here is an extract...we actually think many stocks are...

here is an extract...

we actually think many stocks are over-valued and should be avoided like the plague. One such example is JB Hi-Fi. Although we very much admire the company and its management, we think at $8.75 the shares are currently priced for perfection. One slip up and the share price could easily fall 20% or more. Investing when there is no margin of safety is not the way to make money over the medium to long-term.

- Given that some stocks such as JB Hi-Fi appear to be over-valued, it is absolutely imperative that you select the right stocks for your share portfolio. We call it a stock pickers market, something we're pretty good at here at Fat Prophets... but more on that later.

- We believe the resources boom is only just beginning. But don't just take our word for it. A recent report on Bloomberg quoted prominent investor Marc Faber as saying, "the up wave of the (current commodities) cycle is likely to last another 15 to 20 years".

- If you do believe the resources boom is only just beginning and that we are in for a sustained period of high and rising commodity prices, you can buy many stocks today that are just plain cheap. Such companies include some of the biggest stocks quoted on the Australian Stock Exchange, hence our overall positive stance for the stock market.

- But heed these cautionary words of warning... Even though the stock market as a whole may continue to rise, if you buy the wrong stocks, like JB Hi-Fi and any old speculative uranium mining company, your own portfolio will be in the doldrums. That won't impress the socialites at your next Mosman or Toorak dinner party!