The Contrarian

[aim hier]

I continue to read everything i can, books, internet blogs, magazines. Most of what I read is unhelpful. But one good idea can make all of the time and expense very profitable.

Of what I read that is unhelpful, it's not that it's all bad information, much of it may well be sound. But it's just not me. As many have pointed out, each investor/trader, has to find a methodology that matches their personality, temperament, and risk profile.

[aim hier]

Unlike many here, I'm retired, thus I'm focused on risk management and cash flow. But if you were to see my actual portfolio, you'd be disbelieving that statement. It would appear agressive, with no bond or cash holdings per se.

Yet it's a system of systems. I think it's fairly simple, but not compared to AIM or Stock Trading Riches. I'm investing in growth, but have several system features to prevent the kinds of big drawdowns, bear markets bring.

I don't like fixed income investments, as for much of my adult life, they underperformed. I did well with some modest investments in recent years, but I think bonds have entered a long term bear market.

But are there any bonds that I would consider. Yes, a convertible bond might be of interest, if I was high on the underlying company and it's conversion value close to it's bond value. Also, a high yielding corporate bond, where I felt the credit quality of the issuing company was improving, might be worthy of consideration. Conceivably, there might be some overseas bonds worth considering. But for my part, I'm in equities and commodities.

[aim hier]

The Fed can control short term rates, but not longer term rates. Longer term rates are already rising. Commodities are rising. Whether it's due to the economy growing, inflation, the risks of higher future interest rates, is in my opinion, too great to invest in any bonds, corporate or government, at ths time.

Where to put your money? Wish I knew, gold seems overbought as well, at least on a short term basis. I think you are probably best served, investing in Buffett type companies, that have been successful, and likely will continue to be successful, and are selling at reasonable multiples of earnings. If they pay a little bit of dividends, that is a plus. These stocks will probably do well, whatever the economy does, or the government chooses to do. I prefer cash to bonds, even at zero interest rates. I prefer equities to cash. But if in doubt about an equity, I'd choose cash in a heartbeat.

[AIMster]

Interest rates will rise, the question is when, not if.

Given the relatively historic lows, what else can they do if not just sit there but go up? Not much further down to go to 0%. The thing of it is that rising rates are usually used to help cool down an overheating economy. This economy is anything but. With joblessness being where it is and new uncertainties out of Washington, given the change in power structure between the Democrats and Republicans it will be interesting to see.

Of course, with Bernanke cranking out $ at the Fed, an inflation ignition becomes more real all the time also. In that case, we could be in for some volatility and turbulence - which in a contrarian sense is not necessarily a bad thing.

[aim hier]

Nice to open the new year with GAINS. That said, I remain worried about the overly bullish sentiment. I'm looking to reduce my equity exposure, on any market weakness. There are plenty of negatives, that the market could focus on at any time, to lead us to a healthy correction. I'm bullish long term on equities, but not in the short term.

I'm very bearish regarding bonds. I wouldn't invest a red cent in them, and you'd be better off in cash even if pays zero, than any bond, short or long term. In my own portfolio, I don't generally use fixed assets to reduce volatility. But, even if I were to do so, now is not a time I'd give it any consideration. Interest rates will rise, the question is when, not if.

[aim hier]

Hi Aimster,

It depends upon the period of time, the ETF has been in disfavor. I know of some people who earn a living doing the opposite, buying high relative strength ETFs. The longer the period of time that an ETF has experienced poor relative strength, the more attractive a purchase it may make.

In other words, if ABC has been a poor performer the past quarter, it might be a good sale candidate. But if it's been a poor relative performer the past 3 years, it's probably a good candidate for purchase. I haven't researched this myself, but from some studies I remember reading, the minimum period of poor relative performance is a year, optimally 3 years.

[AIMster]

In general, the ideal contrarian prospect is a stock, no one follows, no one reads about, it's off the radar screen. Or, it's a well known stock that has cratered. Everyone knows it's history. Shareholders who owned it and lost big, before selling, won't consider rebuying it. It's a leper. Some of the lepers pass over to the final resting place for spent corporations, but many do in fact recover, and can be great investments.

With the analogy I couldn't resist the line from the old Monty Python film The Life of Brian, appropriate for this time of year, actually as it follows the life of a poor fellow named Brian who happens to be in the next stable down the road and around the same time as Jesus. Initially mistaken for Jesus, it gives his parallel story. Which segues to my point of where, later on, Jesus having cured a leper of his affliction, said leper is still going around with his begging bowl, asking instead, "alms for an ex-leper? alms for an ex-leper?" That was all he knew to do, though now free of the disease.

Another contrarian play that might be less risky than dealing with an individual company that may crash-and-burn totally would be to buy ETF's of the lowest ranked relative strength. These are the ones of companies in the least favor. Likely they will return to favor sooner or later, and in so doing, afford the investor a tidy profit. Buy low, sell high, after all.

Best,

AIMster

[PraveenP]

In the case of Forbes Magazine, I've figured out that the columnists are motivated to give good picks at good prices. They even publish how their picks did a year later (minus a certain % to simulate commissions, fees) vs. the S&P 500.

The readership of Forbes is skewed to the wealthy, and Forbes and the columnists make the big money and business contacts by hosting investor luxury cruises, etc.

So they are motivated to give good, timely picks because they want to attract wealthy couples and financial planners to their cruises and retreats.

That is why a billionaire like Ken Fisher bothers to write a column for them.

In a way, getting some picks from Forbes is a contrarian play, since the majority of magazines give picks after the stock is successful

[aim hier]

Hi Praveen,

I certainly would agree that stocks receiving favorable coverage in articles are likely to be much higher by the time you read it. The long lead time before an article is written and is published and distributed is only part of the problem.

I haven't read Forbes in a while, though I did recently add it to my Kindle subscriptions, so I will check it out. However, I'm a sceptic as to columnist reccomendations as well. There is only one motivating factor to recommend good stocks, and that is the hope that a reader will be impressed by the recommendations, and become a client.

On the other hand, suppose you are already one of his/her clients. If they see a great prospect, but haven't finished buying all of the shares they want, wouldn't they be harming your interests, but disclosing the stock now? On the other hand, what if they had a large position in a stock that had produced outsized gains for them? If they wanted to trim that position, wouldn't it be great to write about what a great stock it is. With the subsequent runup, the shares could be sold. It would not surprise me if some hedge funds are already playing this.

For a long term investor, this might not be so bad, as over the long haul, buying the shares for a buck or two more dollars, might not be a disaster, particularly, if more shares are added on declines. But for those, looking to see quick profitable trades, these recommended issues are probably not promising.

Now I haven't actually tested this thesis, it just appears logical. HOwever, I did read an analysis of Wall Street Week recommendations some years ago, and it supported the thesis.

In general, the ideal contrarian prospect is a stock, no one follows, no one reads about, it's off the radar screen. Or, it's a well known stock that has cratered. Everyone knows it's history. Shareholders who owned it and lost big, before selling, won't consider rebuying it. It's a leper. Some of the lepers pass over to the final resting place for spent corporations, but many do in fact recover, and can be great investments.

[PraveenP]

I'm not sure of the other publications but, over the years, I've gotten some good stock picks from Forbes magazine.

But, I only look at the columns by the analysts - especially Ken Fisher, who is a contrarian and a billionaire. I've found that they recommend stocks at good prices - either value or gaarp (growth at a reasonable price).

I have found that it's best to avoid investing in those companies featured in the main stories - those written by reporters. Those stocks have already climbed a lot by the time they are featured.

[aim hier]

We live in interesting times. Several sentiment surveys, show that bullish opinons are very high, which is worrisome to a contrarian. ON the other hand, we are at a time of the year, when the market has generally been favorable, and the economy seems to be recovering.

I am largely invested, but with a decent cash balance. If we get a correction, I should be in good position to take advantage of lower prices, but if the market continues higher, I will profit from that as well. As the market climbs, I will add to my cash position. As a retiree, I'm happy to sacrifice some gains for safety. On the other hand, I'm largely a stock investor, somewhat unusual for a retiree. I don't find bonds at all attractive in this environment. CDs, money market funds? They pay nothing. I have a lot in money market funds, as collateral for my options trades, but they pay nothing, fortunately, the underlying trades are very profitable.

By investing in quality businesses, many of which pay growing dividends, I'm prepared to accept whatever the market chooses to do. I have no control over the direction of the market, and am somewhat indifferent to what it does. If stocks go up, I will consider selling any shares that seem to have outrun the value of the underlying business. But if shares decline, I will certainly look to add shares.

Finally, I continually review my holdings. If any of my underlying businesses, seem to have declined in quality and in their future prospects, I will sell them, regardless of whether I have a profit or loss, and invest the proceeds in a superior business.

[aim hier]

Biggest way, my strategy varies from AIM, is that I try to invest in great companies. Why would I sell, just because the price goes up a little? When AIM gives an order to sell, is it because the stock is overpriced? No, AIM, doesn't have a clue what a stock is worth. And where it gives an order, depends on portfolio valuation, minimum trade size, and safe controls.

The only valid reason for me to sell, is that the fundamentals have changed for the company, or I find another company that seems to have an even brighter future. But I certainly don't want to sell a great company to put the proceeds in a money market fund, paying almost zero. My companies will grow more valuable over time, regardless of how the stock market values them. I try to keep just enough cash to allow me to adust my options positions, as conditions warrant.

[aim hier]

How do you pick stocks in which to invest? If it's as many, by reading financial publications or watching CNBC, I'd suggest a little different strategy. Prior to your reading, a large number of people have already invested in that stock and pushed the price up. Look at a chart, has the stock recently had a great rally, you might do better to put that stock on a watch list, and wait to see if it declines before you buy.

When you like a stock that is written up in Money magazine, Forbes, Smart Investing, Kiplinger's, et al, you are very late to joining the crowd. Maybe you will do well in the long run, but you probably will be disappointed in the short run.

[aim hier]

Most individual investors are part of the crowd. They don't realize it, but they are. They will insist that they are long term investors, and don't follow the crowds. But studies show, that most people invest more at market tops, and less at market bottoms. Are you scared today? It does seem like the world as we know it, is about to end. Even if you are right about the market crashing, how will you know when it's safe to get back in? It's a given that the market will be much higher, before you are comfortable putting money back in the market.

It's not just that people become influenced by media coverage and personal conversations that reinforce either enthusiasm or fear. When times are good, people are employed, they get raises and bonuses. They have monies to invest, so they invest when market prices are high. In recessionary times, employment is down, earnings take a hit, there simmply isn't as much money to invest, even though prices are low. Of course, even if one has money, they may be too scared to put it to use.

If one is selecting successful, growing companies, the past several centuries of market history, suggests that you should stick to your plan. If our economy self destructs, where is a safe place to put your money? Cash may be a terrible place to be, real estate, commodities, there are certainly scenarios where these don't do well either. Perhaps, having your money in a Swiss bank in a safer currency, but that's not practical for many of us.

[aim hier]

Why being CONTRARIAN is profitable. Many studies show that the average individual investor severely underperforms the stock market averages. That is amazing, as the stock market has outperformed just about every asset class over the long term.

Obviously, if you are doing what most individual investors are doing, you aren't going to fare well. Indeed, I've identified dozens of areas where being in the crowd, hinders your opportunity to be successful.

I'd almost recommend that you don't watch CNBC or read financial publications. The reason is simple, the names you hear over and over, are not necessarily great investments. The very best investments are dormant, in terms of media coverage. No one is following them. Comapnies that have had their earnings and revenues trashed, have had their stock prices annihilated. Former shareowners lost a lot of money, and won't consider the stock again. Some of these trashed companies will disappear. Many others will quietly rebound. By the time, they are grabbing a lot of media attention, they are poised for a correction.

The moral of the story, is that if you are a natural contrarian, you may do well in the market, if you fade the crowd. But, if you are like most people, and prefer concensus, you'd probably be well advised to place your investment monies in carefully selected ETFs, CEFs, and mutual funds, and pretty much leave them unchanged over the years, unless there is something fundamentally different about the fund, such as a change in orientation, higher fees, etc.

[aim hier]

Much to be thankful for. I'm retired, my time is free to do as I please. I have adequate income, and cash reserves. I no longer really care what the market does from day to day. I have no control over what it does. I AM confident that I will be able to continue to earn monies from my investments over time, no matter what Mr. Market decides to do from day to day.

[aim hier]

HI all,

The market has been very good to me the past year and a half. I'm probably a little more aggressive than the average retiree, but I feel comfortable with the risks/rewards that I'm assuming.

I like the fact that I've borrowed a little here, a little there, and my final operating system, is probably unique to me. I consider myself an investor, but my trade frequency is more like that of a trader. I'm a little of both. And I'm happy to go against the crowd, whenever one forms.

My board appears in the AIM, free section, though I acknowledge, it's not strictly AIM. Indeed, I consider AIM to be a rather poor investment strategy, but it's superior to no strategy at all. I don't always buy on dips, nor do I necessarily unload my positions after a good advance. I trade options more than stocks, and also have done well over the years with deeply discounted closed end funds.

[neko]

To Aim Hier

Thank you for your information. I just read my mail today.



neko

[Firebird400]

Hi AH,
I'll be in Ocala end of next week for 8 days. Keep the temp in the 80's please, Best Regards, Ken

[Toofuzzy]

We should be in a recession, almost all agree. Could we all be wrong?

Naw. The numbers are wrong! Lies, damm lies, and statistics!

Not always
Toofuzzy

[aim hier]

Will we miss the recession that was recognized by almost everyone just a week ago? The GDP went up a scant 0.6%, but that's still positive. The dollar is now above par versus the Canadian dollar, and has been a little stronger against other currencies.

Stay tuned. It's an election year, so every piece of data gets extra parsing. We should be in a recession, almost all agree. Could we all be wrong?

[aim hier]

Viewed CNBC the other day, usually a mistake. Caught two former Clinton administration economists. The optimistic one was Robert Reich, who foresaw ONLY a 20% chance of a DEPRESSION! Don't you feel better. He was followed by Joseph Stiglitz, nobel prize winner, who predicted a long, deep recession.

Clearly, the doom and gloomers have won the day. A recession is unavoidable at this point. How deep and long are still to be determined. While the psychology is poor, underlying fundamentals will improve. Every month, mortgages are being amortized, and there is more liquidity in the system. Also new families continue to form and they constitute home ownership demand. Home builders are not adding to inventory as in normal times. The upshot is that the economy's bugaboo, housing, has to be moving towards a more normal balance in supply and demand. Some of the houses currently in the inventory pipeline, will be removed voluntarily by weary sellers, who will decide to stay where they are, and upgrade their present domicile.

The U.S. economy has been tested many times, it has always rebounded, and I'm confident it will this time as well.

As for the economists, bear in mind that they are not immune to biases themselves. When tied to political parties and candidates, they are subject to a number of influences and biases that may color their forecasts.

[aim hier]

Existing home sales unexpectedly rose in February!

http://www.bloomberg.com/apps/news?pid=20601068&sid=a1qSmdzaJ1gc&refer=home

couple this with the brief but sharp rally in the stock market, the S&P report that financials had about written off all the bad paper on their books, JPM raising it's bid on Bear Stearns, you might be excused for thinking we might be bottoming.

No guarantees, my crystal ball is in the shop, but we might be bottoming at that.

[aim hier]

The VISA IPO was well received, somewhat surprisingly. If we are entering a recession, one would expect VISA fees will decline. Just looking for any signs that the widely expected depression, is not going to materialize.

[aim hier]

Bear Stearns collapse and Alan Greenspan's comments about our being in worst economic crisis since WWII, have led to the market bearishness. Overshadowed was S&P's report last week that they believed that the end to financial writeoffs was near. They still see problems in the housing sector, but the credit writeoffs are largely done, both domestically and globally.

Each month, mortgage lenders are becoming more liquid, as mortgages are being amortized through monthly payments, and payoffs as homes are sold. Biggest problem is that the psychology of homebuyers must be as bearish as that of stock investors. Why would you buy a home today, if home prices are going to decline for a long time to come. That said, at some point, many people are going to realize that it's a buyers' market and interest rates are low. When everyone recognizes that housing prices are firming, prices might not skyrocket, but sellers won't be as motivated to deal, as they are today.

[Firebird400]

Hi AH,
I'll be in Ocala in a week. Get me some warm weather please. Ken

[Toofuzzy]

Thanks Aim hier

That is why I use AIM instead of either Technical annalisis or Fundemental. And I try to stay away from individual stocks also.

Toofuzzy

[aim hier]

Hey TF,

I don't have up to date information about the banking industry. At times, I'm not sure anyone does. I'm not sure that publicly available information is sufficient to really determine the true condition of many financial institutions.

For example, is an investment grade security really an investment grade security. Just as individuals are always looking for a free lunch, so are bankers. Take a bunch of subprime mortgages, have them guarantee by an insurer, and presto, you have a higher yielding investment grade security. If the insurer had not properly discounted the decline of housing prices and moral risks of subprime mortgages, they may have guaranteed more such securities than prudent for their capital reserves. If the bank primarily relied on the investment grade rating, you have the makings of an instrument defying analysis by a layman. Add in, that such securities may have been used as collateral for borrowings, you have more uncertainty. Presently, there are margin calls being issued as these securities are steadily being marked down. Thus an institution may sustain horrendous losses or even fail, even in a case where the actual performance of the securities turns out to be favorable.

[Toofuzzy]

Hi AIM Hier

In February when IYG was high I had an AIM directed sell for 5 shares. The broker sold 50. I could have made a stink but maybe it was my error. So I just bought 45 shares back. I had a BIG taxable gain.

Fast forward to December and IYG is down the tubes. I am supposed to buy some shares. Then I realized I had the gain. Instead of buying more IYG I sold all I had and then bought KRE in its place.

I killed two birds with one stone.

1) I now had a loss on the 45 shares of IYG to offset the gain on the 50 I sold.

2) I switched from a financial ETF that held a lot of large cap companies that I knew had exposure to subprime to an ETF that held regional banks, was more narrowly focused but was highly correlated to the ETF I sold.

Anyway with your knowege of the banking industry are their any you like?

ING, GS, Bank of NY ? BAC scares me because they want to purchase Countrywide.

Any thoughts on NLY. Are any of the mortgage / finance REITS going to survive?

Toofuzzy

[aim hier]

Yesterday seemed so much like the day before the last day of the world. The numbers of bad subprime loans are eye boggling. One would think that every loan written the last five years was subprime. Then this morning I read of the latest economic forecast from UCLA, and their prediction is still for 1.5% growth in GDP, they'd be surprised if a recesssion develops. Surprised! I thought there was a nearly unanimous recognition that we were already in a recession. For the bold, this may be one of those once in a decade opportunities to snap up stocks cheaply when pessimism is widespread. Of course, I can't guarantee that the pessimists may prove right, we could see lower stock prices, maybe all of our financial institutions are failing.

It seems to me that we are getting a perfect financial storm. I worked in the commercial banking and residential mortgage markets more than 25 years ago, and marvel at the differences, and suspect that those differences have led, in part, to our current situation.

Commercial banks, insurance companies, and investment brokerages, were distinctly separate industries, and could not be combined. Derivatives weren't common. Most credit applications were reviewed and approved by humans locally, now computers make most of the decisions. Regulators have increasingly reduced the regulation of financial institutions and relied upon internal regulation within the industries themselves. All of these changes worked well as long as the economy operated normally. But in the days of the housing bubble, all of these things began to break down. Financial institutions were chasing fees and high yields, fell vulnerable to fraudulent credit applications, didn't understand the nature of risks in securitized mortgages, etc.

[Briboy]

aim hier: I had a great first half of 2007

but made some bad decisions, right now just chipping away,
if I get anything I will pass is on, but right now we are
in the midst of a bear market and things are tough,

re housing market, I agree. You should see things here in Texas....

good luck to you

briboy

[aim hier]

Hey Briboy,

I've never said contrarianism was an easy path to wealth. I will confess to having been premature in spotting contrarian turning points in this economy. I did find some comfort in Sam Zell's comments that the housing economy will bottom this spring. It has been my feeling that we were near to a bottom if not at the bottom. Housing prices are key, many of the most pessimistic forecasts assume that housing prices will fall much further for an extended period of time. But I think those forecasts fail to realize that there is pent up demand for housing, coupled with a decline in new inventory, and interest rates are low. Further, housing prices are a localized, not national. In many markets, prices are stable, while they are still falling in others.

My portfolio is not back to it's pre-November levels yet, but it's getting closer. If you see any good ideas out there, please share them with us.

[Briboy]

I would like to be considered a

Contrarian, but I have hit a brick wall lately, so currently I am non-contrare, but I am in abeyance to any advice from the powers that be,

with that, I remain

briboy

[aim hier]

Fascinating story developing at French bank, Societe Generale. The bank claims it discovered a massive fraud perpetrated by a low level rogue trader, which led to the bank sustaining 7 billion dollars worth of losses. The bank unwound the trades Monday, and may have caused the worldwide selloff which convinced the Fed that an emergency 3/4 point rate cut was needed.

This is always a problem in the markets. The markets have been so weak, and pessimism so high, that the worldwide selloff seemed to confirm that there were a systemic crisis in the world's finanical markets. Had the market not been so pessimistic, the Fed might have dug a little deeper into the situation.

The bank's story still seems a little suspicious. In light of the Barings Bank rogue trader incident, one would certainly have thought all of the big global trading banks would have tightened control of their systems to prevent such an occurrence. Nor is the motivation for the fraud evident, the trader was not highly compensated, and supposedly was not considered a star. Perhaps he had made a string of bad trades, and was hoping to cover it up, but 7 billion dollars is a lot of bad trading.

But then, we have our own problems here in the U.S., with off balance sheet entities, improper risk management, poor regulatory efforts, malfeasance by bond ratings agencies, a lack of public disclosure of the looming credit debacle, until long after more knowledgeable large investors had time to divest their shares. One would have thought that the President and Congress had plenty of time to fix these problems after the Enron, World Com, and Global Crossing scandals. Evidently not.

[aim hier]

Interesting day coming up. Looks like a major downdraft at the open. both seasonality and contrarianism have taken hits recently. The market was strong when seasonality suggested weakness, and has been awful in a seasonally strong season. Last month I thought there were strong concensuses, bullish for oil, bearish for the dollar and stocks. The oil and dollar calls look like they might work out, though it was decidedly too early calling for a contrarian play. Stocks, though, don't appear anywhere close to recovering. Will today represent the capitulation, that will provide a floor for the market?

Part of my problem in predicting the market is the fact that I worked in banking 25 years ago. The subprime problems seemed way overblown, I didn't think it was even possible for the mess to have developed that obviously has. That said, the banks have not only been reckless in the conduct of their business, they have been dishonest in their public disclousure of the problems. This should be a topic for a lot of political crusades against business in the coming year. Twenty seven years of deregulation has resulted in a financial meltdown. It is almost guaranteed that we will now overregulate in compensation.

[aim hier]

Hey TF,

I'm not sure what is contrarian about PCU, it's certainly a courageous move. I would have thought that with a weak housing market and weak economy, that copper would finally take a rest after a meteroric rise in prices.

I'm not sure what to make of anything, so I'm lying low. I got a nice pile of cash from year end dividends, but i need that money for several projects, so I'm just keeping an eye on things. I still think house prices will not be declining as much or for as long as most people think. I do think we are going to be in recession next year, but I think it will be a very shallow, short recession. I may get a little more adventuresome after the elections.

[Toofuzzy]

Hi Aim Hier

I just bought some PCU today at $84.82

Is that contrary enough for you ? >>grin<<

Waiting to get back in to REITS

ICF (if cut in half) or FUN and WRI

Toofuzzy

[aim hier]

it may be that the last shares sold, were as a result of a margin call, though I don't that to be true, but it definitely is not the cause of the majority of his sales. His legal argument will be that they were previously planned sales, and not a result of inside knowledge. The problem with this is that he made two changes in his plan in a short period of time. If the Feds wishes to make him a poster boy of insider trading, he is probably facing a short stint in federal prison.

I'm assumed by all of the references to his tan. Living in L.A., maybe he is tanned. But, I knew him over 40 years ago, and he was a dark complexioned Italian, then.

[Toofuzzy]

Hi Aim Hier

>>>>I suspect CFC's Angelo Mozilo will be prosecuted.<<<<<

Probably not. I think he ended up selling because of a margin call.

ow you COULD say he margined the account knowing there was going to be a problem but I think he will avoid prosecution.

Toofuzzy

[aim hier]

Listened to part of Bernanke's speech, one item that really caught my attention was his statement that it wasn't the Fed's job to bail out investors from bad decisions. That is, of course true, but it misses what actually happened. Did individual investors make bad decisions, or were they gamed?

All of the banks announced their credit woes, and writeoffs within a fairly narrow window, and LONG after they had to know of the looming problems. I'm certain that very wealthy investors and hedge funds were advised of the portfolio problems long before the public knew of the problems. I can't fault investors for buying financial stocks when all of the available financial information supported such a buying decision. Insider trading is a growing problem. Some of it is blatant, such as huge options volume just before buyout decisions. The SEC rarely does anything, short of making an example out of a very few cases, such as Martha Stewart. I suspect CFC's Angelo Mozilo will be prosecuted.

[aim hier]

Hi Don,

That was quite prescient, to somehow know that I couldn't link to the site!

your idea of looking for a low correlation index, was similar to my idea of moving into lower volatility funds when the price on major indices went below the 200 dma, and go into higher volatility funds when the indices reversed.

Basically, the idea was that the lower volatility fund would probably be an equity index, or balanced fund approach. That way, you'd less in a declining market, and hopefully pick up most of the gains in a bull market. In addition, in a bear market, the dividends could be reinvested in cheap shares.

Right now, my lower volatility funds have been quite volatile. when even money market funds are being filled with junk mortgage collaterized securities, there aren't many safe ports.

The weather has been pretty good here, though I think it's going to get a little colder next week, maybe down to the 60s.

Charlie

[DonCarlson]

Markets still unnerving...

Remove the trailing "/" on the link
http://fundbuster.com/idexc.htm/
and the link should work.

http://fundbuster.com/idexc.htm

[DonCarlson]

Markets are still unnerving.

Here's link to Major Market Indexes, that FundBuster (http://www.fundbuster.com/) has temporarily shared.

http://fundbuster.com/idexc.htm/

The Columns are sort able by clicking on them:

Last = Current RSI Stocastic (varies from 0 to 100)
Blue = over bought condition (can buy but be cautious)
Green = trend accelerating (buy candidates)
Yellow = trend leveling off
Red = trend heading down
Last column = RSI on last trading day (in this case Friday 1-11-08)
Negative columns = RSI on previous 10 days

MOM = Momentum ranking (comparing current RSI to -13 trading days back).
Acutrk = Measure of power, indicating if an index is outperforming a money market or not….so, when red, a person might as well be setting in money market.
Mtrend = Medium Trend, comparing this index to a 30-day EMA (i.e. green 5 indicates that the index is performing 5% above it’s EMA).
Ltrend = Long Trend, comparing the Mtrend EMA to a 200-day EMA of the index (i.e. green 7 indicates that the Mtrend is 5% above the Ltrend).
FBS = The FundBuster Score compares this index performance compared to the S&P.
RelSD = Is the Standard Deviation of the Index compared to the Std Dev of the S&P.
Link and Description = The index being analyzed.
Status, Buy_on, Gain %, Cdd%, and Sell_on = Timing system based on Parabolic’s, not the best, but meant to provide a person a general feel of how the index is performing.
[Cdd% = The current drawdown from highest value for the index since the current parabolic buy.
BH_1yr = The Buy and Hold of the Index for the past year.
Corr = The Correlation of the Index to the S&P. (i.e. when the S&P is declining, as it is now, a person should be looking for indexes/tickers that have a low/inverse correlation to the S&P).

[aim hier]

Market was very unnerving today, looking at the banks, it's hard to be very positive. We may be facing the greatest financial debacle of modern times. The FED talks of moderate risk, but bank managements aren't saying anything positive, even as the stocks slide below book value.

I have never seen a market like this, at this time of year, before an election year. The key is still, how healthy are the banks, and they don't seem to be disclosing much, on that score. There are banks now trading well below book value, in which case, one does have to wonder if they are viable. Yet, presumably the FED does have a clue, and it's apparently not doing very much, at least not publicly.

[aim hier]

I think we may have a long wait for the market to turn up. Like you, I thought we would climb a wall of worry at year end. The bank problems now appear to be rivalling the Enron fiasco. Nothing in my banking career came close to the sheer incompetence and recklessness we are now seeing. There was a total failure of regulation. A lot of fat cats have gotten a lot fatter, when the banks all announced their writeoffs, the portfolio problems were obviously known to a lot of traders months before.

We have breached the recession psychology tipover point. I never pay too much attention to consumer sentiment, it's a lagging indicator to me. But business sentiment is a different matter, and I think business sentiment is now negative and virtually guarantees a recession, no matter what the Fed does.

[DonCarlson]

Sure can use a warm up in this North Country.
This market is nuttier than a fruitcake. A few days ago, I thought it was trading a wall of worry and getting ready to rally; but, it's turned back down and we will have to wait for another day.

[aim hier]

It's cold, first overnight freeze in Pinellas County in 10 years. But it's about over, will be near 70 later today, and in the lower 80s by this weekend. Understand Chicago is going to be warming up, as well.

Can you believe this market?

[DonCarlson]

I heard it was so cold in Florida, it rained iguanas.

http://www.miamiherald.com/news/breaking_news/story/365463.html

[Toofuzzy]

Hi Firebird

Unfortunately you liking my post won't make me surpreme ruler of the US so I can institute either a flat tax or just a tax on energy.

The resulting lack of a mortgage deduction will drop house prices and make them more affordable to people who save money instead of borrowing it.

Toofuzzy

[Firebird400]

Hey Toof,
I like it, good post. Ken