GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Are You Optimistic? Heading Right Towards A Big Iceberg

June 05, 2012 | About:
Intelligent Speculator

Intelligent Speculator

6 followers
I’m an optimistic guy in general. I’m the type of person who sees a glass as half full, a poor NFL season (Colts…) as an opportunity to draft the best player, etc. That being said, these days, I find it increasingly difficult to be optimistic about the economy, and indirectly the stock markets… Europe is the biggest sign of course with Spain already struggling to roll its debt, now having to start saving both its banks and some of its regions. Greece has been a major problem and it certainly attracts a lot of attention but the truth is that it barely counts when you look at Europe.

Having a country like Spain or Italy go down that path though would make Greece look like that practice that everyone goes through when boarding a big cruise ship. No matter how well or not the practice is executed, it doesn’t seem to help as much as you’d like when the actual emergency hits.

Everywhere around the world, economic growth is small, real estate prices are shaky at best, governments are being forced to withdraw some of their promises regarding health care, education, retirement benefits, etc. Many are blaming the wealthy but the fact is that it’s not that simple. Attacking private equity as some democrats have been doing lately is a little bit like suggesting to raise taxes on the wealthy. It’s a big oversimplication. In this new complex and global planet, solving problems has become increasingly complicated.

How I Track This Big Giant Mess

I always like to see how major exchanges have performed both here and abroad but those do not necessarily give a good picture of the situation. A better way in my opinion is to look at charts such as the long term rates that the Spanish government is paying on its debt. For example, if you take a look at this chart, you will see that the yield is over 6%, which is not sustainable in the long run. As long as that remains true, it means that Spain needs some type of help.

yields.gif

One Opportunity

When chaos starts to happen all around the world, one industry that will clearly profit is the security field, with security guards near the top. A company such as Canada’s Garda World (GW) would do very well in a context where all of the problems that we have been seeing in Greece when Austerity measures kick in start happening in other locations. Just two weeks ago, Garda announced terrific results and I would expect security companies to do well in the next few months/years.

GW.png

What are your thoughts? Am I too negative on the economy?


Rating: 2.3/5 (3 votes)

Comments

manxman
Manxman premium member - 2 years ago
I don't think you're too negative. The situation is terrible. Watch Kyle Bass discussing the situation in his talk at AmeriCrest conference in late December 2011. It's on YouTube - search "Kyle Bass americatalyst 2011" in YouTube. It's about 66 minutes long and well worth watching.

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide