Today’s Daily Angle comes from Wikinvest Wire member Contrarian Profits. You can read the full article on the Contrarian Profits Blog.

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David Rosenberg, chief economist for Gluskin-Sheff, is a contrarian with a superior intellect than our own. That’s why we hang on most every word he says.

Throughout the “sh*t hitting the fan” events of last fall, and the subsequent policy response, we’ve listened intently on what this Canadian had to say. The picture he paints today is one of bearish conviction. That’s exactly the reason he’s come under recent criticism as his ilk of ivory tower economists have started calling an end to this recession.

Though we don’t think he has anything to prove, he released a special report reaffirming his key points. You can read it in full here. But if you don’t have the time to peruse the twenty-two page (slightly wonkish) document, we’ve broken down the basic takeaway for you.

The equity markets have moved too far, too fast, and a correction is coming. Rather than buy into this rally, you should look at commodities. That’s because David believes that since 2001, commodities took off on a secular bull market run.

Also, rather than hold US dollars, Rosie bets that the Canadian buck is a safer bet due to Canada’s smaller national debt (26% of GDP vs. 62% in the US), smaller budget deficit (-3.4% of GDP vs. -11.2% in the US), stronger bankingsector (no Canadian bank needed a bailout), lower unemployment, and an economy more reliant on commodityexports like lumber, oil, natural gas and precious metals.

But the scariest–for holders of US dollars—forecast Rosie makes is that the US has yet to use a power policy tool: thedevaluing of the greenback.

As Obama continues to take pages out of FDR’s playbook, he’s yet to devalue the dollar as FDR did in 1933. Rosenberg doesn’t say that the US policy wizards will directly devalue the dollar. Rather, he thinks it will happen by the expansion of the Fed’s balance sheet and the creation of freshly printed dollars.

We think he’s dead on about this call. The US’s “strong dollar” policy has become the latest oxymoron to enter the American vernacular. There is only one direction the value of the US dollar is going over the long-term—down.

Where exactly should you invest amidst this economic malaise? Here are the seven places to park your cash. Not surprisingly, our favorite precious metal tops the list.

1.) Gold

2.) Commodities

3.) The Canadian dollar

4.) Resource sectors of the stock market

5.) US sectors that have high foreign exposure (materials, tech, staples, healthcare)

6.) Canadian sectors that benefit from lower import costs (consumer stocks) but lose export competitiveness (manufacturers)

7.) Canadian bonds (a higher Canadian dollar will keep inflation low, hence reinforcing positive fixed income returns)

Today’s Daily Angle comes from Wikinvest Wire member StockTradingToGo. You can read the full article on the Stock Trading to Go blog.

Thinking about shorting a stock for the first time and betting against the market? Consider these 11 points first featured today over at TradingMarkets (link) before you give it a go:

1. Risk – While with buying a stock you can only lose your investment, with shorting you can lose a whole lot more. Buy a $20 stock and watch it go to zero and you lose 100% of your investment, but short a $20 stock and watch it go to $100 and you just lost 500%.

2. Finding a Stock – Not all stocks can be shorted, so make sure to trade with a good online broker to give you the most flexibility.

3. Liquidity – Only short stocks that are highly liquid to make sure you can get out of the position when you want to.

4. Outstanding Short Position – If 10 – 20% of the company’s shares are already being shorted then the bad news is already out and other investors are already hopping onboard the bear train. These types of stocks are prone to short squeezes (explained further down, point #8) and should be pursued with extreme caution.

5. Margin Account – No margin account means no shorting stocks (read our article 9 Tips For Successful Margin Trading).

6. Margin Calls – Make a bad short and your broker may issue a margin call. Since they are lending you funds they have no interest in watching you lose 500% and then not be able to pay them back. A margin call forces you to either deposit more cash into your account or be automatically closed out of the position.

7. Early Sale – If the original owner decides to sell the stock you are borrowing against then you must replace it (note this is extremely rare so can really be ignored).

8. The Short Squeeze – If a lot of buyers come in all at once and cause a stock to jump in price then all the shorts rush to cover as quickly as possible. A short squeeze is when a stock has a large outstanding short position and good news causes a mad dash to cover shares. Not fun for an investor who is short.

9. How to Cover – Make sure when covering the position you fill out the trade ticket correctly. Look for the option, “buy to cover”.

10. Dividends and Taxes – You don’t get to keep stock dividends, they are paid to the actual share owner, and furthermore all profits are short term capital gains so don’t expect to get a tax break by holding over a year.

11. USE STOP LOSSES – This is a golden rule for shorting stocks and I am adding it here as the 11th fact. If you dont use stop losses you will end up getting burned! Step a profit to loss ratio and stick to your rules.

As far as I can tell, most analysts now concede that the bursting credit and real estate bubbles played a key role in bringing about the devastating downturn of the past two years.

Logically, that would suggest that a sustainable recovery is going to require some degree of stability — no, normalcy — in these two areas. Yet by most accounts, credit markets are on life support, dominated by the Federal Reserve andbanks with broken business models that are somehow too big to fail.

Meanwhile, the residential property market is still being propped up by all sorts of subsidies — for more on this, see“Policy and Housing: Someone’s Gotta Give!”– and the supply-side of the equation remains an ongoing concern, if reports like the following from Reuters, “U.S. Mortgage Delinquencies Set Record,” are anything to go by:

High U.S. unemployment keeps pushing up the rate of mortgage delinquencies, which could in turn drive personal bankruptcies and home foreclosures, monthly data from the Equifax Inc credit bureau showed on Monday.

Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.

August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed.

The rate of subprime mortgage delinquencies now tops 41 percent, up from about 39 percent in each of the prior five months.

The results, which correlate with consumer bankruptcy filings, suggest U.S. homeowners remain under financial stress despite signs of improving sentiment and fundamentals in the U.S. housing market.
In addition, the commercial property market is looking dicey again, as Bloomberg reveals in “Moody’s Property Index Resumes ‘Steep’ Fall in July“:

Commercial real estate prices in the U.S. resumed a “steep decline” in July after showing signs of leveling off in June, Moody’s Investors Service said, as credit restrictions curtail lending and push landlords toward default.

The Moody’s/REAL Commercial Property Price Indices fell 5.1 percent in July from the month before, Moody’s said today in a statement. The index is down almost 39 percent from its October 2007 peak. The decline in June was 1 percent.

Commercial property sales this year may fall to an 18-year low. This latest set of numbers suggests no letup in that trend, said Neal Elkin, president of Real Estate Analytics LLC, a New York firm that partners with Moody’s in producing the report.

“We are still vulnerable to moves on the downside,” Elkin said in a telephone interview. “As time passes, the distress and the stress among those who need to sell is growing.”

Elkin cited figures from Real Capital Analytics Inc., whose data are used in compiling the report, showing the portion of sales classified as “troubled” — those properties in or close to default — almost doubled to 23 percent in July from March.

That’s “something we’ve never seen,” Elkin said.

Sales this year through July totaled about one-third of the year-earlier number, Moody’s Managing Director Nick Levidy said in the statement. The market averaged about 375 sales a month this year compared with almost 1,100 a month last year, he said.

Office sale prices fell 23 percent from a year ago in New York, 27 percent in San Francisco and 22 percent in Washington, according to the report.

South Affected

Prices of apartment buildings in the U.S. South have seen some of the steepest value declines, according to the report. Apartment prices in the region dropped 44 percent in the 12 months through June, almost twice the nationwide decline of 24 percent, and are now about half what they were two years ago.

Florida apartment values tumbled 40 percent in a year, the report said.

“That’s eye-popping,” Elkin said. The decline is being caused in part by “a ripple effect” from the overbuilding of condominiums in those markets, many of which are now competing as rentals, he said.
In sum, it seems like those who see signs of light at the end of the tunnel need to look a bit more carefully at what’s really there.