"Market Monitor"-Mark Skousen, Editor of "Forecasts and Strategies"
Friday, March 07, 2008PAUL KANGAS: My guest market monitor this week is Mark Skousen, editor of the market letter entitled "Forecasts and Strategies" and I want to thank you very much for being with us and welcome, Mark. Good to have you.
MARK SKOUSEN, EDITOR, FORECASTS & STRATEGIES: Thanks, good to see you again, Paul.
KANGAS: Almost all of the recent reports on the U.S. economy show things are really slowing down. You have a Ph.D. in economics, so tell us, is the economy close to a recession or is it already in one?
SKOUSEN: We economists have predicted the last nine recessions out of five, so we don't have that great of a track record. But one of the things that I look at in particular is not what is going on right now, but the leading indicators. And the Conference Board has a list of 10 leading indicators and I watch those pretty carefully and it is a sad record right now. In fact, the last six months have been the worst in terms of leading indicators since 2001. That indicates that I think we are in a recession right now. I don't think it will last very long, but the stock market is a negative. The housing permits, which is another leading indicator is dropping, manufacturing of capital goods is down. But one of the positive indicators that has been ignored by the media is that the money supply is now growing very fast and real m.2 growth is now at a 13 percent rate. It is the highest rate. It is clear, in my mind that the Federal Reserve has panicked here, that Ben Bernanke is doing everything he can -
KANGAS: Right.
SKOUSEN: To try to right this ship. And there is no indication yet that he has been able to do it. But if there is any past indication, as my old buddy Milton Freeman used to say, if you look at the money supply, that has a lot to do with the business cycle. And I think that there is an indication that six months from now we could see a recovery in the economy.
KANGAS: All right --
SKOUSEN: And the U.S. economy.
KANGAS: You say we are in a recession, but are we in a bear market reflecting recession?
SKOUSEN: Oh, very much so. I think that the selling has been unrelenting. All the indications of the market down 15, 20 percent across the board and especially the global stocks. These are all indicators that we are definitely in a bear market.
KANGAS: What investment strategy are you recommending in this environment?
SKOUSEN: Well, I think you have to be very careful with the U.S. stock market. I think some incredible bargains are developing and I have a couple of recommendations for your readers.
KANGAS: Relax, we'll get those in just a moment. OK.
SKOUSEN: But my overall strategy is to stick with the gold and with the oils. Those have been working very well. They worked really well. I use protective stops. I think it is very important for your readers to maintain protective stops to keep you from losing. We've been hit by a lot of our stops in the markets, so we're in gold. We're still in the oils, but we're out of the real estate investment trusts. We're out of most of the growth stocks. It's been a very tough market.
KANGAS: We're down to a minute-and-a-half now. This is your first visit with us as a market monitor, so we can't review your past recommendations, but perhaps you can provide our viewers with some stocks you currently would buy.
SKOUSEN: I would be glad to do that. I have four recommendations for your listeners, for your viewers.
KANGAS: Quickly now.
SKOUSEN: The first one is Goldcorp. I'm still bullish on gold. The symbol is GG. It's one of the lowest cost producers, a major gold mining company. That has a very good record. My second recommendation is Aberdeen Asia Pacific Income Fund (FAX). This is a play on the Australia dollar, which has been strong against the U.S. dollar and it has a very nice yield of almost 7 percent.
KANGAS: Right. OK.
SKOUSEN: My third recommendation is kind of a turnaround story. It's called Gladstone Capital. It is run very conservatively. Symbol is GLAD and you will be glad you owned it a year from now.
KANGAS: Time for one more.
SKOUSEN: OK. One more, China Medical Technologies. CMED is a medical device company based in Beijing. It has been hit hard, I think way too much. I expect to see it recovering.
KANGAS: Mark, do you personally own any of the securities you've mentioned?
SKOUSEN: No, I don't, but I strongly recommend them.
KANGAS: All right, we appreciate your sharing your views with us and I wish you well.
SKOUSEN: Thank you very much.
KANGAS: My guest, Mark Skousen, editor of "Forecasts and Strategies" market letter.
