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Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the... More
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  • Market Looks Positive As Transportation Index Hits A New High

    The Dow Jones Transportation Average (DJTA)

    Also called the "Dow Jones Transports", the DJTA is a U.S. stock market index from Dow Jones Indexes of the transportation sector, and is the most widely recognized gauge of the American transportation sector. It is the oldest stock index still in use. This index hit its height of importance when railways across America hit their peak and has been regarded ever since as a bellwether of future movement in the major US stock indexes. As railways gradually declined in importance, so did the Dow Jones Transportation Average. However to this day, it is watched closely by veteran market players and remains an important (if less relevant) indicator of the near term future of the stock markets.

    A New High
    Yesterday, the D-J Transportation Average (TRAN 5639.64) broke out to a new all-time high. Its last peak was July 7, 2011 when it reached 5618.25. In past decades, there would have been jubilation at this event with investors eagerly buying stocks and anticipating profits. The event yesterday brought some muted optimism and this is understandable given the dramatic meltdown and erratic performance of the market in recent years.

    What is does seem to indicate is that 2013 should be a good year for the markets, and the economy should not slip into recession. This is yet another of the many indicators that we have pointed out to show that, as in every previous economic cycle, the USA is gradually but surely pulling itself into the next boom.

    The Dow Theory
    Another important signal for stock market watchers is when the Dow Jones Industrial Index also breaks out, and this has not yet happened. The Dow Theory calls for both the Dow Jones Transportation Index and the Dow Jones Industrial Average to hit new highs, and this is supposedly a very positive sign foretelling a roaring bull market to come.

    Green Shoots
    So we have one sign and not the other at this point. Remember just after the meltdown of 2008-9 when everyone was searching for 'green shoots'? Prior to Mr Greenspan being anointed as Fed Chairman, economists generally expected economic cycles to run in roughly 7 year cycles. Every 7 years or so, the economy would slow down, and purge the excesses of the previous cycle, then gather its strength and roar off to a new and higher cycle of economic activity. As each successive cycle drew to a close, people were economically hurt and left in its wake. In each of these cycles, believers were created who were sure that prosperity was here to stay, and governed themselves accordingly, only to discover to their chagrin that this cycle, like every other cycle in the past, would come to a crashing halt.

    Then we appointed the economic guru - Alan Greenspan - as Fed Chairman, who decided that he was smarter than anyone else, and found a way to cease this endless parade of economic cycles that brought prosperity and then devastation. His solution - every time a weakness appeared in the economy, or some catastrophic event occurred anywhere, Mr. Greenspan would print money - gobs of it - and put that new money into circulation. The banks with lots of new free money would look to use and lend this new money, and VOILA - the cycle continued and economic prosperity continued after a short pause. The effect was that the current economic cycle slowed a few times before it again roared off. When the end came in 2007, and the policies of Mr. Greenspan, which had created the longest boom cycle on record, then created the worst and most painful crash in modern history. Now in 2013, we are still suffering the pain of what was created.

    One minor effect, was that the world grew used to expecting that every crash would be followed quickly by a boom as Mr Greenspan pumped more money into the system. After the crash of 2007, people kept watching for signs of the rise of the new economic cycle and the term coined for these signs was 'green shoots'. Economic pundits kept pouncing on this or that 'green shoot' expecting that it was a sign of a new rebirth of prosperity. Alas, as the economic woes just kept mounting, the number of green shoots grew less and less, and the the term 'green shoots' fell out of use.

    The Rebirth of Green Shoots
    It is now going into the 6th year since Money Market Funds froze in the year 2007. Mr Greenspan's harm to the economy is finally fading, and indeed there are finally some signs of economic growth. The Dow Jones Transportation Index is indeed one of these signs, as are many of the other signs previously mentioned in these blogs.

    We are now in the beginnings of the next cycle bringing economic prosperity. Those that retain their fear of a deepening crash, and those that believe that holding gold is their only salvation, will miss this coming cycle and not be participants in the coming prosperity.

    The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds.

    Jan 18 9:55 AM | Link | Comment!
  • Prosperity In 2013

    We have often remarked on how the USA will lead the recovery and that the next economic cycle will make its way through the doom and gloom in today's market. We now have visible evidence that this is starting to happen.

    European Debt Crisis
    Pundits continue to insist that the EU (European Economic Union) must flounder because of the heavy debt loads of its weaker members. Don't be misled. The EU is an economic powerhouse that has had its troubles and will continue to have its troubles, but it remains an economic powerhouse. It is true that its debt are far too heavy and that the union is based on political will rather than sound economic footing. It is true that some members seem to have no perception of fiscal restraint, and so on.

    Yet look at what is actually happening rather than the news media that floods the airwaves with hysteria. The supposed basket case that is Italy: too much debt and interest rates skyrocketing. Can default be far off? Yet in the most recent bond auction, Italy was able to borrow money below 2% again, for the first time in more than two and a half years. Doesn't sound like a default to me.

    How about Spain? The word is that they will have to ask for bailouts. They owe more than they can ever repay. Yet they haven't asked for any bailout and insist that they will not. There has been unrest in Spain as budgets have fallen, but reality is sinking in. Governments are slowly and painfully taking the necessary steps. No default is now forecast.

    How about Greece? Despite social unrest, Greece is still in the EU. Surprise. Surprise. Even if Greece left, which is possible, so what? The national budget of Greece is insignificant.

    Bottom line - The EU will continue and the countries comprising the EU will gradually recover, albeit with some strains. Countries adjacent to the EU are continuing with their applications for membership in the community.

    China
    We heard forecasts of doom and gloom, and how China is headed for a disaster and so on. The price of iron ore plummeted as demand for iron ore dropped, because China has stopped growing. China seemed not to need as much. The price of copper was forecast to plummet as China's demand curve dropped. Then the forecasts of new Economic Stimulus of gargantuan proportions that would surely bring China to its knees.

    Instead of listening to the drivel on the airwaves, look at the facts. China's exports and imports most recently reported growth. No reports of a collapse or anything similar. Instead, after some temporary market movement, iron ore has completely recovered in price and demand is growing. Copper has held its price. Some metals such as platinum palladium are moving strongly higher.

    Once again, we repeat our earlier comments. China, like Japan before it, and Europe before that, moved from either devastation or 3rd world status, to a strong economic power, and while moving up and down somewhat, remain strong economic powers. When a nation moves to a modern economic economy, it doesn't fall by the wayside in a month or a year. All of the industrial knowledge remains. All of the masses of newly created middle class (economically) people remain, and they all want goods and services. Demand may vary somewhat, but when you create millions of people demanding goods and services, that is what they want. The demand doesn't dissipate overnight.

    The Precious Metals - Gold & Silver
    We have often remarked on these metals. In times of great economic stress, there always arises new economic gurus who insist that the only way to avoid personal economic disaster, is to buy gold, or the poor man's gold - silver. We have discussed that relationship before and will again in the future.

    The theory is severely flawed and arises from economic upheavals in Europe of the previous centuries where when countries were invaded by their neighbors, the currencies of those countries became worthless. Therefore the protection against losing your money was to hold gold which was valuable in every currency. Let's look at gold from another perspective.

    If Gold Portends Trouble, What Does Gold Moderating in Price Portend?
    Now examine the theory of holding gold in modern times. The belief is that when the economy falls, or inflation increases, gold rises in value. In fact, gold rose in value quite dramatically over the last decade, but so did every other metal - some rose more than gold. Putting that type of debunking aside, let's accept that flawed theory for a moment. Since gold reached its peak in late 2011, it has moderated and remained in a consistent channel. Some upward movements were soon exhausted and today gold is about $1,600 an ounce. exactly where it was a year ago, and roughly where it was 18 months ago.

    If you believe that gold is a barometer of economic troubles, it sounds to me as if the signal is "fair weather ahead".

    Another persuasive reasoned rational we hear is that we are in for trouble because gold is trading at roughly 8 x higher than it was a decade ago. However, so is copper and so is every other metal that has has had a consistent demand curve.

    United States of America
    The USA remains the economic powerhouse of the world with roughly 25% of world economic production. A world economic recovery will be led by the USA as other countries rely on USA demand for their goods and services for their own economic prosperity. As we have previously said, all signs in the USA are positive. Bidding wars for real estate in prime locations have started. US auto sales are now at pre-2008 levels. Banks are being recapitalized and are meeting new standards. Unemployment lags, unfortunately just as it has in every economic recovery of this or the last century as older workers, and less trained workers fall by the wayside. This is difficult, but is normal and to be expected. Airlines are flying at capacity on some routes. Manufacturing in the USA is increasing measurably. Jobs are returning to the USA for overseas as wage costs moderate. Union membership continues to decline and many states have brought in 'right-to-work' laws.

    Investing
    A recent conference held in 2013 by a major investment house had one over-riding theme. The recovery in the US is gaining momentum and the place to invest is in the USA.

    The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds.

    Jan 15 10:25 PM | Link | Comment!
  • Theatrics Of Fiscal Cliff Obscure The Facts. US Economy Is Moving Upward

    A Sense of Drama
    Stuck between a hard place and a rock, the Republicans finally relented and an agreement concerning the Fiscal Cliff was reached. The issue seems to have been a holdover from the sudden rise of the Tea Party, which during the last administration promoted a nonsensical pledge among Republicans to never agree to any legislation that included any tax increases. Well intentioned and an attempt to roadblock the continual increase in debt of the USA, but idiotically misguided and a knee jerk reaction to what seemed the political flavor of the day. Now that pledge is a matter of yesterday, and is wildly out of flavor this month.

    Everyone knew that an agreement had to be reached, yet there was teeth gnashing and obstructionism to the very end. Should an agreement not have been reached, the politicians would have been directly blamed for a dip in the economy, for tax increases, and for the polar ice melting, as well as everything else the media could think up. The media needs a story of hysteria every month to whip up emotions and attract viewers. The Fiscal Cliff was ideal for this.

    The ridiculousness of the matter, was that the politicians had all the way through this piece, the ability to retroactively put an agreement in place, and the effects of that agreement were not dramatically different regardless of the timing of the agreement. In other words, an agreement could have been reached yesterday, or next month, and by the stroke of a pen it could have been made retroactive to yesterday, or to any other day. So the hysteria of the media in insisting on an agreement by yesterday, was simply that - hysteria.

    Theatrics became the flavor of the day. The politicians pretended to be working night and day, and miraculously, an agreement was reached at 11:59 PM of the 11th hour. This allowed every politician to shout out how important his/her contribution was. The only word for it is "disgusting".

    The US Economy is Recovering
    Regardless of the political foolishness, the private sector of the US is doing what it does best. Free enterprise people are starting to re-assert themselves and the economy is showing irrefutable signs of recovery and growth.

    The latest economic info shows growth and positive movement. The American Bankers Association said today that delayed repayments of bank-card loans dropped to the lowest level since 1994 in Q3, falling to 2.75% of all accounts from 2.93% in Q2. Delinquencies in a composite ratio of eight installment-loan categories, which doesn't include bank cards or mortgages, fell to 2.16% from 2.24%.

    US Car makers enjoyed their best year in 2012 since 2007 selling almost 14.5M vehicles in the U.S. in 2012, up 13% from 2011 and the highest since 2007. A strong December for Ford (NYSE:F), GM (NYSE:GM) and Chrysler (FIATY.PK) capped off the year, while Japanese car firms improved sales dramatically from the earthquake-ravaged levels of 2011.

    The Eurozone is Also Recovering
    The world is slowly pulling out of the bottom of this cycle. Europe also is now showing positive signs, in spite of the doom and gloom pontificaters. Eurozone composite output PMI rose to 47.2 in December from 46.5 in November, with the services index edging up to 47.8 from 46.7.

    Some Other New Signs
    Canadian banks are now moving into the void created by US banks by giving mortgages on real estate in the US. TD Canada Trust and The Royal Bank of Canada now have programs in place to offer mortgages to good credit borrowers. Real estate in Florida and in many other centers have stabilized and the great bargains of the last two years have disappeared. House prices in prime areas are climbing, and there are even multiple offers on some properties. There is no boom yet, but the market is strengthening.

    The price of real estate in major markets is definitely moving up, sometimes quite dramatically. Great numbers of homes remain under water and unsellable, but certain markets are starting to show remarkable strength, such as vacation properties in Florida, in New York, in gated communities, and in prime areas. In some cases selling prices are 20% higher than last year. Good values are being snapped up by Canadian buyers, by Russian buyers, by Argentinian buyers, and other international buyers. What is remarkable, and at the same time expected, is that people from around the world are coming to the USA to buy real estate, for the same reason that the US will continue to lead the world. The US remains the shining light as to the rule of law, the rights of the individual, the reliance of property rights and patent rights, and the freedom and security of its citizens. The US will continue to lead the world as a result, and slowly but surely the next economic cycle will take shape.

    Investing in the Stock Market
    What all of this means to the average investor, is that now is the time to buy beaten down good value stocks.

    The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds.A Sense of Drama

    Stuck between a hard place and a rock, the Republicans finally relented and an agreement concerning the Fiscal Cliff was reached. The issue seems to have been a holdover from the sudden rise of the Tea Party, which during the last administration promoted a nonsensical pledge among Republicans to never agree to any legislation that included any tax increases. Well intentioned and an attempt to roadblock the continual increase in debt of the USA, but idiotically misguided and a knee jerk reaction to what seemed the political flavor of the day. Now that pledge is a matter of yesterday, and is wildly out of flavor this month.

    Everyone knew that an agreement had to be reached, yet there was teeth gnashing and obstructionism to the very end. Should an agreement not have been reached, the politicians would have been directly blamed for a dip in the economy, for tax increases, and for the polar ice melting, as well as everything else the media could think up. The media needs a story of hysteria every month to whip up emotions and attract viewers. The Fiscal Cliff was ideal for this.

    The ridiculousness of the matter, was that the politicians had all the way through this piece, the ability to retroactively put an agreement in place, and the effects of that agreement were not dramatically different regardless of the timing of the agreement. In other words, an agreement could have been reached yesterday, or next month, and by the stroke of a pen it could have been made retroactive to yesterday, or to any other day. So the hysteria of the media in insisting on an agreement by yesterday, was simply that - hysteria.

    Theatrics became the flavor of the day. The politicians pretended to be working night and day, and miraculously, an agreement was reached at 11:59 PM of the 11th hour. This allowed every politician to shout out how important his/her contribution was. The only word for it is "disgusting".

    The US Economy is Recovering
    Regardless of the political foolishness, the private sector of the US is doing what it does best. Free enterprise people are starting to re-assert themselves and the economy is showing irrefutable signs of recovery and growth.

    The latest economic info shows growth and positive movement. The American Bankers Association said today that delayed repayments of bank-card loans dropped to the lowest level since 1994 in Q3, falling to 2.75% of all accounts from 2.93% in Q2. Delinquencies in a composite ratio of eight installment-loan categories, which doesn't include bank cards or mortgages, fell to 2.16% from 2.24%.

    US Car makers enjoyed their best year in 2012 since 2007 selling almost 14.5M vehicles in the U.S. in 2012, up 13% from 2011 and the highest since 2007. A strong December for Ford (F), GM (GM) and Chrysler (FIATY.PK) capped off the year, while Japanese car firms improved sales dramatically from the earthquake-ravaged levels of 2011.

    The Eurozone is Also Recovering
    The world is slowly pulling out of the bottom of this cycle. Europe also is now showing positive signs, in spite of the doom and gloom pontificaters. Eurozone composite output PMI rose to 47.2 in December from 46.5 in November, with the services index edging up to 47.8 from 46.7.

    Some Other New Signs
    Canadian banks are now moving into the void created by US banks by giving mortgages on real estate in the US. TD Canada Trust and The Royal Bank of Canada now have programs in place to offer mortgages to good credit borrowers. Real estate in Florida and in many other centers have stabilized and the great bargains of the last two years have disappeared. House prices in prime areas are climbing, and there are even multiple offers on some properties. There is no boom yet, but the market is strengthening.

    The price of real estate in major markets is definitely moving up, sometimes quite dramatically. Great numbers of homes remain under water and unsellable, but certain markets are starting to show remarkable strength, such as vacation properties in Florida, in New York, in gated communities, and in prime areas. In some cases selling prices are 20% higher than last year. Good values are being snapped up by Canadian buyers, by Russian buyers, by Argentinian buyers, and other international buyers. What is remarkable, and at the same time expected, is that people from around the world are coming to the USA to buy real estate, for the same reason that the US will continue to lead the world. The US remains the shining light as to the rule of law, the rights of the individual, the reliance of property rights and patent rights, and the freedom and security of its citizens. The US will continue to lead the world as a result, and slowly but surely the next economic cycle will take shape.

    Investing in the Stock Market
    What all of this means to the average investor, is that now is the time to buy beaten down good value stocks.

    The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds.

    Jan 05 9:55 AM | Link | Comment!
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