Market Capitulation

Posted by Ray on November 12, 2008 under Main | Be the First to Comment

The market hit its post 10/10/08 lows and closed on them. The Asian markets are getting creamed in overnight trading and a Canadian hedge fund has to liquidate and close 2 funds. This is the perfect storm for short-term trading.

Based on what we see, by the end of the week, but more than likely tomorrow, we will see a close below 8,000. This takes out the temporary bottom we called on 10/10/08 and there is no bottom until 7,500. However, after the new closing lows that we will see by tomorrow or the next day there should be a spectacular rally.

The rally will fizzle and the markets will then form a longer term sideways trading range, probably between 8,000 and 9,500 or 10,000. The good news is the consistent down days could be over in the next few days. There are so many good buys out there right now it is clear that the market is oversold.

Good luck and see you tomorrow as we discuss the talking heads and variable annuities.

The Internet and Annuities

Posted by Ray on November 3, 2008 under Main | Read the First Comment

We have seen this before, websites popping up over night saying that they are unbiased and the best place to compare annuities. Well, each site that comes along is a broker driven site which directs you to invest in what they feel is the best product.

What is the problem with that? Many, they could steer you into either the highest paying product, for them, or into a product they think is the best product for you, which is still the best product for them to sell you. This has happened again over the weekend, there were a few before this one actually.

While there is one online site that we have some respect for the rest, we do not. The rundown of the last sites that came out were AnnuityHQ and annuity Professor. Each of these sites copied an existing website and one tried to copy our system, only the ratings none of the actual data.

Well the new site claims to grade the contracts based on the COMDEX rating, surrender charges, sub-account quality – very subjective to personal feelings, expenses and a rider “evaluation”. Here is the problem, we looked at their “Top” picks, which are identical to what AnnuityHQ’s top picks because it is the same people, and there is no reason whatsoever that they should be claiming these products as “the best” in the industry.

It is laughable that sales people rate variable annuity contracts and try and tell you what the best contract is. They are SELLING YOU the annuity, it is that simple. This site did not even touch on real world scenarios, maximum costs or current financial risks, which are very different for mere S&P, Fitch or Moody’s ratings.

You have to be careful with who you are dealing with when buying a product. Especially from a firm that is both selling you a product and rating a product. This site gets the triple stinky award for their effort. Plus, they are dangerously close to a real trademark and copyright suit by not only us, but by another website.

Buying on Confirmation of a Recession?

Posted by Ray on October 30, 2008 under Main | Be the First to Comment

The market opened up +200 points today because Asia was up and, I guess, people like the confirmation that we are in a recession? We do not get it, but apparently buying stocks is a good thing when the economy shrank by .3% and consumer confidence is at 38.

While we think the market was oversold at 8100, we think the market is now way over bought. There is no reason to buy stocks today, the data stinks to high heaven. Although, this is the first hour of trading, but we do expect rationale people to come into the market soon and say, are you kidding me?

Based on the data the market should be much lower than it is. We see the technical’s kicking in to support the market, but fundamentals typically trump the technical’s. We speculate a loss by the close of trading today, but hell, if you like negative growth then go ahead and buy…

So, Do You Like Taxes?

Posted by Ray on October 29, 2008 under Main | Be the First to Comment

Regardless of what happens next week the one thing we know that is going to be a fact is that there is no tax cut coming, for anyone. All those campaign promises are just the stuff to get the person in office and once they realize that Congress has to approve it and they have to pay for it somehow.

Both candidates say that there will be tax cuts, but it just is not possible. If either of them get what they want then we are, long-term, in big trouble. We have too much debt, as the financial meltdown has shown us, and there is no one to bail out the government if it fails, well no one we want to bail us out, huh, hum China…

No matter who wins the election there is no way we can keep taxes where they are. They will have to go up in order to boost revenue in the short-term. We do not want to see it happen, but there is simply no other way out of this huge deficit we have. Neither party can deliver the tax cuts or their talking point programs there simply is no money to fund them with.

When they figure this out then they will look to us, again, to pay for their pet projects and staggering debt. Taxes go up and down, but now they will have to trend higher. Sorry, and keep your political comments to yourself please as we believe both candidates are very, very flawed.

In 45 Minutes We Will Know

Posted by Ray on under Main | Be the First to Comment

As expected the markets opened to the downside and has been volatile today. Although the volatility is more reminiscent of years past rather than the 4% swings we have seen in the previous weeks.

With only a 200 or so point swing it reminds us of the good old days before the FMOC revealed their interest rate decision. This is good news and even better news is the fact that the Dow is holding above 9,000. While the decision is still 45 minutes away we do suspect that the Fed will cut only by .50%.

Anymore would signal that the Fed is panicking and any less would send the markets plummeting. We believe only a .25% rate cut is enough, but the Fed has gone from making monetary decisions to now accommodating the equity markets. Even upon the news of the .50% cut we suspect that profit taking will ensue as the markets tend to buy on the rumor and sell on the news.

The pundits will be out saying that they should have cut more, but that is an opinion based on greed rather than necessity. Banks carry the US government backed guarantees now, they have plenty of funding and the last thing the Fed wants to do is take all of its recession fighting power away with one single huge cut, of the 1 – 1.25% some nut jobs say they should do.

So, as far as the markets, no matter what the decision it will more than likely lead to a selloff today. We could be wrong, but with the huge run up from yesterday before the news it is a pretty good bet that negativity will take over.