---
title: "Maximum Opportunity"
url: https://independentstockanalysis.com/maximum-opportunity/
description: "Durable goods orders have slowed and second quarter GDP was revised to a pathetic 1.3% growth rate. Yet Two Reasons to expect Economic Growth to Increase…"
published: 2012-09-29
updated: 2012-09-29
---

# Maximum Opportunity

Published 2012-09-29

Posted on

by

J.J. Butler

Durable goods orders have slowed and second quarter GDP was revised to a pathetic 1.3% growth rate. Yet Two Reasons to expect Economic Growth to Increase ([Calculated Risk](http://www.calculatedriskblog.com/2012/09/two-reasons-to-expect-economic-growth.html)) includes [housing](http://4.bp.blogspot.com/-M54-Eqg8Qco/UGHEF3d9t9I/AAAAAAAARd8/7tZxDxYKtew/s1600/NominalHousePricesJuly2012.jpg).

“All the while, the market continues to grind higher, disbelieved by a significant percentage of market participants…How can we reconcile these apparent contradictions? In a word, it is the **Fed**. My read is the only thing standing between you and an ordinary cyclical recession — including a 20-30% drop in the SPX — is monetary policy.” [Ritholtz](http://www.ritholtz.com/blog/2012/09/how-long-can-these-markets-run-on-qe/?utm_source=dlvr.it&utm_medium=twitter)

“With a “titanic battle” underway between inflationary and deflationary forces, Gross’ own expectation is that inflation is about three times more likely…” [Advisor Perspectives](http://advisorperspectives.com/newsletters12/pdfs/Bill_Gross-Hedging_Your_Bet_on_Deflation_versus_Inflation.pdf)

Bonds are like internet stocks in 1999 on a valuation and sentiment basis. How does that end well? [Reuters](http://www.reuters.com/article/2012/09/26/us-fidelity-bonds-idUSBRE88P1U520120926)

Vale says iron ore won’t go below $100 – 40% of Chinese output is already off the market at [Mining](http://www.mining.com/vale-says-iron-ore-will-stay-above-100-as-40-of-chinese-producers-shut-down-93217/?utm_source=digest-en-mining-120927&utm_medium=email&utm_campaign=digest). I’ll suggest a Chinese growth re-acceleration is premature, though BHP says sees China’s growth strengthening in H2 at [Reuters](http://af.reuters.com/article/metalsNews/idAFB9E7IC00X20120927). **Maximum opportunity for resource investors would be for a bottom in materials stocks to coincide with the end of the current (early) cyclical gold run.** It never turns out so clean, but we’ll keep watching.

“I’ve long held the stance that its brilliant business model makes it the *perfect* silver stock.” [Scott Wright at Zeal](http://www.zealllc.com/2012/siletf.htm).

Enjoy your weekend.