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In contemplating the theme to this week's message, the title 25 or 6 to 4 occurred to me. I grew up loving the song, but never understood the title. I'm sure many financial writers are stuck in the same conundrum. The market is their meat and potatos therefore they must love it. Unfortunately it makes no sense to them. I say this because many articles try to explain why the market made a particular move and are written soon after the move occurred. If they truly understood the market, more of them would be writing about what is going to happen next! I'm convinced the market moves and then the reporters are out searching for all the possible reasons that could have caused the move. This is why they are reporters and not investment managers. Technical analysis allows you to make educated decisions about what is going to happen next, based upon what happened last. Just as no one can predict on a regular basis what is going to happen next in the market, no one can be 100% in their investment choices. But, as everything else in life, it is a numbers game. The more closely you track human psychology as it relates to supply and demand, the more successful you will be. With all that aside, I will make my point. Last week was a horrible week in the market. There are plenty of articles to tell you the cause was due to Europe or the global financial crisis. But between yesterday and today (Monday and Tuesday) the market has staged a remarkable short term increase. Now there are articles pinning this increase on "renewed hope that Europe can tackle the region's debt crisis." The operative word here is HOPE! Financial markets may rely on hope, but I will certainly place my hope in something else! In the financial markets I would prefer to place my understanding and wisdom calling on past experience. Not hope. The market the last couple days is simply a result of last weeks sell off. Rebounds ALWAYS occur after an oversold condition. The key is in understanding the oversold condition. . . not hope in an event you have no control over. A wise man once said to positiely effect the things you have control over and don't worry about the things you don't. 
Einstein discovers that "TIMING" the market equals MONEY, not "Time in the market".
This brings us to this weeks briefing which may be one of our more important briefings due to last weeks market actions. I doubt if this weeks volatility will be any better than last week with what is setting up to occur later in the week (Europe). Check out the briefing here. By the way, the title 25 or 6 to 4 is simply a reference to time. The time it refers to is 3:34 or 3:35 A.M. which can also be referred to as 25 or 26 minutes to 4. The song was simply about writing songs. Huh.
Have a great day!!
John Norquay CEO PivotPoint Advisors |
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Tuesday, September 27, 2011
25? Or 6 to 4?
Wednesday, September 21, 2011
What Does The Fed Know That We Don't?
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Late last week the Fed made an unprecedented move to provide dollar liquidity to the European Central Banks. They need to do this because the regular market won't. If the market won't, why should our Fed? Hmmm, they must know something they aren't telling us and I have a feeling it isn't good. My favorite analyst, John Mauldin, wrote "What in the wide, wld world of monetary policy is the Fed doing, giving essentially unlimited funds to European banks? What are they seeing that we do not?" He goes on to say: "The only reason for this move must certainly be that theiy are acting to prevent what they fear will be another Lehman-type crisis. Otherwise it makes no sense. They can give us any pretty words they want, but this was not something calculated to make the US voter happy. To do this, you have to be convinced that “something evil this way comes.” And to recognize the costs of not doing anything, and try to head them off. My guess is that the European Central Bank made a presentation to the other central bankers of the realities on the ground in Europe, and the picture was plug ugly." I don't know about you, but this doesn't paint a good picture for me. The article points out that French Banks are leveraged 4 times the entire Country's GDP! We saw what too much leverage did for us in the last credit crisis. Europe has that same thing going on as we speak. Its funny, I've heard at least a million times how day traders are to blame for the volatility in today's market. The people who have that opinion must not be aware of Greece, Portugal, Spain, etc, etc. The update, found here, was short and to the point this week. With great hindsight (since this message is coming out so late) I can tell you Don was right on the money again. He mentioned how the market was up against a ceiling and would probably take a bounce lower before making its next move. Monday saw the market give up over 2% before it started to climb back again. We do these briefings so that you, our faithful clients, will feel at ease with your investments even when the market isn't playing nice. The special two day Fed meeting concludes today. I have a feeling we are going to see news of more easing. What is going on behind the scenes may be a bit scarier than they are letting on. If they announce a new round of easing the market should make a big pop upward. If not, then look out below. Whichever it is, you can be assured we are on it!
Have a great day!!
John Norquay CEO PivotPoint Advisors |
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Monday, September 12, 2011
Preparing For A Crisis
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Howard Marks of Oaktree recently wrote about simultaneous problems in the market and what happens: “Markets usually do a pretty good job of coping with problems one at a time. When one arises, analysts analyze and investors reach conclusions and calmly adjust their portfolios. But when there’s a confluence of negative events, the markets can become overwhelmed and lose their cool. Things that might be tolerable individually combine into an unfathomable mess whose extent and ramifications seem beyond analysis. Market crises are chaotic, not orderly, and the multiplicity and simultaneity of contributing causes play a big part in making them so.” As I have mentioned before, when the economy becomes fragile, just about anything can become a trigger. So many countries are in crisis right now in Europe. Take a look at the chart below from the St. Louis Fed. The spike up on the far right shows foreign official and international accounts pouring money into the US Fed. The amount is much greater than during the last credit crisis in 2008.  We know they aren't loading their money into the US Fed because they are getting a good return from interest. They must feel there are going to be problems elsewhere they are trying to hide from. What do they know that they aren't telling the rest of us? These are huge institutional investors! John Mauldin, who writes a weekly newsletter to an audience of 2 million, said that people should be increasing cash within their portfolios and not buying long only mutual funds. He believes you should be using fund managers that are nimble, because "in the next crisis, opportunities to buy assets on the cheap will grow." Our entire objective at PivotPoint is to be exactly that. . . nimble. When we take a losing position, get out of it quick so we only lose a little and wait for the next opportunity. We want our entire portfolio intact and ready for the next opportunity to "buy assets on the cheap". Please go to the Briefing Room to see exactly what we think of the most recent developments in the market and what we are doing about it with YOUR portfolio. Have a great day!! John Norquay CEO PivotPoint Advisors |
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Monday, September 5, 2011
Labor Day Update
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Europe is wishing their market was celebrating Labor day. Unfortunately, instead they are experiencing labor pains. Germany is down about 5% as I write this. Chancellor Merkel has just been pummeled in regional elections. I guess the fan base isn't happy at all how their leadership has handled the european turmoil or maybe they don't like the options presented to them by their leadership. I think people are tired of the same solutions for the same problems. The downturn is being led by the banks being sued by the US Government, while, at the same time, banks in general are releasing under performing numbers. The S&P 500 index futures are following suit, down over 2% in anticipation of a negative market open Tuesday morning.  I have said a number of times how the market inteprets even bad news in a good way when the overall cycle is up. Bad news on the down side of the cycle gets interpreted very badly. I think we all know the market goes down faster than it goes up. It is my humble opinion the market is preparing for another recession. We at PivotPoint have protected your portfolio from this carnage. If you know of anyone who might like our approach, please forward this email to them using the "Forward To A Friend" link on the right side of this email.  The employment numbers released Friday are a strong indicator our economy is not experiencing recovery. Our employment numbers are about the same as they were in 2000. Unfortunately there are about 30 million more workers in our economy than there were in 2000!!! I love the saying "Figures can't lie, but liars can figure". Economists can try to put lipstick on a pig, but those who know what a pig looks like, can still clearly see it is a pig. In our briefing this weekend, Don shows how the market performed exactly how we thought it might this week in an illustration containing a portion of last weeks briefing. This is yet another indication that the market speaks, if you know how to listen. There is a lot going on in the world today. Keep up to date with our response. Read the briefing here. And please, pass this email to a friend!!
Have a great day!!
John Norquay CEO PivotPoint Advisors |
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