This week’s Guru Outlook brings us the brilliance of Felix Zulauf. Zulauf is the founder of Zulauf Asset Management based in Switzerland and is well known for his appearances in Barron’s annual roundtable.
Zulauf has nailed the secular bear market downturn and 2009 upturn about as well as anyone. More importantly, he has been nearly flawless in connecting the dots in the macro picture. From the de-leveraging cycle that led to the downturn to the government stimulus that led to the upturn – Zulauf has been remarkably prescient.
Zulauf’s macro outlook hasn’t changed all that much. He still believes the de-leveraging bear market cycle is with us and that we’re in the early stages. Zulauf sees a number of similarities with Japan and says the consumer is in the process of long-term balance sheet repair:
But Zulauf hasn’t turned bearish in the short-term yet. He says the markets have another 10% of upside before concerns over the end of the stimulus begin to weigh on the markets:
Zulauf believes gold is the only currency that isn’t currently flawed. He says the likelihood of a correction this year is very high, but that the secular bull in gold will continue. He says gold will outperform stocks in the coming 5 years. Specifically, he likes physical gold and the GLD etf. Although gold stocks could perform well, he says there are too many outside influences in gold stocks.
In terms of currencies Zulauf sees an opportunity to short the Euro and Yen against the dollar.
Although we’ve avoided a total economic Zulauf says the difficulties are far from over. Like TPC, Zulauf says the biggest risks lie in the latter half of 2010 and into 2011 when governments pass the baton onto the private sector:
All of this will ultimately result in a new bear market and another punishing period for global investors:
http://pragcap.com/guru-outlook-felix-zulauf