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  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    OK Bull Rider, someone should tell you this. It is not uncommon to find out that you do lots of work using an indicator that you plainly cannot find a way to use. It does not fit your expectations, period. The main thing to do in cases like this is to put this work aside and start working up using a different indicator or a different angle. Stubbornness does not work well in the market, if you cannot get something to work, just put it aside and stop wasting your time with it. Do not think about this as a failure on your part, we all have had similar experiences at one time or the other. Regardless of the disappointment level, you have gained valuable experience every time something like this happens.

    All the best.
    Jan 23, 2016. 04:20 PM | 2 Likes Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    Hey rope789, my quote above should have said "It is like the race track where you do not bet on the horses, you bet on having more knowledge than the guy standing next to you eating a hot dog and blowing his weekly paycheck..." Things are a lot more personal in the race track. You see the other players up close and just by looking you know that truthfully you know more than most of the 30,000 or so people in the cheap general admission section. In the market you never see anyone else, and indeed a number of people always will know more that yourself. However you can bet that years of work and experience and have made you more knowledgeable than many of the others. I doubt that you need me to pass any mustard to you, figuratively speaking, it may well be the other way around. All the best.
    Jan 23, 2016. 04:15 PM | 1 Like Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    Bull Rider, in your own terms, the SP closed today at 1906. It has not closed above 1950 since January 6th. This should answer your question in terms of your own analysis.
    Jan 22, 2016. 04:47 PM | 1 Like Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    @bbro, I am glad you brought up the decline in price and increase in yield of Energy High Yield Debt. 17.81% yield on a 7.19 average life, attractive is it not? Not really, not for the common investor who is retired and living out of assets, a number of the companies issuing this kind of yield will possibly go bankrupt and disappear. So, why should anyone buy this stuff.

    The answer to that is because you are in the business of buying distressed debt and turning it around, or you have lots of time to wait and lots of money to invest, or whatever. The necessary ingredients for this type of purchase are time and money, a third ingredient will help a lot as well, knowledge of what to do with distressed debt once you own it. Of the three ingredients mentioned, probably the most important is the last one, knowledge.

    The firms and investors that deal with this portion of the market are very knowledgeable and have ample funds and time horizons. With these ingredients they can make significant money from this kind of investment.

    Some people take this as an affront to the common man, but if such types of buyers did not exist, the distressed debt would drop in price a lot faster than it does, and the number of companies ceasing to exist would increase significantly. With these investors' capital infusions many of these companies may survive and flourish later on, under different management of course.

    The question we should be asking ourselves is how low can the price of these securities decrease before they find buyers and how high can the yield go? I am certain we will find out, perhaps this year.

    @Andrew, please keep in mind that going long oil is pretty risky at this time. If you are doing this, check up your holdings and eliminate the companies that appear likely to go under (too much debt, too little income, too little asset values, low current ratios), then hunker down for the long haul to come.
    Jan 21, 2016. 09:24 AM | Likes Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    Just for the sake of bringing a bit of a global perspective to this discussion, KKR just published a report called "Outlook for 2016, Adult swimming only." Whatever you may think of the title, this is a report in fair depth about macro issues in the world. It is 40 pages long so there is no point in even trying to paraphrase it here. All I can say is that if you desire more of a global perspective about the state of the world's economies, ours included, you should access the KKR website and download this report. The US neither isolated from what happens in the rest of the world, nor is it completely immune to macro events happening elsewhere. I do realize that macro analysis has fallen into a bit of disrepute lately, after the closure of a number of well recognized macro funds. However it might be a good thing to learn a bit about these macro issues and how they may affect the US economy in the coming year. Please do not commit the mistake of thinking that macro issues will affect specific investment plays. Macro issues are more of a broad economic background for the whole world, US included.

    Keep in mind that the market is like a gigantic race track. You do not bet on the horses, you bet on having more knowledge than the guy standing next to you, eating a hot dog and blowing his weekly paycheck... All the best, good luck and good hunting.
    Jan 19, 2016. 11:26 PM | Likes Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    Just for the sake of bringing a bit of a global perspective to this discussion, KKR just published a report called "Outlook for 2016, Adult swimming only." Whatever you may think of the title, this is a report in fair depth about macro issues in the world. It is 40 pages long so there is no point in even trying to paraphrase it here. All I can say is that if you desire more of a global perspective about the state of the world's economies, ours included, you should access the KKR website and download this report. The US neither isolated from what happens in the rest of the world, nor is it completely immune to macro events happening elsewhere. I do realize that macro analysis has fallen into a bit of disrepute lately, after the closure of a number of well recognized macro funds. However it might be a good thing to learn a bit about these macro issues and how they may affect the US economy in the coming year. Please do not commit the mistake of thinking that macro issues will affect specific investment plays. Macro issues are more of a broad economic background for the whole world, US included.

    Keep in mind that the market is like a gigantic race track. You do not bet on the horses, you bet on having more knowledge than the guy standing next to you, eating a hot dog and blowing his weekly paycheck... All the best, good luck and good hunting.
    Jan 19, 2016. 11:26 PM | 1 Like Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    I may be overstating the obvious, but so far all Iran has done is saying the sanctions were lifted (absolutely true and correct) and that they would be exporting about 500,000 barrels per day. The last part of the statement is just not true, they are not producing enough at this time to do this and do not have enough storage to keep millions of barrels ready for export. They have ordered an increase in production but this order is not equivalent with the reality of Iran flooding the market with oil any time soon. As a matter of fact it is questionable whether they can crank up production that much after such along absence from the main oil markets. I believe they need much refurbishment and construction of infrastructure before they can do so.

    What we have here with the oil futures decreasing like they did today is not based upon the fact that Iran has increased exports or will increase exports in a very short time interval. What we have here is just the effect of sensationalist negative media coverage of this event.

    Looking at the other side of the coin, now it appears that Quatar and Saudi Arabia are talking about oil price controls, why should anyone doubt this?, they are literally going bankrupt with prices as low as they are. Yes, sure, the Saudis are planning to sell Aramco, but this is again nothing that can be done at short notice, if it is done at all. Saudi Arabia is a very rich but very small country, Quatar is even smaller. They are burning through currency reserves faster than they anticipated. They may be on the way to slow down production given their rate of burn of currency reserves.

    So, what is real and what is imaginary in the current market decline is not easy to sort out, at least in terms of what is actually going on in the oil patch. Without a doubt the things that are real are the fear stoked out by the financial media and the relentless losses in the indexes. Personally I think that regardless of the constant price decreases of the last few months, we are doing reasonably well in the US.
    Jan 18, 2016. 06:02 PM | 2 Likes Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    Speaking in generalities about severe market losses, the smart money moves into the market when things look the blackest and the prospects most dismal. This is followed by steadily increasing numbers of investors seeing the light and getting in the market. By the time the common investor realizes the turnaround has happened, the likelihood of the real large gains is gone. This does not mean the common investors will not make money coming into the market even at this late time, but it means they will make a lot less profit than the smart money will. I am not labelling myself as capable to come in at the time when all the lights are out and only darkness looms in the future, but I believe I am part of the second wave. The level of risk assumed by the smart money is something that is not easy to do for it requires strong convictions and a good deal of courage to assume the risk level required to go in at that time.

    The moral of the story is to look for the darkest times and jump in if you dare. The water may be fine after all. Sometimes it is not good to be cautious.
    Jan 17, 2016. 06:59 PM | 1 Like Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    Of course, the long term investment is the priority, the little trading on the side may provide some profits and some additional cash for investment but it will always be a side show. Fully agree.
    Jan 17, 2016. 12:02 PM | Likes Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    Good point newbeach. Trading is diametrically different from investing, however in specific circumstances and for specific securities I think it is OK to make exceptions to the main long term plan and do a bit of trading. For example, let's consider a stable market, not what we have now. Suppose you own a security that bobs up and down with a fairly fixed range. Should you not sell a few shares when the price reaches the upper border of the range, and buy a few shares when the price reaches the lower border of the range? This is definitely trading, but it also can have a place within a long term investing plan providing you keep close follow up of the parameters used for the small amount of trading done.

    The reason you cannot do trading in the manner you describe above is that neither you nor anyone else can really determine the tops and the bottoms; and even when the market tops and bottoms happen very few people have the guts to act and not procrastinate. You are much better off with a long term plan that may include a small amount of trading on the side.
    Jan 17, 2016. 09:08 AM | 1 Like Like |Link to Comment
  • Weekly Update For The S&P 500: Is It Time To 'Buy The Dip' Or 'Sell The Rally'?  [View article]
    I do not think it is possible to predicts highs or lows with accuracy. That said this piece places the current situation in a firm footing from the point of view of fundamentals and technical aspects. What is missing here is the fear factor. For example, Iran is off the sanctions and is getting ready to export large amounts of oil or so they say, whether they can do it or not remains to be seen. However, in my opinion, with the statements Iran has been making about increasing the available supply or oil, and the end of the sanctions, the likelihood of oil prices remaining stable or increasing early next week are as close to 0 as I can imagine. It remains to be seen what happens but in my opinion, which in this case is not long term at all, we are going to be seeing lower oil prices, perhaps much lower, and increasing market sell off this coming week. I hope I am wrong about this but I just do not think there is much likelihood of increases in either oil or stock prices this coming week. I really have no idea what will happen next.

    By the way, going back to oil prices, I do not believe Iran can resume exports at the levels they are claiming any time soon. If they do, I think Saudi Arabia will suffer the greatest economic impact from it. I think they are already overextended and playing very close to their economic limit without the Iranian intervention.

    Your piece is very good and very well reasoned and I really enjoyed it. I hope you are correct in your conclusions, the analysis is superb. However short term I cannot see the market going anywhere but down next week.
    Jan 17, 2016. 08:43 AM | 2 Likes Like |Link to Comment
  • XLE: A Solid ETF, If Only It Could Beat Exxon Mobil  [View article]
    GetRealHere I agree index investing makes sure you always do as well as the market, so this is an advantage. The disadvantage is that you will never generate alpha. On the opposite side of the coin you will never perform really bad in comparison to the market either. This is exactly what I advised my daughters to do when they asked how to invest their 401ks and have no need to pay attention to their funds. There are uses for this approach, I fully agree.

    As far as outsmarting everyone else, no that is not a good approach either. I am referring to trading now, not to long term investment. This approach finally wears you down and causes mistakes, sometimes the kind of major mistakes that leads you towards becoming food for the vultures as you say.

    However, there are large numbers of investors and firms that perform above market levels in an at times erratic but fairly consistent basis. After all, no one can be in the market and never lose money in it. However, it is possible to generate a fairly consistent CAGR level that beats the market. So, what can I say except that this is my take of it. Every approach has uses for some people. This may be due to any number of reasons that we will not go into here. I do know that your index approach has many advantages and think it is probably just fine for you. Again wish you all the best.
    Jan 13, 2016. 09:15 AM | 1 Like Like |Link to Comment
  • XLE: A Solid ETF, If Only It Could Beat Exxon Mobil  [View article]
    @GetRealHere. I really do not know how to say this without offending a lot of people but here it goes. The vast majority of college educated, 50+ hours a week, money managers have many clients. Let's say over 100 clients per manager. When you have that number of clients' portfolios in your hands, you cannot spend a lot of time giving each one of your clients lots of individual attention. Oh, you may try but soon enough the 50 hour weeks become 80 hour weeks, and all of this extra work produces very little additional profit for the manager. Therefore, most managers follow standardized professional investment approaches which do not take much account on individual differences between portfolios.

    If you really want totally individualized professional handling for your money you have to develop a significant amount of knowledge on your own and have to stay in close communication with your financial manager. The idea is to provide the guidance you wish to have applied to your portfolio on your own. This is not easy to do successfully.

    By the way I think the approach you described based on buying sector funds after a sector has been beaten down heavily in the market is quite reasonable and may produce significant profits if done correctly.

    Wish you all the best.
    Jan 11, 2016. 11:41 AM | Likes Like |Link to Comment
  • The Great Reset! Has It Begun?  [View article]
    So Bruce, this may be the application of the old Chinese curse about living in interesting times featuring China in a major role... Let's say I hope you are not right about a collapse in debt. I do agree the future may well be very interesting over a certain, and as yet undefined, period of time.

    You are correct in saying that trees do not grow to the sky, but they are biological organisms with built in limits. Is there an organic built in limit to the markets? That is a limit that is not imposed by regulatory or political action? I do not know the answer to this either, but I suspect that as the concept of a global economy becomes more and more of a reality we are likely to see interesting changes in political and regulatory activity as well as in the markets themselves. I would like to mention that these changes may open up all kinds of possibilities.
    Jan 10, 2016. 03:34 PM | Likes Like |Link to Comment
  • The Great Reset! Has It Begun?  [View article]
    @Bruce, I agree the addition of influxes from sovereign funds and the proliferation of derivatives further complicates the evaluation of possible market moves and most likely contributes to its increased volatility. The market's complexity, already huge, is increased by these types of inflows and influences. I am personally not sure that the massive US credit and debt expansion of the last few years makes the current economic conditions unsustainable and require a "reset" as you call it. After all both Europe and China are currently on a path of increasing stimulus at the same time the US starts raising rates. From a global point of view, the expansion in credit and debt appears to continue undeterred. The same, in reverse, happened when the US under Bernanke was actively providing stimulus while Europe was engaging in austerity. Are we getting near an endpoint to this?, for all I know the status quo may continue for quite some time yet.
    Jan 10, 2016. 02:24 PM | 2 Likes Like |Link to Comment
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