Short-Term Key: Negative Long-Term Key: -93 (Neutral to Negative)Read more...

Short-Term Key: Negative    Long-Term Key: +32

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Inside this week's update...

***** Why own defense stocks?
***** Why long-term buy and hold doesn't work.
***** What really keeps the dollar afloat.
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Readers of TCI often ask us why we continue to recommend investing in the defense industry.  Actually, we hold three defense stocks in our Growth Portfolio:  Northrop Grumman (NOC), Raytheon (RTN), and CACI International(CACI).

Admittedly, the defense industry depends on government contracts, and casual observers might wonder if these will soon start to shrink.  Given the extraordinarily high deficits the government is running up these days – including massive sending on entitlement programs, healthcare, corporate bailouts, and economic stimulus - surely even the most profligate politician will be combing the budget looking for areas where some savings can be made.  Defense would seem to be a prime candidate for cutbacks, especially since the war in Iraq looks past its peak.  However, defense stocks have a lot more going for them than meets the eye!  Here's why...

THE DECADE OF TURMOIL

As we keep pointing out, today's investment climate is both stranger and more precarious than the one most investors cut their teeth on.  Look at the previous four decades and you'll see why.Read more...

As far back as January, 2005, we were recommending you hold some gold related securities in your portfolio. Back then, gold was selling for just $425 an ounce. There have been times since then when you must have had your doubts, such during 2006 when gold prices entered a sideways pattern. But in the last four months, gold has redeemed itself, gaining $100 to close last week at a 28-year high of $750 an ounce.

Well, that’s the yellow metal for you. Sometimes it frustrates you. But when inflation or financial turmoil reigns, gold comes through for you better than anything. Of course, periodic bouts of financial calm could still hold gold back temporarily. It’s over the long haul, the big march towards higher inflation over the next few years, that we expect gold will be one of the strongest performers.

Other than gold … 

FED MAY HAVE CUT TOO FAST, AIDING INFLATION 

Last week two important numbers caught our eye. The first was a new high in industrial commodity prices. Industrial commodities are the raw materials used by manufacturers, so as their prices rise they indicate both strong business activity and inflationary pressure. They differ from gold because, while gold can remain strong in the face of a very weak economy, commodities like tallow, rubber, and copper cannot. They are strong only when the economy is growing.Read more...