Wednesday, June 27, 2012

An Update From Harry Dent

Harry Dent's June 2012 Update

Canary in the Coal Mine
The major problem I experienced with the crash that resulted in the last Great Recession was that everybody was afraid to come out and tell the general public just how bad they thought things could get, with one exception.  I watched Mad Money with Jim Cramer on CNBC and one night he told his audience that if they had money invested in the stock market that they might need over the following five years, they should sell that portion immediately.  I did just that, but it was already too late.  While I did not lose as much as most people, it was still a big hit to my portfolio (i.e.: life savings).

The Media?
As it turns out, there were a number of people who came forward, later, to tell us what they knew and how things looked pretty bad to them, well before it actually happened.  The trouble is, what they were trying to tell people was not very popular at the time - certainly not with the broadcasting media.  As for the rest, do you think they would actually say anything to you and me, even if they suspected the worst? (That is where the term "whisper number" comes from - they'll say it to close allies, but not publicly).

Odds Are
Cramer took a lot of heat for telling people to sell.  Many in the industry called him irresponsible.  I appreciated the fact he had the courage of his convictions and was one of the few people I have ever heard actually telling people to sell.  The Buy and Hold types may scoff at the warnings, but as Mr. Dent says in this video, if things don't get as bad as he thinks it might, then worst case is we miss a little to the upside.  If he is correct, we miss a lot to the down side.  Any time I find myself in a situation with little chance of gain, and a huge chance for loss, I will gladly sit it out until the odds are more in my favour.

Technically Speaking
When do I get back in?  When the technical indicators say so.  I'll be one of the first to say when I see the technicals showing me a good re-entry point.  I am no investment professional, and can not advise others what they should do with their money.  Personally, I have been short, or out of this market, since before the year began.  I see no reason to change now.  For other peoples' sake I hope Mr. Dent is wrong, but right now, it just isn't a risk I am willing to take.

How do you see your chances?

Wednesday, June 20, 2012

Buy Energy Companies?

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John Manley from Wells Fargo talks about his liking energy companies.  He says he doesn't believe oil prices will go as low as people are predicting.  He also thinks oil will stay more expensive longer than people think, and that natural gas will stay lower longer than people think.  He especially likes big dividend paying energy companies.

Myself, I would like to see a break in the longer term down trend in energy stocks before I would buy.  The way I personally would play it is with the Horizons leveraged energy Exchange Traded Fund - HEU on the TSX.  These leveraged ETF's are only for shorter term trades, so if I wanted to hold it for longer term durations I would likely use the iShares Energy ETF (XEG).

How is your energy level?

Thursday, June 14, 2012

I am not really sure why I haven't posted anything here by Mr. Rogers prior to this.  From what I can tell he is one of the smartest people in the room.  His expertise is more in the area of commodities than equities, but that would make him an expert in commodity companies at the very least.

It would seem like common sense, but politicians and even too many economists believe the solution to too much debt is more debt.  Mr. Rogers disagrees.  He also talks about when the economic collapse will come, rather than if it will because of the snowballing debt world wide.  He states that competent people are supposed to be allowed to replace the incompetent ones who lost all their money.  Failing to do so, he says is "Absurd economics and absurd morality."  It reminds me of the author Stephen Covey who used to say we can't talk our way out of things we have (mis)behaved our way into.

Do you think Europe will survive intact?

Tuesday, June 12, 2012

An Update From Bill Strazzullo

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The markets are getting close to the levels Mr. Strazzullo from Bell Curve Trading talked about in this video at the end of May.  He said at that time he was expecting a tradable bounce from there.  At this point his prediction would seem to be supported by the technicals.  I think the key term he used was tradable bounce.  Given the situation in Europe as we make our way into the summer season, I see no catalyst to turn the markets around and reverse our overall downward trend in a significant way.  There is only so much the U.S. Federal Reserve can do between now and the U.S. elections coming this fall.

Where do you think we will go from here?

Thursday, June 7, 2012

May 2012 Returns

Click To Enlarge
I would rather not spend a lot of time or energy being negative about the markets and how things continue to go from bad to worse.  I want to be more positive than that.  It is not difficult to understand why people would think stock markets are completely unregulated and out of control, or at least controlled by big money with nothing in it for the small, personal investor.  I still feel small is beautiful, especially under current conditions.  We can run rings around the big fund managers and still minimize our risk with Exchange Traded Funds.  That strategy can be  particularly effective during months like this last May when inverse ETF's allow us to profit while the markets are trending down.  The markets appear to be more oversold than last year, at this time, but that doesn't mean we can't go a lot lower.  It is the fourth year in the U.S. election cycle.  Markets tend to be stronger during the second half of that year than others.  We will have to watch and see!  

17 month return for TSX @ April 30, 2012 = -14.59 percent
Return for Basic Timing Model using XIU = 10.57 percent
Return for Advanced Timing Model (my returns) = -4.36
Money for charity = $0.00