Archive for August, 2009

Trop évident?

Thursday, August 20th, 2009

‘Thought I’d try to strike a more cosmopolitan tone with a little French, courtesy of Babel Fish. Oh, by the way, it means “too obvious.”

Here’s my present view of the [investment] world:

  • Lots of optimism around stocks and the economy out there.  Stocks:  from the Investors Intelligence survey of investment advisors (fewest bears since October aaii2007 high) to the ratio of funds invested in Rydex’s bull and bear funds, optimistism abounds.  Here’s a look at the usual lemmings, the participants in the American Association of Individual Investors.  As usual, their enthusiasm is directly correlated with stocks’ movement, not recognizing that risk increases as prices increase.
  • Insiders are very bearish.  Click here for more.
  • The calendar is not friendly for the next couple months.  See the highcycle-composite-highlightlight from the 2009 composite graph shown to the right.  The tendency for September and October to be nasty months seems to happen more often than chance would suggest.
  • The intermediate term backdrop of earnings and the economy has largely only changed from bad to not-so-bad.  To be fair, there have been a handful of indicators that are out-and-out good.  For example, the Leading Economic Indicators justed posted the fourth straight month of positive readings, which is, as Friday’s dispatch pointed out, the first such time since December 2004; also, some of the regional economic surveys have been posting postives, such as today’s Philly Fed, which came out as +4.2%, which was the highest reading–and heading the right direction–since November 2007, when it was heading the wrong direction.

Here, though, is a critical question:  is there any well-informed investor with no particular style axe to grind (e.g. long-only) or investment mandate (e.g. fully invested at all times) who is not aware of all these.  Does that create a well-informed group of lemmings whose fingers are poised too close to the sell button?  Only time will tell, but these big signposts seem to at least command respect, if not action.

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Weekly Recap & Outlook – 08.14.09

Friday, August 14th, 2009

Tower Private Advisors

Below

  • Shallow pullback
  • News hodgepodge (hello, Ed Meese?)
  • Economics:  inventory spring gets further compressed

Recent posts

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A Picture is Worth . . . a Picture

Friday, August 14th, 2009

Here’s an example of a disingenuous use of a picture.  The chart shows the S & P 500 index  and the weekly readings of the American Association of Individual Investors–participants who classify themselves as bullish divided by those who classify themselves as bearish.  The chart is clearly bearish for stocks, as it shows that investors in the survey are at their most bullish . . . in a year.  The implications are clear.  Investors are very bullish–and we condescendingly call these investors the dumb money–and past levels of bullishness like this haven’t worked out well.  Sell your stocks!

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Wisdom of the Sages – George Ross Goobey

Thursday, August 13th, 2009

Some times it’s helpful to consider the wisdom of the sages for helpful investment guidance.  Here’s one that should serve you well, and it addresses a natural behavioral weakness of investors, the reluctance to realize losses. 

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Insider Activity

Thursday, August 13th, 2009

Our insider activity service, InsiderScore, recently sent out a report indicating that insiders were as bearish–judging by their insider activity–as they’ve been in a long time.  We should care about insiders because no one should know businesses better than the insiders at those businesses.  They apparently are seeing no green shoots of growth as the insider selling relative to buying has worsened in the time since earnings were released.

I don’t mean to bring you down before the weekend, but there’s enough stuff coming from the mindless perma-bulls on financial television that you need to know what’s lurking in the weeds.  Here’s a look at the last time the selling was this bad.

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