By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) — A veteran gold bug continues to splash about with stocks — and maybe even real estate.
Stocks have been in an upswing since October, and the bears are beginning to feel burned.
Dow Theory Letters’ Richard Russell says that his key indicator “continues to climb without any correction, but personally, I don’t have the guts or the stomach to join the parade.” Stealth Stock Daily’s Dennis Slothower, which I named 2011 Letter of the Year, is now 50% in stocks. See Jan. 5 column.
But one veteran gold bug letter, Forecasts & Strategies, edited by Mark Skousen, has been splashing about with stocks for some time (See Dec. 22, 2011 column.). And it has resulted in some of the best results of its long career.
Dow closes in on 13,000
The Dow pushed higher for the second day, closing at a 52-week high, after European leaders signaled progress toward an agreement on a bailout for Greece. Photo: AP
Over the past 12 months through January, Forecasts & Strategies is up 11.9% by Hulbert Financial Digest count vs. 3.72% for the dividend-reinvested Wilshire 5000 Total Stock Market Index /zigman2/quotes/211296689/delayed XX:W5000FLT +0.08% . That makes it ninth out of some 180 portfolios followed by the HFD.
And over the past three years, Forecasts & Strategies is up 24.65% annualized vs. 20.15% annualized for the total return Wilshire 5000.
Things were a bit flatter over the past five years, which include the Crash of 2008. The letter was up just 1.26% annualized — still better that 0.71% annualized for the total return Wilshire.
And over the past ten years, the letter was an annualized 6.08% vs. 4.43% annualized for the Wilshire.
Like many veteran gold bugs, Skousen combines a dark long-term view with a hard-earned short-term respect for the power of the central banks. He wrote recently:
“Despite long-term challenges in Europe and the United States, stocks and commodities edged higher in January, 2012… This election year, we are emphasizing dividend-paying stocks and growth mutual funds, which are deeply undervalued. Indeed, they currently are better values than gold and silver. Stocks have been in a bear market for a decade, while commodities have soared. At some point, the trend has to change, especially if a Republican wins the presidency.”
Skousen’s recommended asset allocation:
— Natural Resources 10.00%
— Stocks 40.00%
— Interest-bearing Investments 50.00%