I have published the KRO 2012 Bottom-Fish Edition during the July 14-15 weekend using the closing prices of July 13, 2012 to establish accumulation ranges. The 2012 Bottom-Fish Edition consists of 100 TSX and TSXV listed juniors already involved in the resource sector or likely to become involved with a resource project. Normally I publish a new Bottom-Fish Edition at the end of the year, and even then only if I feel we are at a market cycle bottom. Following the meltdown in 2008 which produced the best ever bottom-fishing window for the resource juniors, the sector developed an uptrend in Q2 of 2009 which peaked in Q1 of 2011. The 2009 Bottom-Fish Edition published December 24, 2008 did extremely well, consisting largely of cash and asset rich juniors with management teams that still had meaningful equity stakes.
The 2010 Bottom-Fish Edition published December 31, 2009 consisted of second string juniors more rich on structure than story and was premised on the speculation that a global economic recovery jump-started by China would eventually receive support from Europe and the United States. Unfortunately during 2010 the eurozone sovereign debt crisis reared its ugly head, and again in 2011, which also saw the prospect of an American recovery sabotaged by a political power struggle symbolized by the debt ceiling fiasco. The resource sector has been definitively in a downtrend since Q2 of 2011, a downtrend which worsened in 2012 when it became clear that, 1) a China slowdown triggered by the failure of the American and European economies to mount meaningful recoveries would reduce raw material demand, 2) Germany's insistence on austerity as a cure-all would pull Europe into a death spiral that would harm the rest of the world, and, 3) congressional gridlock in the United States would prevent the Obama administration from undertaking any measures to jumpstart the US economy and possibly tow the rest of the world back into an uptrend, causing the US economy to march over the edge of the so-called "fiscal cliff". None of these global depression geared problems appear likely to help the price of gold higher, at least not unless measures deplored by gold bugs are undertaken. For these reasons I closed out the 2009 and 2010 Bottom-Fish Editions at the end of 2011, and refrained from publishing a new edition until now.
So, given that there is no hope for positive legislative action from the United States until 2013 after the election has redefined the power structure, and given the apparent reluctance of Federal Reserve Chairman Ben Bernanke to embark on a new round of Quantitative Easing 3 for fear of being accused of throwing the election to Obama, would not the wise thing be to wait until the end of the year when stocks will be at rock bottom?
That which is most obvious when it comes to cultural phenomena such as markets and economies has a habit of turning out to not be the case. After four years of deleveraging the American economy is ready to switch the glass from half empty to half full. Although employment growth has slowed, it is still growing in the right sectors. There is $1 trillion parked in corporate coffers looking for a green light to deploy itself in new productive capacity, mostly likely based in the United States itself. There is $8.7 trillion parked in household savings deposits earning less than 1%, waiting for a sign that it need not be held in reserve to deal with decades of austerity and misery. The only way for the United States to deal with its retiring boomer generation problem is to grow the economy, to give back to the children the future the boomers have selfishly tucked away for a twilight increasingly viewed as universal. It does matter what the outcome of the election is, the next administration has no choice but to avoid austerity, especially if it is a Republican administration. So I am guessing that by the start of Q4 2012 the markets will be anticipating an upsurge in the American economy if it has not already manifested itself. In that case the bottom-fishing window would be now.
There are three ways to view the 2012 Bottom-Fish Edition. The Active Bottom-Fish Recommendations report has the list and the recommendation strategies, though the latter will be empty until I publish them as comments over the next couple weeks. You can also use the KRO Search Engine to select the 2012 Bottom-Fish Edition in the Special Parameters list using this Bottom-Fish Search Query - you must be logged on as an active KRO member for this to work because this link does not generate a login box. And you can view our Bottom-Fish 2012 Index. The last two do not contain information about the recommendation.
We have changed how we handle bottom-fish picks. Please visit the Newcomer Orientation for details. Bottom-Fish Editions are in effect lists of "Stocks to Watch" which we monitor for possible formal Spec Value Hunter recommendations.