Some things are just obvious. Every big rally in the last 6 weeks has been met by selling pressure from hedge funds, and guests on the various financial networks have convinced investors that every rally should be sold.
On the flip side, every sell-off has been met with buying pressure. The smart money likes to invest in the markets during periods of turmoil, and these investors will hold positions until the next bull market begins to mature. I believe the smart money is accumulating at these levels, and they will not sell for another three to four years.
Below is a excerpt from "The Book of Business Wisdom" edited by Peter Krass. On page 421, there is a chapter entitled "How to Make Money on Wall Street" by Henry Clews.
During the late nineteenth century, Clews saw firsthand, and understood how Wall Street worked. In his book, "How to Make Money on Wall Street", Clews revealed some shocking stories of political and economic manipulation.
The nuts and bolts lesson from Crews is that regardless of the investment, investor emotions often cause serious mistakes.
While it's easy to get rapped up in manias and hype's (I.E. - The NASDAQ in 2000, Real Estate, Dow 12,000?) the big money is made when there is blood in the streets and widespread pessimism.
"How to Make Money on Wall Street" by Henry Clews;
Few [traders] gain sufficient experience in Wall Street to command success until they reach that period in life in which they have one foot in the grave.
"In times of panic, (these old veterans of Wall Street) these old fellows can be seen hobbling down on their canes to their brokers' offices."
While the market is in panic, these old men go down to the bank and withdraw the cash and buy good stocks to the extent of their bank balances, which have been permitted to accumulate for just such an emergency. After doing so, they return home and wait for panic to subside, and euphoria to return.
Once the market recovers, these old men go down to their brokers' offices, sell the stock they bought, and put the money back in the bank.
"I say to the young speculators, therefore, watch the ominous visits to the Street of these old men. They are as certain to be seen on the eve of a panic as spiders creeping stealthily and noiselessly from their cobwebs just before rain."
'Those who follow this method always succeed. There has hardly been a year within my recollection, going back nearly 30 years, when there have not been 2-3 squalls in the Street, when it was possible to purchase stocks below their intrinsic value".
Intrinsic Value ? Haven't we heard this term used by Warren Buffett?
Here are our Top 10 ETF's for the week of November 10th:
1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) FXF: Currency Shares Swiss Franc Trust
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) KBE: KBW Bank ETF- Not Rated
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust
Here are our Top 10 Fidelity Sector Funds for November 2008
1) FSCHX: Chemicals
2) FSMEX: Medical Equipment
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSRBX: Banking
10) FSVLX: Home Finance
I Wish I Were Obama
Barrack Obama was handed a gift. Four years from now the economy will be firing on all cylinders, and he will look like a hero.
Unfortunately for George Bush, he has some extremely incompetent people working for him. Bad advice was up and down the halls of the White House. In addition, this bad advice permeated over to the McCain campaign. The republicans looked like a bunch of out of touch morons. If I were running for President, and wanted to make sure that I lost, I would do exactly
what the republicans did.
If you have read my blog for any length of time, you know that I believe that behind every politicians there is a man (a force or group) behind the curtain pulling the levers and giving instructions.
I find it odd that in August of this year the DJIA was hovering around the 11,500 level. Both candidates were about even.
Here are some polling quotes from some media outlets during those months;
07-17-2008: A recent Washington Post-ABC News poll found 72 percent of Americans say McCain would make a good commander in chief, compared to 48 percent who say the same about Obama.
Today the Obama's will be touring the White House with George and Laura Bush. First of all, if I were attacked a brutally as GWB was during the campaign, I would have responded aggressively to Obama's claims before the election. Secondly, I would not be a gracious host and show them around the White House. But that's just me.
I don't want to waste anymore time on this subject, but if the man behind the curtain wanted Obama to win, all he had to do was pull a few levers, and tank the economy and stock market in September and October.
For the Week:
The seesaw action in the stock market is all part of a bottoming process. The 3-month LIBOR rate was down again to 2.29% (back to normal) which means credit has returned to bank loan guarantees.
As credit returns to the market place banks are more confident to loan to one another, and as the Christmas season approaches, I don't believe the massive contraction in spending that many are expecting will occur. Sure, there will be a pullback, but I believe when the consumer spending numbers are released in January and February, you will see headlines like; "Consumer Spending was Better than Expected".
You need to remember with an unemployment rate of 7,8, or 9 percent, over 90% of the country is still working and making money. Since spending has become a habit, spending will continue. For many, it's their favorite pastime.
Yesterday I went to the outlet malls in our area, and the parking lot was jammed. The Ralph Lauren Polo store was packed with customers, and they were buying. I told my wife with all the discounts this Christmas, I wanted us to spend double what we spent in 2007.
In short, whether it is stocks, or retail items, now is the time to back up the truck.
-Gold
-The U.S. Dollar
Our current asset allocation is as follows;
95% Equities: (Normally 95%) Aggressive
80% Equities: (Normally 80%) Moderately Aggressive
60% Equities: (Normally 60%) Moderate
40% Equities: (Normally 40%) Moderately Conservative
20% Equities: (Normally 20%) Conservative
