Overview

As the January of 2010 proceeds and investors and traders have returned from their vacations, it isconfusingly quiet in all different kind of asset classes. The S&P 500 has barely moved since the beginning of the New Year and except commodities which remain the name of the game for many“Hedge” Fund Managers, everything is tightly squeezed into their Bollinger Bands.So, is the next “perfect” storm ahead of us or is 2010 merely a repetition of the boring InvestmentYear of 2004? Although, opinions about the Short and Intermediate Term vary at the team of BPT,we are convinced that the years of high double digit growth for the S&P 500 and high single digitgrowth for the World Economy are behind us. In fact, as many other great minds out there, we believe that the S&P 500 (or much more the World Economy) has entered into a Secular Bear Market back in 2007.In spite of the recent hype around stocks and the Big Rally in every imaginable Asset Class , we believe that this Secular Bear Market will go along with us much longer than the year of 2010 andStructural Problems and so called Black Swans are nearly guaranteed to reveal themselves over thecourse of this decade.Furthermore, we are the opinion of that the World Economy has somehow entered a decade whichwe internally call a “black hole decade”. What is that supposed to mean? Well, we describe it as atime where there is not one world leader as such, but different countries who try to claim the worldleadership. A time where uncertainty about the leadership in the world reigns the daily grind.

Trading or Investing – what is the better choice du jour?

Many people in the investment world are probably still struggling to recognize that the “Buy andHold” model is broken once and for all. You can not just sit there, load up a couple of stocks andwait until your investments have grown in size. This is not going to be the way it works for the next

couple of years (ceteris paribus). Rather than just loading up and waiting until your investmentshave doubled, timing is the most critical part in this trading environment.This is not the time for long term investments to be made in stocks and as we may be following the path of Japan, trade and act accordingly.Therefore, to answer the question set above, we advise you to get rid of the old Investment philosophies (unless you know the books or are in for high growth plays) and rather trade than toinvest. Whether you want to DayTrade (you are always welcome in the channel on the front page)or Swing Trade is your choice, but be advised that timing these kind of markets is more importantthan ever before.

Market Outlook -2010

Equities

Neither bad unemployment numbers nor worse than expected Economic Growth are going to be thekey market drivers for 2010. In this kind of stimulus driven market, everything really is dependentupon the ZIRP (Zero Interest Rates Policy) of the FED. Unless some serious policy changes occur

immediately, the ZIRP will give us the direction for the entire year. (geopolitical risks excluded)Hence, we are seeing 2 main scenarios for equities in 2010.Scenario 1 (Blues Scenario): No or only slight change in ZIRP in 2010 – We could end up where westartedEquities should grind higher to the 1200 SPX area with several scary dips. Afterwards, due to slowgrowth and higher interest rates assumption in 2011 the markets will go into a big stall pattern tosee where the next big move takes us. We could end up where we start in 2010.Scenario 2 (Snobtraders Scenario): Change in ZIRP – Push up and a big drop. Negative at the endof the year Equities are forced to go higher at the first half of 2010 due to cheap money flying around thesystem. Once, the FED signalizes that they are going to start raising rates, equities are set to semi-crash once again and at the end of the year they will be a lot lower than where they started.

Bonds

As for the Bond Market, we think that no matter of the ZIRP policy, they are set to drop slowly in2010. More sovereign debt scares such as Greece, Dubai… will push rates higher. In addition tothat, any hawkish FED talk will scare the Big Bond Market.As for the Big Bond Bubble, we do not think it is ready to really crash until late 2010, going into2011, again dependent upon ZIRP.