Plunges and Crashes and Bankruptcies, Oh My By Andrew Gordon 
They say a bull market makes geniuses of us all. And there’s some truth to that. When the market is climbing and inviting almost all the stocks along for the ride, even a two-year old child or 82-year old grandmother can run up big gains. I remember at the height of the dotcom boom, analysts talking up their favorite fast risers. Remember Webvan? It talked a good game ... spent more than a billion bucks ... expanded from San Francisco to eight other cities ... and saw its shares peak at $30. It was a nice ride while it lasted. But it didn’t last long. Some 18 months after its IPO, it shut down. But for a while, those analysts who touted Webvan looked like geniuses (and many got paid like one too). If you don’t remember Webvan, perhaps you remember pets.com. Its IPO took in over $82 million. Cheerleading analysts didn’t have a lot of time to bask in the company’s reflected success. Nine months later it was out of business. There are dozens if not hundreds of other examples of companies that were once the darlings of Wall Street but disappeared in the bear market of 2000 through 2002. Once again we’re in bear territory and once again crashes and plunges and bankruptcies and companies holding on for dear life will be part of our investing world. It gets much harder now... First off, that feeling you have that you’re swimming up-stream all the time? That’s because you really are. It’s like the song I used to hear as a kid – Ten Little Indians (yes, I’m dating myself). First there were ten, then there were nine, then there were eight ... until one little Indian is left. Last year, eight out of ten major sectors went up, according to the Dow Jones Indexes. The reverse is happening this year. Eight out of the ten are now in negative territory for the year. Materials and energy are the only holdouts – and of those two, the materials sector is down 2.5 percent for the month of June. Only one little Indian left – energy. Energy covers everything from the oil majors to small alt-energy start-ups. This is a tricky sector. If you don’t pick and choose carefully, you could easily lose your shirt. For example, I’m not touching the oil majors right now. Even as they grow their profits, their oil production and reserves are shrinking. Their offshore production and pipelines are under attack by militants in Nigeria. Their joint ventures are under government attack by Russia and other countries looking for a bigger piece of the pie. It’s become an unfriendly world for Big Oil. And they don’t seem to know what to do about it. Energy has a few places where investors can do very well. But it certainly isn’t a haven. Then what is? 
- Retail? It’s the third-worst performing sector in the S&P 500 during the past three months. Low-cost retail should do relatively well. But it’s no haven. If it were, you wouldn’t have to try to figure out why Wal-Mart is doing well and some mega-stores like Costco aren’t.
- Precious Commodities? A surprising laggard that has lost investors some money over the past three months. I talk about gold below so let’s turn our attention to non-precious commodities for a moment.
A combination of bad weather, accidents, and project delays are pushing prices to record highs. Will this last? Could they go even get higher? Not if the economic slowdowns in the U.S. and Europe leak into Asia. - Oil services? I’ve recommended overseas integrated oil companies, publically listed state-controlled oil enterprises, rig contractors, oil tankers, and oil pipelines. Half these companies were up last week – and my oil tanker – Tsakos Energy Navigation (TNP) – did the best. It rose 3 percent last week.
But since the beginning of the year, it’s no contest. The rig companies are my best oil-related companies by far. Last week’s latest leg down officially introduced the markets to bear territory. With no obvious havens apart from energy remaining, how should investors invest? Should they even bother with the equity markets? Apart from rigs, the other sector I like is dry bulk shipping. It’s actually a hedge against the banking crisis and credit crunch. By making it more difficult to borrow, banks are forcing numerous shipping companies to abandon their plans to build ships. The shortage in dry bulk ships just got extended by the banks. All my shipping companies – I also have oil tankers and commodity shippers in my portfolios – did well last week. But Diana Shipping (DSX) and Navios Maritime (NM) did the best. The bottomline is sobering: Investing in a bear market is hard work. If you’re not up to it, put your money in cash. Protecting your money is better than losing it.
Invest well,
Andrew Gordon
P.S. To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com. [Ed. Note: With a bear market looming, it’s more important than ever to select safe investments that produce monthly dividend income. Click here to learn about Andy Gordon's INCOME service that selects the best dividend-paying stocks available.] Summer Gold By Andrew Gordon I blame high oil prices on gold. Well, I’m not completely serious but I can’t help but feel that gold isn’t holding up its end of the bargain. Investors are dumping their money into oil because nothing else is going up – including gold. That’s a bit strange. Gold loves uncertainty and uncertainty loves gold. But gold usually takes the summer off. I thought if there was ever to be an exception, this summer would be it. Gold is a better hedge than oil against inflation. Ultimately, oil pays attention to its own fundamentals. For example, oil imports for the month of May dropped over 10 percent in the U.S. If other countries follow suit (that’s a big “if”), oil will drop. Gold’s value stands apart from what is happening in any market or any country. It is the ultimate hedge against inflation or recession or wars or natural disasters or mass bailouts. All of these are on the table as practical (not just theoretical) concerns. Some are happening already. It’s gold’s time. Its summer hiatus is over. And it’s already started to make its move up the charts. 
The ETF GLD (which tracks the price of gold) has been trending sideways since March. But its 20-day moving average crossed above its 50-day at the beginning of July – a very bullish sign. And on Friday, GLD convincingly broke through its previous resistance with strong volume. Gold for August delivery ended the day at $960.60 an ounce – up $18.60 for the day. Back in 2005, gold made its move a little early – in July. Looks like history is about to repeat itself. INTERNAL ENDORSEMENT Stock Market Shocker: How a Bunch of 5th Graders Made Fools of the Trading Elite…! Wall Street wants you to believe that you have to entrust your money with the professionals and all their skills, resources and systems, if you want to make money in the markets. It’s what these guys do for a living! How could you possibly beat them?! Nothing could be further from the truth. In fact, I have used an embarrassingly simple secret to make $15,048 in just 30 days... and boost my overall account balance 152% in less than a year. Keep reading to learn how you
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