One thing I have learned about investments and markets: You should buy where others aren’t.
All the great investors (Buffett, Templeton, Soros) make money from buying undervalued assets. They may have different approaches, but in the end they buy things when they are on the cheap.
Just because I am a gold bug does not make me a doom-and-gloomer.
You see, most people in the gold newsletter industry always think the world is coming to end.
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As gold is a sort of insurance or protection against economic mishap, they tend to let this blind them to value in other markets.
Do not get me wrong. I think gold is a great value here even at $1,700 an ounce — when you compare it to the amount of money being printed in the world, it is still cheap.
Even cheaper are the gold stocks, which by some measures as cheap as they were in 2002 when the gold bull market began.
I love the large- and small-cap gold stocks at these levels as they prepare for a rip-roaring 2012.
However, another sector I like is solar. If you look at solar stocks, they have just gone through a minibubble then bust. This is similar to the video-game stocks of the mid-1980s, Internet bubble of late 1990s and uranium bubble of mid-2000s.
The nice thing about bubbles like these is that they create strong companies. As the weak fall by the wayside, only the most innovative and strongest financially survive.
Therefore, the companies that survive the bubble and subsequent burst are usually very strong.
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The video-game bubble had companies like Atari, Nintendo and Sony emerge, whereas the Internet bubble saw companies like Amazon.com, eBay.com, Apple and Priceline.com survive and then thrive.
Now, we are sorting through the rubble of the solar companies. Most of the companies have dropped 75 percent to 80 percent in price and represent great value. As oil moves higher, solar power will be more competitive.
The price of solar panels has dropped on average about 75 percent in the past 5 years. If oil rises toward $150 (which I think it will), solar will become an even more economic alternative.
Two things that shine — gold and solar energy — are two of my bets for the future.
About the Author: David Skarica
David Skarica is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He also writes the Gold Stock Adviser. Discover more by Clicking Here Now.
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