Saturday, September 27, 2014

Is The Stock Market Finally Ready To Fall? | Seeking Alpha

Is The Stock Market Finally Ready To Fall? | Seeking Alpha



This is a very good article about why we must be cautious in today's stock market.  While large cap stocks like Apple have been able to send the market higher at times, most of the NYSE stocks are below their 200-day averages according to the $NYA200R chart.  If the economy was doing poorly, we would probably be headed for an outright bear market.



However, the economy is doing well, and stocks have a chance to move higher for at least the next year.  Since the S&P 500 is only up around 6% this year, you can expect continued meager gains unfortunately.  You should also enter stop-loss orders for your most volatile stocks so that you can sleep better at night and to protect yourself if things suddenly turn very bad.


Thursday, September 25, 2014

The market finally snaps- MSN Money

The market finally snaps- MSN Money



Here is an excellent article about why the market had a huge sell-off on Thursday, September 25.  The Dow was down 264 points, and the Nasdaq was down even more percentage-wise.  Apple has major problems with the iPhone 6 and more Russian trouble appeared possible.  It will be interesting to see if buy-the-dip investors step in now.  You don't want to be in triple long ETFs anymore like TQQQ and SPXL.  You'll be down 6% for every 2% drop in the market.


Wednesday, September 24, 2014

FV: An Undiscovered ETF Which Has Outperformed The S&P 500 For The Last 3 Months - First Trust Dorsey Wright Focus 5 ETF (NASDAQ:FV) | Seeking Alpha

FV: An Undiscovered ETF Which Has Outperformed The S&P 500 For The Last 3 Months - First Trust Dorsey Wright Focus 5 ETF (NASDAQ:FV) | Seeking Alpha



This is a great article on a new sector rotation fund called FV.  It has outperformed the S&P 500 in the past 3 months by a wide margin.  The top five sectors currently are biotech, healthcare, internet, staples, and discretionary.  This is a super fund which will keep you invested in the best sectors through momentum and technical analysis.  There is no need for you to figure it out yourself while these guys are outperforming the market in a diversified fashion.


When Will Interest Rates Rise And What Will Cause Them To Rise? | Seeking Alpha

When Will Interest Rates Rise And What Will Cause Them To Rise? | Seeking Alpha



Here is an outstanding article on why inflation will stay low along with interest rates.  As the old saying goes, "when interest is low, stocks will grow."  Everyone knows that stocks are overbought, but bonds and savings accounts are paying a lot less than stocks.  Therefore, stocks will continue to rise in spite of everything because there is no better alternative.



Banks are holding their money and they are not making loans to individuals.  Credit is a whole lot tighter since the Great Recession of 2008-2009.  Moreover, banks are not loaning to corporations either because they don't have much confidence in the economy.  So, there is no pressure on interest rates to rise.

Tuesday, September 23, 2014

A Rational Look At Stock Market Risk | Seeking Alpha

A Rational Look At Stock Market Risk | Seeking Alpha



Chris Ciovacco has written a very good article about how charts show that we are still in an uptrend even after two days of heavy losses.  SPY (S&P 500) was compared to AGG (bonds) in both risk-on and risk-off scenarios. We are still clearly safe.  A lot of extra cash is sitting on the sidelines, too. So, the buy-the-dip people will eventually run the market up again.  Stocks are paying more than bonds, and the economy is okay.


Sunday, September 21, 2014

The Birth Of 3 New Bull Markets | Seeking Alpha

The Birth Of 3 New Bull Markets | Seeking Alpha



Here is an excellent article about three new bull markets:  India, China, and Brazil.  The author is investing in the new bull markets through an ETF called ADRE.  In this way, you have good diversification in emerging markets.  India is the strongest of the new bull markets.  IFN, the India Fund, is up almost 50% in the last 12 months.  I am buying ADRE and IFN on Monday morning to take part in the new emerging market bull trends.


Diversification At Its Best - SPDR S&P 500 Trust ETF (NYSEARCA:SPY) | Seeking Alpha

Diversification At Its Best - SPDR S&P 500 Trust ETF (NYSEARCA:SPY) | Seeking Alpha



This is an outstanding article about the value of holding bonds through TLT while also being in the stock market through the S&P 500 (SPY). Since 1992, holding 100% of either TLT or SPY resulted in almost the same return with less volatility in TLT.  Wynn Capital believes that stocks have a greater possibility of decline than bonds even though some people say the bond bull run is over.  In other words, as interest rates rise, the capital gain loss in TLT will probably be minimal compared to a greater possible loss in stocks.



The author presented data that showed an 80/20 SPY/TLT allocation resulted in an annual gain of 9.8%, which was more gain than SPY alone with a lot less volatility.  The portfolio was balanced each January.  For example, using 2013-2014, the higher gain SPY was reduced from 2013 while TLT was increased in 2014, and this re-balancing was spot-on for this year since TLT is up significantly.  Each year one asset is bought at a discount while the other asset is sold at a premium.



Next, the author ran the numbers on a 60/40 SPY/TLT allocation, and the annual gain was still 9.8% while the volatility was reduced to almost as much as TLT alone!  Then, the author did a 40/60 SPY/TLT ratio to cap things off, and the annual gain was only slightly lower at 9.5% while the maximum draw-down dropped all the way to 16% which was lower than TLT alone.  So, this article shows the great importance of always holding a significant portion of bonds through TLT.