When in Doubt Sell the Dollar to Save Stocks

Posted by Ray on August 27, 2009 under Main | Be the First to Comment

This seems to be a continuing theme for whoever is driving the markets to the moon, sell the dollar and buy equities. If you were watching today you would have noticed that oil, gold and stocks were trading down to relatively flat. Right about 12:00 the dollar started to decline which drove stocks and commodities higher.

This is a continuing trend within the markets and the primary reason why we have had such a dramatic rally. However, the reduction in buying power is not worth the trade off, in my opinion. If you are watching the news channels they attribute the markets turn on higher oil prices and virtually ignore the dollars plight, even though it is a weak dollar that moves oil. Why are they ignoring a declining dollar, I do not know, but they are.

There is really no reason for the market to be positive today as unemployment numbers were not very good, but, I guess, no revision in 2Q09 GDP was somewhat good news. Either way, we are seeing continuations of a very tired bull market were the likes of AIG, Citi, Fannie and Freddie are the market leaders. While the talking heads applaud this move I am reducing my equity position to 7%, down from 25%, most of which is international holdings.

Frankly, we are setting ourselves up for a most painful selloff which I am choosing to not participate in. I do not know when it is coming, but it will come and I am sure it will be brutal. The likes of Mark Haines seem to think that my view is very bullish for stocks, maybe it is, but I consider my view to be balanced with the data on hand. The data I see is horrible, frankly, and when AIG and Citi, both of which heavily owned by the government, are the market leaders then we have a serious speculation bubble building.

Examine the chart below, the data at hand and make your own call. I am sticking with the call I made 3 weeks ago, which we are barely 2% higher than now, of a market top. Of all the people I have spoken to, no one understands why we have not sold off yet and, perhaps, we will not. Until earnings catch up with valuations or valuations trade down to earnings I am very bearish on equities.

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…

This is What We Were looking For

Posted by Ray on October 28, 2008 under Main | Be the First to Comment

It looked as though the market was going to have yet another day of a downward spiral, but our prediction of a rally came to fruition after all. Yes, we were thinking the rally would not hold unless we had significant buying power enter the market, but the buying did come in after all.

The Dow broke through the 8,500 mark and it needs to close above this mark. It is physiologically important, but also technically important. While the long awaited rally is here we still have an hour and a half before the closing and anything can happen.

This would be an opportunity to sell some loosing positions, but wait before you start to buy randomly. This rally is just a short reprieve from further declines and may not even hold through the close of the day.

We do expect to see a nice close today, for a change.

Can’t hold a Rally

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

This is not a good sign. Even though consumer confidence is low, really does this actually surprise people, there is no real reason to sell stocks right now. Yes, technical analysis says to sell, but the fundamentals are OK, relatively speaking.

We are heading back to the lows set on 10/10/08 at 7,800. The late morning selloff confirms this unless we get a strong, very strong rally by the end of the day. The market has not been able to begin and maintain any type of rally, so we are not hopeful this will happen.

The transports are down, which will drag the Dow lower, and the Russell 2000 is down as well. Both of these are indicators that there is significant weakness today in the market. While we hold out hope for a late day rally it seems unlikely as of right now.

People Profiting From The Economic Turmoil

Posted by Ray on October 24, 2008 under Main | Be the First to Comment

As you probably guessed we read a lot of information. Some of the information we receive comes via email from other, well, unorthodox sources. We like to know what sales people are doing all of the time, especially in these times of panic.

So, we have seen a tremendous rise in equity index annuity material hit the market place. They are saying; “See, we told you these are good and safe investments.” Well, yes you may have not lost any money on the way down, but you don’t make any money on the way up either, so what’s your point?

No matter what, people, these are not good investments if you seek equity type returns. If you want to barely outperform fixed annuities in a bull market then go for this type of product. If you want to make any money in a declining or sideways moving market equity index annuities are the WORST investment you could buy. You would receive the minimum guarantee of 3% on 90% of your principle or maybe on 100% of your principle versus a fixed product that would yield closer to 4 or 5%, depending where rates go.

I am not saying they are all bad, so save the nasty emails sales people, but the vast majority of them are bad. Times like these make people appeal to your fears and you will make a decision you will regret. What is bad today, in regards to equities, will be good tomorrow, but a bad investment today will remain a bad investment for tomorrow.

On word, we get a lot of buy these stocks now, which are all bogus, never buy a stock because you get an email. Probably the most interesting email we received was from another annuity website. You may have seen it, Annuity MD – I refuse to link to it. This site is just plain ridiculous.

He starts out by saying he was an agent (we could not find is license in Michigan where he is domiciled) and was refused appointment by an insurance company because he told people the “truth” about annuities. It is one of those long one page sites, called a squeeze page which is always a warning sign to any web visitor to quickly hit the back button, where he states that you are being lied to the industry stinks and everyone, except for him, is stupid.

He sells his wears for $47 – it was free when he changed his business model to some lawyer to sue insurance agents, but now its paid again – with an up sell of $97 or a $100 and something fee for his “gold” service, whatever that is. Anyhow, we read his material, yes we paid for it, it is rudimentary at best and not even close to the price tag.

He is trying to sell annuities either through a referral program or himself, we never enquired further. I do not know this guy, but I do know that he also used to run the 2 minute workout site as well, an annuity expert that is also a fitness trainer?? Alrighty then, I guess there is some business diversification for you.

So we bought his material which we now use as light reading material when we are, um, well indisposed at the moment to see what it was all about. As we just stated what he sells you get on our site for free, so you make the call. We now get periodic emails from him and what he is up to, this is what we got last week – the exact email, we know there are grammar errors!:

Dear bob (that’s me, like I’d give him my real name),

Before I get to the bad news, I would just like to ask the following question:

Tony

So I wrote to Tony, here is what I asked:

Dear Tony,

What qualifications do you have in order to provide timely investment advice on this current crisis, i.e. licenses or securities experience?

I have not heard back from him as of yet, that was about 10 days ago. He is selling this news letter for, what he says, ordinarily $99 per month, but is running a special for $47 a month. However, since I am a client I can buy it for only $19.95 a month.

He claims that, and I quote: “When you become a subscriber to this newsletter, it will pay for itself one thousand times over in the money that you’ll save alone! The money you will save and earn as a direct result of this relevant and detailed information can pay you back 1,000 times your minimal investment. What if you don’t invest in the annuity MD Cures newsletter and you end up making one of the mistakes that could cost you thousands of dollars in your future? Furthermore, what if one tip we give you has a significant positive impact on your financial situation (which we believe it will)?”

Talk about fear mongering and profiteering. The point is that there are people who will do anything to make a dollar. This guy is one of them, switching between some rudimentary report to an affiliate of a law firm who sues brokers, WMI or something like that, to now selling this bogus newsletter. It is incredulous that someone would sink to this level.

Just because its on the internet it does not make a viable or worth while product.

The markets have yet to test their lows again, but we are seeing it trading between 200 and 350 down which could lead to a close on the 7800 lows today. However, the last hour of trading is erratic and dangerous to take any position. We are speculating a close of down 400 for the day with Monday being a swing trade day.

Have a great weekend and be careful about bogus sales people.