The markets are very complicated at the moment, which is why now's an ideal time to reach into the Money Morning Mailbag and address your concerns.
The goal here is simple: To provide understandable, actionable, and, of course, profitable answers to your thoughtful and extremely insightful questions.
Let's start with Syria and what the conflict really tells us about gold and energy…
Q: "Does the president's speech change anything (in Syria)?" ~ Robert P.
A: Nope. What's interesting in this case is that most leaders throughout history spend their time debating an exit strategy. President Obama seems to be hunting for an entry.
This points to opportunities in gold and energy. The key is not so much the commodities themselves, like most people think, but what conflict says about the need to own them.
Gold is really a value play that's very pure and simple, if you pardon the pun. Conflict places every fiat currency at risk, and that means the need to preserve value overrides price.
Energy is much the same. There is no doubt that a broader conflict would spark higher energy prices, but unless you're nimble and equipped with institutional-grade trading platforms, chances are you won't be able to harness the volatility. But, you can absolutely get in front of the need to find new sources away from the shooting. Exploration and equipment companies are a logical alternative with momentum that will continue long after the shooting starts… and stops.
And finally, the euro.
Europe is far more exposed to fighting in the Middle East than America because of where our oil is sourced. This speaks to a weaker currency as prices rise in conjunction with any conflict escalation. Diversified European companies are a different matter because many do business in dollars. I'm talking specifically about the euro itself.
Q: "What do you make of Apple's big slide?" ~ Thomas W.
A: Apple's got a real innovation problem post-Jobs. Tim Cook is just not up to the task, which is why the company is losing market share in almost every market segment. The latest iPhones move – introducing the premium 5S and the inexpensive 5C for emerging markets – makes it clear that the company wants profits over market share. That's not going to be enough at the end of the day.
It's worth noting that both Palm and RIM adopted similar philosophies on the way down. Droid is now strong enough to "pick" Apple.
There are three strikes against Apple: slowing innovation, a lack of differentiation, and margin compression.
Short Apple or, if you're not comfortable doing that, consider running some really tight stops to protect your capital. Longer term, there are better opportunities out there. It simply doesn't make sense to get "pruned."
Q: "How risky are bonds now… really?" ~ Andrea J.
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.