Adam Hamilton zu Bear Markets and PM Stocks:
ZitatAlles anzeigenIf a bear is approaching or already upon us, PM-stock traders fear that their sector will not escape from this hungry bear’s wrath. They suspect that during such a traumatic event, everything will be sold with no distinctions made between fundamentally-promising and fundamentally-weak sectors. And if the baby will be thrown out with the bathwater, then it makes little sense to hold PM stocks through such an event.
There have already been a couple mini-scares in 2007 that buttress these fears. In late February when the SPX swooned in sympathy with a sharp selloff in the Chinese stock markets, the HUI plunged about 2.5x as far as the general stocks. And more recently in late July, the HUI mirrored and exceeded the SPX selloff by 1.5x or so. During these two episodes the HUI not only paralleled SPX selloffs, but it amplified them.
Based on these events, traders and analysts alike fear the HUI will be crushed in the next general-stock bear. And if their sample of data is limited to 2007 alone, then you can’t blame them for reaching such conclusions. Ever the contrarian agitator though, I believe this thesis quickly falls apart in the light of a little historical perspective. The tyranny of the present has blinded this notion’s adherents to the precedent of the past..
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