• Stan Williams of the Quantum Systems Research Lab at Hewlett Packard
• Robert Celotta of the National Institute of Standards & Technology
• Michael Fuhrer of the Maryland Nanocenter
• Teri Odom of Northwestern University
• Mike Sailor of UC – San Diego

If you missed our Managing Director’s 2009 comments on Nanotechnology investing, click here to read them and from there you can follow through to other interesting past blogs: http://www.nanotechnology.com/blogs/blognano/2009/01/2009-nanotech-advanced-technology.html

Of course there is still no better book on the subject than Nanotech Fortunes, and if you haven’t read it you can get it here at a great, special low price: http://www.nanotechnology.com/marketplace/index.php?a=store

To those who might have an interest,

This will probably be my very last stock and mining market prognostication (made before becoming an officer of Stellar Biotechnologies which we expect to become public in January):

Most stock market calls, even those of current "Bears", are for the recent strength to continue well into the first quarter or half of 2010.

My somewhat off-kilter (even I was surprised when I checked the evidence this morning) call for these markets is really out of the consensus range, so I thought it was worth sharing:

On the general U.S. stock market as represented by the DIA, QQQQ and SPY:

Most often, (this past year was a terrific exception) "Sell in May and go away" is good advice. Not in 2010, I think.

I'm looking for the market to start an almost immediate and significant (8-18%) decline after January 3rd. I believe any rally above the 2009 highs in the first half of the year will be limited to 2 1/2 to 7 1/2% above the highs and to be completed (if a rally continues at all) before March 1, 2010.

My note to self - tax issues aside, tighten stops dramatically on all longs, and go short on the first sign of any reversal.

On mining shares (and gold and silver - GLD and SLV) as represented by GDX and GDXJ:

Most often, "the seasonal" in these dictate a top in the February to May timeframe. Not for 2010, in my opinion.

It appears that the early December 2009 top is that important top for 2010 and the decline and large liquidation has already begun. The heavy public participation in these markets may not see its all-time high for a year or two or three or more, but the current level seems the equal to the 1980-1981, 1988-1990 and 1996-1998 periods, and mining share markets following those were no picnic. Except for mining stock private placements and tax considerations, I would dramatically tighten stops and sell any good rallies over the next 2- 6 weeks.

Note to self - Wait for the summer seasonal bottom (not surprisingly, I expect it to be earlier than usual in 2010) to re-load on the buy-side. "All bets are are off" and I would reverse and "go long" on breaks above the December highs.

What does it all mean? Look for continued, surprising strength in the U.S. dollar for at least a few more months. Look for long-term capital gains "capture" selling to dominate stocks, metals and mining for a few months. (Coincidentally, I concur with the "double-dip" recession scenario, and am convinced that the deflationary period we've been in will continue for a few more months, at least, before the "piper is paid".)

Longer term for the general market: I'm in the long-term, "trading-range" camp (see years 1968-1982). I believe the general stock market bottom in 2009 is extremely important and, despite my bearishness for the first half of the year, I do not expect to see it approached or violated in 2010. Mid-year 2010 should present an excellent buying opportunity for another 4 month to 10 month rally especially for small-cap, biotech and technology stocks.

Longer term for the mining shares and precious metals themselves: I'm in the long-term inflation camp (somewhere between U.S. 1976-1981 and Weimar Republic 1921-1923 . . . sigh . . .). I believe the 2010 lows (probably in the May to August period) will be the last great buying opportunity for the next 2-7 years.

Dear Mining Insights Subscriber,

I have been looking for a way to be of service to our most loyal readers. Especially in this extremely difficult economy, we need trusted, experienced and knowledgeable advisors.

We are developing a way that I may be able to provide a unique service for a few of you: More on that later.

Let’s take a look back at 2008 and a look forward at 2009/2010 and see what we got right and what we missed, and how we should proceed in the coming years.

What we missed:

1. We recommended a portfolio of mining shares in 2008 and they suffered large losses to date.
2. We recommended too many high-risk companies with small treasuries that cannot sustain them through 2009.
3. We overemphasized silver stocks – gold stocks did much better.

I apologize if this cost you money. While negative on the economy, I now believe even I was too early on the markets and most of 2008 was part of a different world that no longer exists. There were no bailouts. There were no multi-trillion dollar stimulus programs (yes, by the end of 2010 it will not be $775B; it will be more like $2.5T). I just thought things were horrible and getting worse; I didn’t know the roof was about to cave in. This was a time when TARP was merely a flexible, waterproof covering.

What we got right:

1. We warned of a recession and collapse in real estate in 2006 and in November 2007 warned that this would be the consensus view before September 2008.

2. We bought at the April and August lows; excellent timing for the first three quarters, and we did not buy in 2007 as many did at substantially higher prices.

3. We advised only 3-6% of portfolio total in mining shares.

4. While we advise holding core positions for the long-term, we recommended the sale of all other mining shares at the TSX Venture signal at 1444 in late September 2008. The index is now about half that. (Core positions include Animas, Canplats, Rare Element, Silver Wheaton, Intl Tower Hill, et al. per previous Mining Insights)

Where we are today:

Except for our core positions we still advise being out of the market.

It pains me say this, but while we have spoken about passing the early 1980’s double recession and the 1973/74 recession a while back, we have now made enough of a mess to say we have passed the Panic of 1907 and are fast approaching the Panic of 1893. While I am not a scholar in the field, the Panic of 1893 is considered this country’s most damaging depression with the exception of the Great Depression. This depression is starting to look in many ways like and echo the 1893 -1898 depression. It is unlikely that we will find a “bottom” for the economy before mid 2010 and if we keep putting the day of reckoning into the future like Japan did in 1990 (to today, continuing), we may see 11-16% unemployment and a bottom in 2013 or later.

My biggest question mark is how long this deflationary period will last. My work cannot see whether it ends in 3 months or lingers for 3 years. Certainly, whenever it ends, years of high inflation (hopefully not hyperinflation) will follow. The human costs, market costs and financing predicaments will be immense. Please don’t listen to those who think this is all going to pass by June to October of 2009. The next layoff response is still months away (and it may not be the last) and the best day for a laid-off person is the actual day they are laid-off. Months later, when jobs are still hard to find and money is scarcer, it is much worse.

We expect the markets to do better than the economy. There will be some significant rallies, and while we do not expect the November 2008 low in the general stock market will hold, it might.

One thing we said in 2008 that we still believe is that when we compare the TSX Venture Exchange Index highs between now and March 2010 with the average of the April and August 2008 TSX Venture lows where our purchases were made, the profit potential will be extraordinary.

For the time being we are in a continuing bear market in precious metals mining stocks that I expect to end by September 2010 (and possibly by August 2009). The bottom will be indicated in one of two ways. Either a bottoming formation will be made in 3 to 6 months or the GDX (Gold stock ETF) price of $34.46 will be exceeded.

What will work now:

1. Buying for the long term at significant bottoms over the next 6-30 months
2. Trading for two week to two month timeframes
3. Equal dollar amount Long/Short investing

Please send a note to darrell@ResourceDevelopment.com for further info in this regard, as it develops.

I will be speaking at the Vancouver Cambridge House Conference Jan 25-26 and look forward to seeing some of you there. Visit Cambridge House

Dear Nanotech Insights Subscriber,

I have been looking for a way to be of service to our most loyal readers. Especially in this extremely difficult economy, we need trusted, experienced and knowledgeable advisors.

We are developing a way that I may be able to provide a unique service for a few of you: More on that later.

Let’s take a look back at 2008 and a look forward at 2009/2010 and see what we got right and what we missed, and how we should proceed in the coming years.

What we missed:

1. In March 2008, I suggested for the first time since 2002 that investors start investing 1/24 of their funds for advanced tech stocks on a dollar-cost-average basis, every month for the next 24 months. I fear I was a year or more early.
2. In May 2008, I proposed that the stock market and small-tech bottom would be in place before the end of 2009. While I now believe such a bottom may technically be put in place this year, I don’t see a significant advance beginning before 2011 at the earliest now.

I apologize if this cost you money. While negative on the economy, I now believe even I was too early on the markets and March-May 2008 was part of a different world that no longer exists. There were no bailouts. There were no multi-trillion dollar stimulus programs (yes, by the end of 2010 it will not be $775B it will be more like $2.5T). I just thought things were horrible and getting worse; I didn’t know the roof was about to cave in. This was a time when TARP was merely a flexible, waterproof covering.

What we got right:

1. We warned to sell all small-tech & advanced tech stocks in October 2006, and that turned out to be good advice, as the typical stock in this group was down more than 25% to May 2008.
2. We have been warning continuously since 2003 that the venture capital model is broken, and finally this month Forbes, in a major expose, noted that the top firms in VC (to say nothing of the average) have not returned profits to their limited partners in eight years while collecting ridiculous fees.
3. Despite the warnings, we managed to guide our subscribers to significant profits in trading nanotech and small-tech stocks from early 2006 through 2008, far exceeding the notable indices, which posted negative returns.
4. We warned of a recession and collapse in real estate in 2006 and in November 2007 warned that this would be the consensus view before September 2008.

Where we are today:

It pains me say this, but while we have spoken about passing the early 1980’s double recession and the 1973/74 recession a while back, we have now made enough of a mess to say we have passed the Panic of 1907 and are fast approaching the Panic of 1893. While I am not a scholar in the field, the Panic of 1893 is considered this country’s most damaging depression with the exception of the Great Depression. This depression is starting to look in many ways like and echo the 1893 -1898 depression. It is unlikely that we will find a “bottom” for the economy before mid 2010 and if we keep putting the day of reckoning into the future like Japan did in 1990 (to today, continuing), we may see 11-16% unemployment and a bottom in 2013 or later.

My biggest question mark is how long this deflationary period will last. My work cannot see whether it ends in 3 months or lingers for 3 years. Certainly, whenever it ends years of high inflation (hopefully not hyperinflation) will follow. The human costs, market costs and financing predicaments will be immense. Please don’t listen to those who think this is all going to pass by June to October of 2009. The next layoff response is still months away (and it may not be the last) and the best day for a laid-off person is the actual day they are laid-off. Months later, when jobs are still hard to find and money is scarcer, it is much worse.

We expect the markets to do better than the economy. There will be some significant rallies, and while we do not expect the November 2008 low in the stock market will hold, it might.

Without going into detail further detail on the economy and the markets, we encourage everyone to buy precious metals and precious metals mining shares with a portion of their portfolio. The dollar will be “toast” within 3 years. Those who want more on this should send a note to darrell@ResourceDevelopment.com to be put on the mining, metals and natural resource stock list.

For small-tech and nanotech investments, there will be three clear roads to profits over the next 5 years:

1. Successful short-term trading (2 week to 2 month periods)
2. Long/Short portfolios
3. Long-term investments (3-6 year hold periods) made at low points over the next 1-3 years

Clearly, for the near future, I do not expect intermediate-term investments in the 4 to 24 month timeframe to have much profit potential.

For those of you who would like my assistance, I may be associating with a Registered Investment Advisor (RIA) over the next few months and hope to offer separately managed accounts (SMAs) through brokerage firms in each of the three winning strategy areas listed just above.