HardAssetsInvestor

Mike Norman, anchor, HardAssetsInvestor.com (Norman): Hello, everybody, and welcome to HardAssetsInvestor.com. I’m Mike Norman, your host. Here today my guest is Matthew McCall, author of the book, “The Next Great Bull Market.” What we’re going to find out is what that great bull market is. Matt, thanks a lot for coming on the show.

Matt McCall, CEO, Penn Financial Group (McCall): Thanks Mike.

Norman: Appreciate it. You just wrote this book, “The Next Great Bull Market,” not necessarily talking about stocks now, talking about commodities, right?

McCall: Exactly. I think along with commodities moving higher the next couple of years, stocks will probably go along for the ride. But I think the big winners are going to be commodities. And I think we need to be invested in that. A lot of investors listening to this right now are under-invested in commodities.

Norman: Really?

McCall: They look at it as a defensive area. I believe so. At a commodities conference just recently, Mike, a lot of people – the big financial advisers – are still very underweight when it comes to commodities. And I think that’s why they are trying to find ideas for where to put money. Is it gold? Is it energy? Is it natural gas? So I think there’s a lot of upside, because there’s a lot of money in the sidelines that can being going into this sector.

Norman: Yeah. I find it interesting, because we certainly hear a lot about commodities, almost on a daily basis. I’ve got to ask you this question, because the commodity bull market has been ongoing now for a while. And we had an interruption in the last year, year and a half, with the global market downturn. But I remember the book “Dow 36000,” which came out in September of 1999, very near the peak. Does it make you a little bit nervous that you’re calling for a bull market in commodities? The next great bull market may be after we’ve already had a significant run.

McCall: It doesn’t make me nervous. I mean, it does sell books, don’t get me wrong ... the big bull title, you have to think about that. But I really think there’s a lot of factors that are really going to push commodities higher, one being inflation. You know, there’s still the debate right now between deflation and inflation. I believe it can actually hit hyperinflation; there’s a chapter in the book that concentrates on hyperinflation, how to invest in that. And commodities will be great winners if that’s the scenario.

Also, the U.S. dollar: If we continue to print money as a country, the U.S. dollar will continue to fall. Again, that’s going to be bullish for commodities. And, finally, a third factor is supply and demand. I really believe demand will continue to pick up, especially in the emerging markets. We need the higher prices as well. So even if two to three might come true the next couple of years, there’s much more upside with the commodity sector.

Norman: Now what areas are your favorites? I mean, obviously we’ve seen a tremendous run in gold now, up around $1,100 an ounce, many people predicting it’s going to go a lot further. Is gold your favorite? Or the agricultural commodities? Is it oil, which one?

McCall: Well, gold’s my favorite right now, because it is the largest holding for our clients. So I love the fact we’re in gold. I am so nervous though, with hitting $1,100. My target was about $1,200 for early 2010. If we hit that, I probably will sell and take some profit. However, if we have hyperinflation, we could see gold at $1,500 over the next couple of years. But that’s not my favorite, because there’s not as much upside potential for that.

I actually like the base metals. I like the coppers, the aluminums of the world. I like that because you really have the demand coming from China and some of the other emerging markets. Prices were beaten down. You know, prices have gone up quite a bit over the last few months; that’s because China has been stockpiling. They’re smart. They’re using the low prices to stockpile. So you’ll probably see a bit of a breather in the base metals. But after that, I believe there’s going to be a big surge going forward the next couple of years, along with the global economy.