will only gain strength as we move away from our dependance on OPEC  and into renewable energy and take the lead in green technology,starting with viable electric cars for the bulk of our consumer needs.

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#5) On November 23, 2008 at 5:58 PM, Harold71 (22.92) wrote:

:)  Sorry, TMFSinchiruna.  I forget it is hard to feel sarcasm across the internet pages...

The US Dollar's value will likely approach zero with the current Gov't agenda.  Chronic and massive deficit spending ensures this.

"The budget should be balanced; the treasury should be refilled; national debt should be reduced; and the arrogance of public officials should be controlled." - Cicero. 106-43 B.C.

And money shouldn't be made of easily created digits in a computer.

Harold71...Long gold.  Long silver.  :)

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#6) On November 23, 2008 at 6:36 PM, XMFSinchiruna (27.48) wrote:

Harold71

Gotcha... thanks for clarifying.  :)

johnw106

By that logic, where land is somehow considered a collateral asset against currency collapse, Russia would be wealthiest nation on Earth, and Canada would long ago have emerged as the economic powerhouse of the Americas.

You're going to have to work harder to convince me that the U.S. can further multiply this already unprecedented national debt without severe consequences for our currency. Germany had resources, so why couldn't the Weimar Republic simply lend itself more money to stave off a complete financial meltdown?

Finally, as to your statement that the Fed can manipulate interest rates to deal with the deficit... this too does not hold water my friend. Volcker managed to avert disaster in 1980 by raising interest rates to 23%, but he only had the luxury of doing so because the economy was otherwise strong. The impact of the Fed's interest rate actions to date in thie crisis have been minute at best, and their hands are tied from raising rates in this climate.

I don't think there's a single economist out there who'll back you up with the claim that modest spending cuts and tax reforms will suffice to pay down this incredible debt burden. I'm sorry to have to disagree with each of your points, as I'm always open to debate, but these are the facts as I see them. Thanks for commenting, though.  :)

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