Back on February 14th, I wrote an article for this column titled, "It's a New Bull Market, Baby: Everything Is Going Up."
In it, I said:
Remember this date: December 13, 2000. That was the last time the NASDAQ closed above 2,930.
Yesterday, the once-mighty NASDAQ closed at an 11-year high at 2,931.
Well, dear reader, after taking much flack for being an optimist...
The following are the market metrics as of yesterday:
- Dow sitting at a brand-new four-year high
- NASDAQ sitting at a brand-new 11-year high
- NASDAQ Biotechnology Index at a brand-new 11-year high
Both the S&P 500 and Russell 2000 are close to making new four-year highs.
In short, the fundamentals and technicals of this market are the best I've seen in years.
But as good as these broader indexes are performing, our bread-and-butter stocks — precious metals — have sold off... and in some cases, the cheapest valuations I've ever seen.
Take Barrick Gold (NYSE: ABX), for example, one of the world's largest gold producers.
Barrick Gold currently trades at a market cap of $39 billion on revenue of $14 billion. Its trailing P/E multiple is a paltry 8.
Its PEG ratio is .24!
At a PEG ratio of .24, shares of Barrick are essentially risk-free.
But even though you would be making a wise investment in Barrick, bigger gains are almost guaranteed in the junior resource market, where many stocks are trading at or near cash levels...
The junior resource markets have been getting hammered in recent weeks, with the benchmark index — the TSX Venture — down 45% in the past year.
In this light, remember what our Uncle Warren advises: "Be greedy when others are fearful."
Of course, this is an index that's quite comfortable being squeezed in the vice. It's as volatile as any class of stocks trading anywhere, and can be equally as nauseating.
And while it's human nature to feel cheated when stocks turn down, it is precisely at these times when seasoned players take advantage of their fellow reactive stock owners.
To us, quality junior stocks at these levels are an atavistic emotion — a rush of exhilaration with a powerful shot of good old-fashioned greed...
A piranha in a salmon hatchery; a Kennedy during cheerleader tryouts: Time to feed.
In the past two months alone, the index is down 22%. The sellers over that time frame — whether raising money for taxes or just joining the bandwagon for the ride down — are setting us up with an interesting opportunity.
It's at times like these, when your gut tells you to run, that you absolutely must stand firm and get ready to buy.
You're either going to use the market, or the market is going to use you. You're predator or prey.
We've literally made some of our biggest money during times like these.
In fact, in the coming weeks, we'll have a list of junior resource stocks that are screaming buys. In many cases, you'll get exclusive access to these stocks well before the market.
Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily and Energy & Capital. Known as the "original bull on America," Brian is also the author of the 2008 book, Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox and countless radio shows. For more on Brian, take a look at his editor's page.