Mellon on the Markets: FLASH UPDATE

With markets in full panic mode, Master Investor Jim Mellon issues a quick note to update regular readers.

Yikes! As usual I don’t pay enough attention to my own advice and was caught scrambling a bit last week. I thought gold and silver would move ever upwards in this difficult period, but they acted badly, and I was a bit hurt. Time to sing a verse of Gloria Gaynor!

This is because everyone was selling EVERYTHING in one giant margin call, and all the economic forecasts and pundits’ well-chosen words made not a jot in the panic that has recently characterised all markets.

This level of hysteria is replicated in the chaos in supermarkets in many countries – particularly in the toilet roll section when there is no rhyme or reason for stocking up on Andrex and its equivalent – and shows that the margins of civility are thin indeed.

I am in the Isle of Man and went to the local supermarket today, where two uniformed policemen were standing outside, with only a couple of ancient folks inside, hardly likely to cause a disturbance.

When I was driving, I heard that IAG (LON:IAG), parent company of BA, and others doesn’t want a government bail-out. Of course they don’t! they have cash and others (Air France-KLM (EPA:AF) and Norwegian (OTCMKTS:NWARF) in particular) don’t. They want them to go bust and then reap the rewards. This will happen more and more.

So, try not to panic. It’s hard, but now is the time in which fortunes can and will be made. I suggest buying the UK bank stocks, as they are much more liquid than before the last crisis and are exceptionally cheap. I also suggest buying IAG, and possibly Carnival Cruises (LON:CCL). By the time the fog of war has lifted, the adept battlefield scavengers will have carried away the spoils.

If you fancy more adventure, buy the pound against the dollar; the dollar is strong because of a temporary liquidity crisis soon to be abated by central bank action. That very action carries the seeds of high inflation. For those that have money, gold and silver remain buys.

Jim

P.S. I am sorry about Master Investor, but December 5^th will be even better!