tag:www.johnmugarian.com,2009://1 2009-07-02T15:02:39Z John Mugarian's Dynamic Growth is a website geared for investors looking to safely grow their money with sector mutual funds and ETFs. Movable Type 3.33 tag:www.johnmugarian.com,2009://1.1300 2009-07-01T18:08:59Z 2009-07-02T15:02:39Z

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey All the richest investors already know this. Do you want to know how to be a successful investor? "Ride...

John Mugarian http://www.johnmugarian.com/ "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey All the richest investors already know this. Do you want to know how to be a successful investor? "Ride the Wave, then get the hell out"! Be a 2-3 year buy and hold guy, then get out and wait for the next disaster to happen. Oh, believe me, every few years Wall Street or Washington will make sure another disaster happens . There use to be a time in the investing world where buy and hold meant something. 30 or 40 years ago you could buy stock in a big blue chip company, reinvest the dividends for 20 years, and in the end, you would have a nice nest egg to live on. Not anymore! So what has happened? Society has changed. I attributed most of it to a lack of discipline and greed. Discipline can be lacking in many aspects of ones life. It can be a lack of fiscal discipline is directly linked to greed (spending, real estate, the NASDAQ in 2000). Greed makes a person do unethical things in order to gain possessions, or an advantage over another person. Imagine you were a conservative investor in GE or Bank of America. You bought your initial shares 20 years ago, reinvested the dividends, and add a few hundred a month along the way. Thinking you were doing the right thing, one day you wake up and find that your financial nest egg has been decimated. The investor above would not be characterized as a "trader", and certainly not a "gambler". They were simply long term investors thinking they were doing the right thing. Character in our society, particularly on Wall Street, no longer exists. The once-proud capitalist system that transformed the U.S. into and industrial powerhouse is essentially dead. Beady eyed executives at Goldman Sachs (Wall Street) continue to receive huge bonuses while the rest of the nation is worried about a recession, their retirement plans, and making the house payment. These are the same Wall Street clowns that try and convince you to be a longer term investor. What a load of crap. How about this arrogant idea former IBM CEO Lou Gerstner. Gerstner said that US authorities ought to have a tax of 80% for those who buy in the morning and sell in the afternoon; a 50% tax if you hold for a year, and zero tax if you hold forever. The arrogance of these fat ass CEO's is amazing. How about this rule Louie? No stock options, and no stock grants for corporate executives unless the giveaways are directly expenses against the company's earnings. No more free rides on the back of the small investors . Now that you know how the game is played, "Ride the Wave, then get the hell out"! ]]> tag:www.johnmugarian.com,2009://1.1299 2009-06-29T18:48:50Z 2009-06-29T19:38:15Z

PART 1 Please pat attention to Larry Levin, of Secretsoftraders.com and CNBC's Rick Santelli as they agreed this morning that the markets have been propped up by the Obama administration- see video. For years, investors who accused the interventionists of...

John Mugarian http://www.johnmugarian.com/ PART 1 Please pat attention to Larry Levin, of Secretsoftraders.com and CNBC's Rick Santelli as they agreed this morning that the markets have been propped up by the Obama administration- see video. For years, investors who accused the interventionists of doing such things were chided as being conspiracy theorists. Those who make these accusations are either part of the gang, or just plain dumb. When comes to the stock market, please understand it is a game of us versus them. Listen to the people who mock terms like "Green Shoots, Goldilocks Economy, Soft Landing, The Resilient Consumer, Points above new all-time high on your TV screen, and don't forget this one...Erin Burnett's, Economic Nirvana." PART 2 I know it's been plastered all over the TV today, but Bernie Madoff was sentence to 150 years in prison for his 20 year, $65 billion fraud scheme. Okay, that's all well and good. What are they going to do about the Wall Street investment banks that created, the so called toxic assets that almost bankrupted the nation. What about those people? What do you think will happen to them? Here is how judges have reacted when Wall Street investment banks doing something wrong- Sgt Schultz of Hogan's Heros Can anyone say- It's us against them? Here are our Top 10 ETF's for the week of June 29th: 1) DBA: Powershares DB Agriculture Fund 2) EWZ: Brazil Index 3) DBE: PowerShares DB Energy 4) USO: U.S. Oil Fund 5) IYF: iShares Dow Jones US Financial Sector 6) DDM: Ultra Dow 30 Proshares ETF 7) PGJ: PS Golden Dragon China Fund 8) IYW: iShares DJ US Technology Sector Index Fund 9) CASH 10) CASH Here are our Top 10 Fidelity Sector Funds for June 2009 1) FSPTX: Technology Portfolio 2) FSRBX: Banking 3) FSCGX: Industrial Equipment 4) FCYIX: Industrials 5) FSCPX: Consumer Discretionary 6) FSCSX: Computers & Software 7) FSCHX: Chemicals 8) FNARX: Natural Resources 9) FSENX: Energy 10) CASH ]]> For the Week: New money continues to pour into the stock market as the mutual fund industry has seen a month and a half of positive inflows. These inflows continue to put a floor under the stock market. With the consumer making up about 70% of GDP growth, the unemployment numbers need to improve to get the economy to start growing again. The Labor Department announced that the unemployment rate is at 9.4% and expected to rise to 10% or 11%. Concerns continue to grow from the world community over our nations so called "quantitative easing" program. Both German Chancellor Angela Merkel, and Chinese officials continued to question U.S. stimulus policies. Chancellor Merkel said, “I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line,” she said. Merkel stressed that “We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years’ time.” The Fed’s continued quantitative easing continues to put pressure on the dollar lower and push commodity prices higher. -Gold -The Commodities CRB Index -Crude Oil -The U.S. Dollar -The 30 Year U.S. Treasury Our current asset allocation is as follows; 85% Equities: (Normally 95%) Aggressive 72% Equities: (Normally 80%) Moderately Aggressive 56% Equities: (Normally 60%) Moderate 36% Equities: (Normally 40%) Moderately Conservative 18% Equities: (Normally 20%) Conservative ]]> tag:www.johnmugarian.com,2009://1.1298 2009-06-25T20:35:41Z 2009-06-25T21:30:59Z

The Manure salesmen have been out in force using another new term from Wall Street to sucker investors into buying. That new word is..."Green Shoots". Steve Leuthold from the Leuthold Group was interviewed on Bloomberg a few days ago, and...

John Mugarian http://www.johnmugarian.com/ The Manure salesmen have been out in force using another new term from Wall Street to sucker investors into buying. That new word is..."Green Shoots". Steve Leuthold from the Leuthold Group was interviewed on Bloomberg a few days ago, and while he is no longer a bear, Steve chuckled at the new "Green Shoots" euphemism, and said; "Too much Fertilizer can kill a "Green Shoot". Of course, Steve was referring to the aggressive stimulus being pumped into the economy, and how the results could kill off any chance of a sustainable recovery. Warren Buffett was interviewed on CNBC yesterday, and was asked if he was "seeing any of those green shoots?" Buffett replied, "I looked. I wasn't seeing anything. I had a cataract operation on my left eye about a month ago and I thought maybe now I'll be able to see green shoots. We're not seeing them." These comments were in direct opposition to the Fed chairman (Bernanke) was said that the "pace of economic contraction is slowing, and the conditions in financial markets have improved in recent months." When trying to decide who to listen too, listen to the people who mock terms like "Green Shoots, Goldilocks Economy, Soft Landing, The Resilient Consumer, Points above new all-time high on your TV screen, and don't forget this one...Erin Burnett's, Economic Nirvana." tag:www.johnmugarian.com,2009://1.1297 2009-06-22T16:10:07Z 2009-06-22T17:16:14Z

Clearly, the economy has sidestepped a prolonged economic disaster, but the strong recovery in the stock market has brought hopes that growth will return to historical norms. One day it may, but not for another year or more. With energy...

John Mugarian http://www.johnmugarian.com/ Here are our Top 10 ETF's for the week of June 22nd: New Buys: IYW: iShares DJ US Technology Sector Index Fund New Sells: SSO: ProShares Ultra S&P500 Trust I am selling the double bull S&P 500 fund because I feel we will have better results with our new additions. 1) DBA: Powershares DB Agriculture Fund 2) EWZ: Brazil Index 3) DBE: PowerShares DB Energy 4) USO: U.S. Oil Fund 5) IYF: iShares Dow Jones US Financial Sector 6) DDM: Ultra Dow 30 Proshares ETF 7) PGJ: PS Golden Dragon China Fund 8) IYW: iShares DJ US Technology Sector Index Fund 9) CASH 10) CASH Here are our Top 10 Fidelity Sector Funds for June 2009 1) FSPTX: Technology Portfolio 2) FSRBX: Banking 3) FSCGX: Industrial Equipment 4) FCYIX: Industrials 5) FSCPX: Consumer Discretionary 6) FSCSX: Computers & Software 7) FSCHX: Chemicals 8) FNARX: Natural Resources 9) FSENX: Energy 10) CASH ]]> For the Week: U.S. stocks were down on the week for the first time since early May. The Dow fell -2.95%, the S&P 500 -2.64%, and the Nasdaq -1.66%. Most of the selling occurred on Monday (Dow -2.12%) after two G8 finance ministers voiced their support for the U.S. dollar before and after the G8 meeting in Italy on Saturday. The extended rally over the past few weeks has come from a weakening U.S. dollar. This spurred a rebound in the energy sector as well as commodity-related stocks. The recent inflation-fighting comments by the G8 finance ministers prompted investors to take profits last week. Look for the trend to continue, but also look at declines in these sectors to be buying opportunities. This morning, the World Bank revised its estimates for the global economy by -2.9% in 2009, and that commodity prices have peaked. How insightful! Yes, commodity prices peaked two years in the first y half of 2008, but now prices are much lower, and much more attractive. -Gold -The Commodities CRB Index -Crude Oil -The U.S. Dollar -The 30 Year U.S. Treasury We scaled back our exposure to the equity market a few weeks ago. We will continue to reduce exposure if the markets reach our target of 950-1050 on the S&P 500. The Fed in its April minutes basically gave us a major warning shot across the bow. They said that they don't believe a meaningful recovery is underway, and were skeptical of the sudden stabilization that many are calling for. In short, the Fed is still projecting a deeper recession and a sluggish recovery. Was anybody listening? Our current asset allocation is as follows; 85% Equities: (Normally 95%) Aggressive 72% Equities: (Normally 80%) Moderately Aggressive 56% Equities: (Normally 60%) Moderate 36% Equities: (Normally 40%) Moderately Conservative 18% Equities: (Normally 20%) Conservative]]> tag:www.johnmugarian.com,2009://1.1296 2009-06-16T18:28:37Z 2009-06-16T19:45:52Z

We need to exercise some caution when Wall Street and the financial media begin using new terms to describe the economy and the stock market. A few years ago the buzz word for the economy was "Goldilocks", and now it...

John Mugarian http://www.johnmugarian.com/ Here are our Top 10 ETF's for the week of June 16th: 1) DBA: Powershares DB Agriculture Fund 2) EWZ: Brazil Index 3) DBE: PowerShares DB Energy 4) USO: U.S. Oil Fund 5) IYF: iShares Dow Jones US Financial Sector 6) DDM: Ultra Dow 30 Proshares ETF 7) PGJ: PS Golden Dragon China Fund 8) SSO: ProShares Ultra S&P500 Trust 9) CASH 10) CASH Here are our Top 10 Fidelity Sector Funds for June 2009 1) FSPTX: Technology Portfolio 2) FSRBX: Banking 3) FSCGX: Industrial Equipment 4) FCYIX: Industrials 5) FSCPX: Consumer Discretionary 6) FSCSX: Computers & Software 7) FSCHX: Chemicals 8) FNARX: Natural Resources 9) FSENX: Energy 10) CASH ]]> For the Week: -Retail sales rose 0.5% last month. Core retail sales, excluding autos, gas and food rose only 0.1%. In May, gas sales rose 3.6% on higher gasoline prices adding 0.3% to total sales. -Walmart announced last week that it will no longer be reporting same-store sales every month. -Jobless claims came in at a less than expected 601,000 versus the 625,000 economists were expecting. Now that GM and Chrysler are officially bankrupt, I would expect the auto dealership shutdowns to add to the jobless numbers in the months ahead. -Gold Gold gave back -$15.50/oz to close at 939.20. -The Commodities CRB Index Inflation threats lifted the CRB Index again last week. -Crude Oil Crude Oil price soared +$4.31/bbl this week to close at 72.75. -The U.S. Dollar -The 30 Year U.S. Treasury We scaled back our exposure to the equity market last week. We will continue to reduce exposure as the markets reach our target of 950-1050 on the S&P 500. The Fed in its April minutes basically gave us a major warning shot across the bow. They said that they don't believe a meaningful recovery is underway, and were skeptical of the sudden stabilization that many are calling for. In short, the Fed is still projecting a deeper recession and a sluggish recovery. Is anybody listening? Our current asset allocation is as follows; 85% Equities: (Normally 95%) Aggressive 72% Equities: (Normally 80%) Moderately Aggressive 56% Equities: (Normally 60%) Moderate 36% Equities: (Normally 40%) Moderately Conservative 18% Equities: (Normally 20%) Conservative]]> tag:www.johnmugarian.com,2009://1.1295 2009-06-09T18:53:28Z 2009-06-09T19:34:29Z

I'll be out of the office for the better part of the week, so I'll be brief and to the point. The market continues to be incredibly resilient. The rebound off the March lows now stands at an impressive 28%...

John Mugarian http://www.johnmugarian.com/ Here are our Top 10 ETF's for the week of June 9th: 1) DBA: Powershares DB Agriculture Fund 2) EWZ: Brazil Index 3) DBE: PowerShares DB Energy 4) USO: U.S. Oil Fund 5) IYF: iShares Dow Jones US Financial Sector 6) DDM: Ultra Dow 30 Proshares ETF 7) PGJ: PS Golden Dragon China Fund 8) SSO: ProShares Ultra S&P500 Trust 9) CASH 10) CASH Here are our Top 10 Fidelity Sector Funds for June 2009 1) FSPTX: Technology Portfolio 2) FSRBX: Banking 3) FSCGX: Industrial Equipment 4) FCYIX: Industrials 5) FSCPX: Consumer Discretionary 6) FSCSX: Computers & Software 7) FSCHX: Chemicals 8) FNARX: Natural Resources 9) FSENX: Energy 10) CASH ]]> Gold -The Commodities CRB Index -Crude Oil -The U.S. Dollar We scaled back our exposure to the equity market last week. We will continue to reduce exposure as the markets reach our target of 950-1050 on the S&P 500. The Fed in its April minutes basically gave us a major warning shot across the bow. They said that they don't believe a meaningful recovery is underway, and were skeptical of the sudden stabilization that many are calling for. In short, the Fed is still projecting a deeper recession and a sluggish recovery. Is anybody listening? Our current asset allocation is as follows; 85% Equities: (Normally 95%) Aggressive 72% Equities: (Normally 80%) Moderately Aggressive 56% Equities: (Normally 60%) Moderate 36% Equities: (Normally 40%) Moderately Conservative 18% Equities: (Normally 20%) Conservative]]> tag:www.johnmugarian.com,2009://1.1294 2009-06-01T21:33:31Z 2009-06-02T01:51:20Z

The Dow Jones Industrial Average rallied 221 points today on....hopes that...on better than expected...on news that the economy has...on news that oil prices have...on news that inflation is no longer... Well, since the rally wasn't sparked by any of the...

John Mugarian http://www.johnmugarian.com/ Click Here So, with oil prices climbing we need to ask ourselves if this is a sucker rally that will eventually correct itself (do to less demand in a weak economy), or do prices stay firm and go higher? Personally, I hope it's a suckers rally. If prices stay firm and go higher from here, we need to get out of the stock market as quickly as possible. Why? How well do you remember 1973-74? If we are in a 1973-74 scenario, a weak economy coupled with high inflation, high oil prices, and higher interest rates is nothing more than a train wreck waiting to happen. If this is truly what is to be, we have not scene the lows for this stock market cycle. Here are our Top 10 ETF's for the week of June 1st: 1) DBA: Powershares DB Agriculture Fund 2) EWZ: Brazil Index 3) DBE: PowerShares DB Energy 4) USO: U.S. Oil Fund 5) IYF: iShares Dow Jones US Financial Sector 6) DDM: Ultra Dow 30 Proshares ETF 7) PGJ: PS Golden Dragon China Fund 8) SSO: ProShares Ultra S&P500 Trust 9) CASH 10) CASH Here are our Top 10 Fidelity Sector Funds for June 2009 1) FSPTX: Technology Portfolio 2) FSRBX: Banking 3) FSCGX: Industrial Equipment 4) FCYIX: Industrials 5) FSCPX: Consumer Discretionary 6) FSCSX: Computers & Software 7) FSCHX: Chemicals 8) FNARX: Natural Resources 9) FSENX: Energy 10) CASH ]]> For the Week: Nice rally, huh? Well, there is always something to worry about when it comes to the markets, and frankly most of the potential problems never pan out. There is only one item- other than a nuke strike- that gives me serious concern- Inflation, caused by a declining dollar that leads to higher Oil, Commodities, and Interest Rates. Also, do you realize what higher interest rates will do to the prospects for a full recovery in the housing market? If rates rise dramatically due to the U.S. government destroying our currency to monetize our debt, then housing prices will fall even further. On Friday, the major market indexes closed the month of May with a gain. Oddly,Commodities had their biggest monthly gains since 1974 as Oil prices hit a six-month high $66/bbl, and precious metals surged as well. Treasury Yields The 10-year Treasury closed at 3.465% on Friday as the U.S. government continues to auction off record amounts of debt. The Fed has been printing "funny money" to buy its own debt to drive yields and interest rates lower. Well, it worked for a while but the Fed’s so called quantitative easing program is only $300 billion commitment, and the size of the bond market is multiple trillions. It's only a matter of time before the RMS Titanic- the U.S. economy- is overtaken by a huge amount of debt that cannot be fully monetized. The Fed has been holding interest rates down by printing more dollars to buy our own debt which has many countries questioning the longer term solvency of the U.S. financial system. Recently, Russian President Medvedev has joined calls by China, Brazil, and other Nations, to prepare for the collapse of the US Dollar. As foreign nations continue to halt their purchases of U.S. debt, the result has been U.S. Treasury bonds plummeting, and Treasury yields jumping. -Gold -The Commodities CRB Index -Crude Oil -The U.S. Dollar On Friday, we use the current rally to scale back on our exposure to the equity market. We will continue to reduce exposure as the markets reach our target of 950-1050 on the S&P 500. The Fed in its April minutes basically gave us a major warning shot across the bow. They said that they don't believe a meaningful recovery is underway, and were skeptical of the sudden stabilization that many are calling for. In short, the Fed is still projecting a deeper recession and a sluggish recovery. Is anybody listening? Our current asset allocation is as follows; 85% Equities: (Normally 95%) Aggressive 72% Equities: (Normally 80%) Moderately Aggressive 56% Equities: (Normally 60%) Moderate 36% Equities: (Normally 40%) Moderately Conservative 18% Equities: (Normally 20%) Conservative ]]> tag:www.johnmugarian.com,2009://1.1293 2009-05-28T20:41:16Z 2009-05-29T17:06:53Z

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey The dollar is falling, and as a result, oil prices, precious metals, and commodities are spiking. The Fed has...

John Mugarian http://www.johnmugarian.com/ "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey The dollar is falling, and as a result, oil prices, precious metals, and commodities are spiking. The Fed has been holding interest rates down by printing more dollars to buy our own debt which has many countries questioning the longer term solvency of the U.S. financial system. Chart of the U.S. Dollar Gold Chart Commodity Chart 10 Year Treasury Chart 30 Year Treasury Yield Recently, Russian President Medvedev has joined calls by China, Brazil, and other Nations, to prepare for the collapse of the US Dollar. As foreign nations continue to halt their purchases of U.S. debt, the result has been U.S. Treasury bonds plummeting, and Treasury yields jumping. In September, $1-trillion of US Treasuries is going to be offered to the market. What if there are no takers? Well, that's an easy one. The Federal Reserve would be forced to print massive quantities of US-dollars to pay the principal and interest on the national debt. As a result, the dollar will continue falling, and interest rates will continue climbing. In reality, it seems the Fed already knows what the outcome is going to be for the economy, stock market, and interest rates down the road. Last week, they tried to temper investors enthusiasm when they released the minutes from their April meeting. The Fed basically said that they don't believe a meaningful recovery is underway, and were skeptical of the sudden stabilization that many are calling for. In short, the Fed is still projecting a deeper recession and a sluggish recovery. Is anybody listening? To me, this is a major warning shot across the bow. We are going to use the current rally to scale back on our current asset allocation recommendations. Since I believe the markets will trade higher into late summer, I will not drastically reduce the percentages just yet. But for now, I am reducing equity positions by 10% across the board. Our new asset allocation are as follows; 85% Equities: (Normally 95%) Aggressive 72% Equities: (Normally 80%) Moderately Aggressive 56% Equities: (Normally 60%) Moderate 36% Equities: (Normally 40%) Moderately Conservative 18% Equities: (Normally 20%) Conservative ]]> tag:www.johnmugarian.com,2009://1.1292 2009-05-23T19:23:42Z 2009-05-26T16:08:20Z

Not so fast says the Fed as the FOMC released the minutes this week from its last meeting. Now why would the Fed want to throw cold water on a stock market recovery that would eventually be followed by the...

John Mugarian http://www.johnmugarian.com/ After the Summer Rally After the summer rally we will sit back and wait. After a meaningful sell-off, we will want to re-enter the market to position ourselves for the manufactured bull period that should begin in 2010. The 2010-2011 bull market has to be viewed as a major selling opportunity for investors. You really don't want to be invested in the stock market when massive inflation begins to hit the economy. Higher interest rates will eventually lead to another collapse in the real estate market, followed by higher oil and commodity prices. The key to investing success during periods of high inflation is to have enough cash to take advantage of unique opportunities. Here is what I would do to protect yourself, and eventually profit. 1) Right Now/ 2009- Sell enough stock to maintain a comfortable cash position. Look for a 7-10% correction, with the possibility of a sideways correction. There is an outside chance of a retest of the March 2009 lows, but only if unemployment rate shoots into double digits. Some are already projecting the unemployment rate could hit 14% by year end. 2) Fall of 2009: Buy into the dip/retest, and ride the market up into the 2010-2011 rally. Favorite sectors include Oil, Commodities- Raw Materials, Precious Metals, and Inverse interest rate and U.S. Dollar ETF's. Investors have waited before piling in to these sectors. The big run up has not proven itself yet, so momentum traders are waiting for a confirmed uptrend. 3) In 2010- 2011, while other investors are getting increasingly optimistic over the new bull market, sell into the rally. Get your portfolio positioned to a point where you are "under invested" in stocks and bonds, and over invested in money markets, CD's, and cash. 4) In 2012, you may have to be patient and wait. Invest in short term CD's until the news gets bad- IE- higher inflation, higher interest rates, and a tanking stock market. 5) In 2013, buy bonds across the board locking in higher yields. Ladder your maturities from 1-30 years out. Hold these bonds through 2014, and only sell if you can lock in gains of 20% or more. 6) By 2014, take any profits/ proceeds from selling bonds, and redeploy the cash back into the stock market. Invest in interest sensitive stocks first, with the highest yields and best quality. Consider buying high quality Utilities, REITs, and Banks. 7) By 2015, you should have a 50/50 mix of interest sensitive stocks and bonds. Continue selling bonds, but retirees, or those approaching retirement should keep the proper allocation of bonds for their "golden years". 8) In 2016, consumers/voters will be looking for another change. The economic environment will be similar to 1988-89 where investors will be reluctant to giving up bond yields for stocks. This will be the exact reason you should begin looking for a renewed bull market that will last 10 years. 9) 2016-2026, IMO, will be the next great wealth building opportunity in the stock market. Until then, it is a traders market. Long term investors may have to get use to buying and selling volatility until a sustained uptrend presents itself. Here are our Top 10 ETF's for the week of May 26th: 1) DBA: Powershares DB Agriculture Fund 2) EWZ: Brazil Index 3) DBE: PowerShares DB Energy 4) USO: U.S. Oil Fund 5) IYF: iShares Dow Jones US Financial Sector 6) DDM: Ultra Dow 30 Proshares ETF 7) PGJ: PS Golden Dragon China Fund 8) SSO: ProShares Ultra S&P500 Trust 9) CASH 10) CASH Here are our Top 10 Fidelity Sector Funds for May 2009 1) FSPTX: Technology Portfolio 2) FSRBX: Banking 3) FSCGX: Industrial Equipment 4) FCYIX: Industrials 5) FSCPX: Consumer Discretionary 6) FSCSX: Computers & Software 7) FSCHX: Chemicals 8) FNARX: Natural Resources 9) FSENX: Energy 10) CASH ]]> For the Week: Last week, investors began to realize that the future will bring a weaker dollar and more commodity inflation. To prove that inflation is on the rise, gold rallied above $950 and oil prices rose above $60 a barrel. As part of the recent stress test requirements, some financial companies diluted their shares by issuing more stock. Bank of America (BAC) issued 1.25 billion shares of stock raising $13.47 billion. BAC was told it had to raise $34 billion, and will sell off some divisions and subsidiaries to make up the difference. I happen to like BAC, and I think the shares will be substantially higher once they payback the TARP money. The dollar declined to the lowest level versus the euro since January, and as a result oil and commodity prices have headed higher. The Fed has been holding interest rates down by printing more dollars to buy our own debt. For the time being, consumer price inflation is being hidden, but there is no doubt that food and energy costs are now rising due to the fact that the U.S. dollar is getting more worthless by the day. This move by the Fed has the Chinese government very upset. In a recent meeting with officials from the Chinese government, Richard Fisher, president of the Dallas Federal Reserve Bank, said; "I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," Last week, Standard & Poor's lowered its outlook on Britain to "negative" from "stable," and may eventually cut the nation's top AAA rating. Since the U.S. has a budget deficit that is higher than Britain's, the U.S. is at risk of losing its AAA credit rating as well. The U.S. dollar has further to fall as the idiots in Washington try to spend the country's way out of a recession and banking crisis. All this spending will add to the $11.3 trillion debt as next years budget deficit of $2 trillion is four times larger than any previous deficit. After watching the stupid moves here in the U.S., nations like China are no longer supporting the dollar. China is tired of watching their trade surpluses deteriorate as the U.S. dollar declines. At this stage of the game, China is more interested in buying copper and other commodities rather than U.S. debt. -Gold -The Commodities CRB Index -Crude Oil -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 ]]> tag:www.johnmugarian.com,2009://1.1291 2009-05-21T19:43:53Z 2009-05-21T20:51:13Z

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey CNBC's Erin Burnett was reporting from Africa today, and was reading from the teleprompter about the investment prospects available....

John Mugarian http://www.johnmugarian.com/ "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey CNBC's Erin Burnett was reporting from Africa today, and was reading from the teleprompter about the investment prospects available. Clearly, U.S. business interests in Nigeria are all about oil. One segment was promoting investment prospects in a Nigerian Bank- Not for my money, but you go right ahead. Nigeria...What's with that! I have had my gut full of third world financial disasters- IE- Lehman Brothers, Bear Stearns, Merrill Lynch, AIG, and Wachovia. Looking at these colossal screw ups, maybe the Nigerian Bank wouldn't be that bad. Surely, the management cannot be more corrupt than what we have witnessed over the past year. Today, the market heading south right out of the gates. After the Fed released the minutes of its April meeting, the index futures began to tank. The Fed is skeptical of the economy sudden stabilization, and they don't believe a meaningful recovery is underway just yet. They're now projecting a deeper recession and a sluggish recovery. The bit of news speak volumes to how irresponsible the idiots are in Washington. Standard & Poor's just lowered its outlook on Britain to "negative" from "stable," and may eventually cut the nation's top AAA rating. Since the U.S. has a budget deficit that is higher than Britain's, the U.S. is at risk of losing its AAA credit rating. In reality, the U.S. a AAA credit rating should have been cut many years ago. With a national debt that is $11.3 trillion, the country is basically broke. As a result, the U.S. Dollar has cratered, while anything with real value has risen sharply. A year ago, Oil was near $150 per barrel, gasoline cost $4 a gallon, copper hit $4 a pound, silver reached $21 an ounce. The U.S. dollar has further to fall as the idiots in Washington try to spend the country's way out of a recession and banking crisis. All this spending will add to the $11.3 trillion debt as next years budget deficit of $2 trillion is four times larger than any previous deficit. Eventually, when the Fed stops buying our debt with newly printed dollars, inflation will be much, much higher. For the time being, consumer price inflation is being hidden, but there is no doubt that food and energy costs are now rising due to the fact that the U.S. dollar is getting more worthless by the day. Smart nations like China are no longer supporting the dollar. China is tired of watching their trade surpluses deteriorate as the U.S. dollar declines. At this stage of the game, China is more interested in buying copper and other commodities rather than U.S. debt. ]]> tag:www.johnmugarian.com,2009://1.1290 2009-05-19T01:57:26Z 2009-05-19T16:02:41Z

Sorry about the late start today. I was waiting on some important economic and political information to come in before I wrote this weeks briefing. Like it or not, I will report my findings. As a guest speaker at the...

John Mugarian http://www.johnmugarian.com/ Here are our Top 10 ETF's for the week of May 18th: 1) DBA: Powershares DB Agriculture Fund 2) EWZ: Brazil Index 3) DBE: PowerShares DB Energy 4) USO: U.S. Oil Fund 5) IYF: iShares Dow Jones US Financial Sector 6) DDM: Ultra Dow 30 Proshares ETF 7) PGJ: PS Golden Dragon China Fund 8) SSO: ProShares Ultra S&P500 Trust 9) CASH 10) CASH Here are our Top 10 Fidelity Sector Funds for May 2009 1) FSPTX: Technology Portfolio 2) FSRBX: Banking 3) FSCGX: Industrial Equipment 4) FCYIX: Industrials 5) FSCPX: Consumer Discretionary 6) FSCSX: Computers & Software 7) FSCHX: Chemicals 8) FNARX: Natural Resources 9) FSENX: Energy 10) CASH ]]> For the Week: The first-quarter earnings reports were about 10% better than expected. The bad news is S&P 500 earnings declined by approximately 35%. Last weeks “stress test” revealed that 10 of the 19 major financial institutions must raise $74.6 billion in capital to shore up the banking system. Investors thought the stress test was a waste of time so short-covering drove financial stocks much higher. In short, bad is now seen as good (less bad). Chrysler filed for bankruptcy last week, and GM announced it intends to cut 2,600 of its 6,200 dealer network. Going forward, I believe we need to prepare ourselves for the possibility of stagflation and commodity inflation. The news here is simple. China is no longer interested in buying U.S. Treasuries, the Chinese have shifted to investing their trade surplus in copper, gold, and other major commodities. The Fed will have to continue to print more money by expanding its $1.25 trillion quantitative easing program. They have to do this to make up for the lack of interest in our debt by the Chinese. -Gold -The Commodities CRB Index -Crude Oil -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 ]]> tag:www.johnmugarian.com,2009://1.1289 2009-05-14T16:44:44Z 2009-05-14T17:12:27Z

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey Former NY Yankee great Yogi Berra is credited with the simply, yet precise observation; "This is like deja vu...

John Mugarian http://www.johnmugarian.com/ "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey Former NY Yankee great Yogi Berra is credited with the simply, yet precise observation; "This is like deja vu all over again." In the stock market and the economy, events have a way of repeating themselves. If you have been around the markets long enough, you know what I mean. How well do you remember the real estate bubble of the 1980's? How well do you remember the effects on the banking sector, credit, and the economy from 1980-1990? While circumstances may not be identical, there are similarities. Between 1980 and 1994 more than 1,600 banks insured by the Federal Deposit Insurance Corporation (FDIC) were closed. The number of banks closed year to date is just a fraction of those during this 14 year time span, but what happened as a result may not be that different. In the early 1980s, booming activity in commercial construction was supported by rapidly increased bank and thrift commercial mortgage lending. The big difference, and this can't be ignored, is the total amount of credit extended to consumers to buy things they didn't need with money that they really didn't have. This extension of credit came by way of second mortgages/ lines of credit, and credit cards. The extraction of equity from perceived appreciation in home values created a vacuum when housing prices began to fall. In the U.S., the total market value of housing, commercial real estate, and stocks was about $50 trillion at the peak and fell below $30 trillion at the low. The loss of $20-$23 trillion of wealth in the U.S. is still enough to deliver some life altering changes for millions of people in the years ahead. This is why I believe we have entered a period in the financial markets and economy that will be eerily similar to the 1980-1990 time-frame. So, what does this mean for consumers, the economy, the stock market, and for credit? 1) Now that consumers are waking up to the fact that they are not as rich as they thought, we will enter into a period of less spending. In short, you can't spend if the banks don't extend discretionary credit. 2) Banks will become less likely to extend credit to marginal or even average consumers. As a result, consumers will spending less, live more frugally, saving more, and waste less. After spending like drunken sailors, consumers will need several years to repair their credit, and payoff debts. 3) This readjustment period (5-10 years) will hurt corporate profits, which for 20 years had benefited from the out of control spending habits of consumers. The stock market, after an initial recovery, sell-off, flat line, and then take several years before making new all-time highs. During the third year of the Presidential Cycle, rallies will be numerous, particularly when massive stimulus programs are applied so the economy can be perceived as stronger prior to the election. The employment rate will magically improve as well. 4) A large rally in the stock market (2010-2011) will prove to be a huge selling opportunity. Shortly following this rally will be a long, drawn out period of substandard returns. Making g big money in stocks will be difficult with the exception of trades on the short side.As a result, investors will shift investments to safer investments (bonds & CD's) that provide steady gains. The game of extreme speculation will be over. 5) After waking up to the fact that profits will be muted for several years, lack of meaningful gains in the stock market will discourage many investors. Inflation will creep up over the next 3 years pushing bond yields higher which will make CD's and bonds an attractive alternative to stocks. 6) While real estate prices have declined, the reduction from peak prices doesn't necessarily make it a bargain. Given the unfriendly nature of the state and local taxing authorities, combined with the higher cost of insurance, many investors will realize that real estate still is not a bargain even at current prices. Like the NASDAQ, real estate will remain in a bear market for 5-10 years. The last bubble to severely punished investors was the "NASDAQ Bubble". Nine years after the bubble burst, the Over-the Counter (NASDAQ) index is still 50% below it's 2000 peak. This latest bubble in real estate is just as bad, but has even more negatives. a) Real Estate is not a liquid investment. b) After so many people have been burned, it may take 5-10 years for wounds to heal, and courage to return. c) During the waiting period, investors have to cope with a significant capital outlay (taxes, insurance, and upkeep) which could serve as a cash drain for many years. What investment moves do we make after the big rally in 2010-2011? 1) Reduce predetermined asset allocation to stocks by 50%. 2) Any cash collected by selling stocks should be held in a money-market account or short term CD's until interest rates rise. 3) As rates climb, slowly allocate cash to longer term bonds. ]]> tag:www.johnmugarian.com,2009://1.1288 2009-05-12T19:46:57Z 2009-05-12T20:10:04Z

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey Did today's -100++ decline scare you? Get you to think a new leg down was beginning? Well, not so...

John Mugarian http://www.johnmugarian.com/ "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey Did today's -100++ decline scare you? Get you to think a new leg down was beginning? Well, not so fast. Evidence for the bears has not yet reached its crescendo. Optimism toward stocks does not evaporate that quickly. Positive (actually, less negative) news from the economy has investors moving cash off of the sidelines, and putting it to work in the stock market. Afterall, something has to be worth more than zero. The weekly AAII and Investors Intelligence surveys now show a split between bulls and bears. As may continues to mature, the survey numbers may actually tilt more toward the bulls. The latest AAII data shows bulls at 44% and bears at 33%, while the Investors Intelligence survey shows 40% bulls and 32% bears. My guess is this pullback, any any pullback prior to S&P 950-1000 will be limited until investors over-commit to stocks. Any pullback off recent highs tells me that the likely next phase would be one of consolidation, not a reversal. The market has the support of less bad news. When you combine this with China appearing to have a handle on its economic stimulus, a short term growth pattern seems to be re-emerging. Stability appears to be emerging on the jobs front (less bad) as well as the housing market. New growth in housing will be light years away, but at least the decline shows signs of slowing. Another sign of recovery is rising Treasury Yields and Commodity prices. This tells us that investors feel the crisis appears to have past, and investors are becoming less risk-averse. As for now, I am not convinced we are "Done Yet". ]]> tag:www.johnmugarian.com,2009://1.1287 2009-05-11T15:46:39Z 2009-05-11T17:43:38Z

Investors managed to keep the rally alive last week despite several key banks being told they had to raise more capital. After the government’s stress test results, 10 of the nation’s 19 biggest banks were told to pony up. Here's...

John Mugarian http://www.johnmugarian.com/ Here are our Top 10 ETF's for the week of May 11th: 1) DBA: Powershares DB Agriculture Fund 2) EWZ: Brazil Index 3) DBE: PowerShares DB Energy 4) USO: U.S. Oil Fund 5) IYF: iShares Dow Jones US Financial Sector 6) DDM: Ultra Dow 30 Proshares ETF 7) PGJ: PS Golden Dragon China Fund 8) SSO: ProShares Ultra S&P500 Trust 9) CASH 10) CASH Here are our Top 10 Fidelity Sector Funds for May 2009 1) FSPTX: Technology Portfolio 2) FSRBX: Banking 3) FSCGX: Industrial Equipment 4) FCYIX: Industrials 5) FSCPX: Consumer Discretionary 6) FSCSX: Computers & Software 7) FSCHX: Chemicals 8) FNARX: Natural Resources 9) FSENX: Energy 10) CASH ]]> For the Week: Short sellers got squeezed last weeks as investors began to realized the U.S. economy was no going into a depression. The recent rally was a major repricing of assets. We went from believing everything was hopeless to the glass was suddenly half full. With the unemployment rate at 8.9%, and the consumer representing 70% of the total U.S. economy, no meaningful growth can occur until employers begin hiring again. The biggest headwind for consumers is that incomes are falling and the jobs market is still in trouble. The good news may be hidden deep underneath the gloom. Bear market rallies register some very sizable gains. According to Tim Hope at Navellier & Associates, Bear market bottoms since 1962 registered an average overall gain of 34.5% in the twelve months after the bottom. See Navellier Chart. Economic News - Last weeks employment report showed a loss of another 539,000 jobs. - The April ISM rose to 40.1 from 36.3, a bit above the consensus 38.4 and the highest reading since September. Looking forward, the news many not be as good given the plant shutdowns at GM and Chrysler. - On the real estate front, there are still a lot of homeowners who are upside-down in their mortgages. According to Zillow.com, 21.9% of all homes in the U.S. have negative equity. During the real estate bubble, consumers supplemented their incomes by pulling equity out of their homes and tapping credit lines. Those sources have been reduced, and in some cases have been eliminated. - The personal savings rate climbed to 4.2% in March, the highest level in a decade. -Gold -The Commodities CRB Index -Crude Oil -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 ]]> tag:www.johnmugarian.com,2009://1.1286 2009-05-07T20:10:06Z 2009-05-07T21:28:21Z

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey Now that the financial news has got everyone excited about the recent rally, the big players on Wall Street...

John Mugarian http://www.johnmugarian.com/ "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey Now that the financial news has got everyone excited about the recent rally, the big players on Wall Street welcomed your enthusiasm by taking profits. They like doing things like that. We call this enhanced media excitement, Stock Market Foreplay. DJIA: 8,409.85, down -102.43 or -1.20% Nasdaq: 1,716.24 down -42.86 or -2.44% S&P 500: 907.39 down -12.14 or -1.32% The big news of the day has to be the upgrade of Bank of America (BAC) to "outperform" at Robert W Baird. They raised their price target on the stock to $18 from $9. Federal regulators will release the results of stress tests designed to mess with the minds of the CEO's of the 19 leading banks. Bank of America continues to get picked on after CEO Ken Lewis spilled the beans on Paulsen and Bernanke for using strong arm tactics to get the company to buy Merrill Lynch. Federal Reserve Chairman Ben Bernanke gave a 15 minute speech this morning on the Feds role of monitoring bank liquidity. I tried to listen, but didn't understand a word of it. The European Central Bank cut interest rates by 0.25% to bring rates to a record low of 1%. Despite the news, Treasury yields continue to climb as China is no longer buying our debt, and the Feds so called "quantitative easing" is slowing. What is happening is the Chinese isn't funding our debt, and the Federal Reserve will have to step and take up the slack by purchasing up excess Treasury's. Right now you are seeing the effects of this as oil prices continue to rise. Gold and commodity prices are moving higher as well. Cisco (CSCO) beat earnings and revenue estimates after the close yesterday. Cisco sees product demand stabilizing, and said July quarter sales would be up 2% to 5%. Going forward, investors that don't get scared during periods of market panic have enjoyed some huge early gains. Given the still low levels of interest rates, consumer discretionary and financials have historically outperformed the broader market. We have witnessed this over the past 40 days. On the flip side, defensive sectors such as telecommunication services, utilities, and staples have been least likely to outperform the S&P 500 during the early months of a new bull phase. Today's sell-off is more than likely a short term timeout rather than a new leg down. The market will not give up that easily, and we will probably go high in the summer months. What could derail the whole thing is interest rates and inflation. The recent bump up in bond yields should serve as a short across the bow. Longer term, when the Fed and China combined stop funding our debt, interest rates could rise dramatically. High interest rates on government bonds will eventually compete with the returns on stocks. When this begins to happen, it's best to sell stocks, and wait. The opportunity to sell stocks should come sometime this summer. ]]>