As oil continues heading down towards $100 dollars, and gold plunges $35 bucks today to an 11-month low, and King Dollar continues its revival, my strategy of buying in consumer products, retailers, and banks is alive and well.
The commodity drop signals the death of inflation expectations. And of course, the oil plunge itself is a big tax cut for consumers. Not only will real wages start rising again, but folks will be able to service their mortgages. That’s good for banks. There’s a lot of volatility and cross currents in the stock market right now. But this consumer/banking theme should hold the test.
The trick here is to look through the front view of the windshield, rather than the rearview mirror of yesterday’s credit crunch like Lehman Brothers, Washington Mutual, and other cases.
The game changer is oil’s drop and the dollar’s rise. The collapse of gold adds more icing to the cake.
The recent surge of the McCain/Palin ticket can only help matters. Incidentally, for the first time, McCain and Obama are basically tied at 50-50 on Intrade’s pay-to-play prediction market. That’s an incredible turnaround.
I know that there’s no confidence in the stock market. But I do want to keep hammering away that falling commodities is a very good thing for consumers. You can make money on that in the stock market.