Its Beginning To Look A lot Like . . . 2008

MF Global accepting client deposits

Last week was the worst Thanksgiving week the market has had since 1932.  What am I thankful for?  We didn't participate in it.  In fact, as Don points out in the briefing, the last 9 market days have brought an 8.5% drudging to the markets.  We participated in none of it.

I've written about the events going on in Europe weekly for the last few months.  It seems something big is happening in the news every week over there.  This last week was no different.  There is such a stigma regarding Europe in the investment community that Germany, one of the only responsible adults in the entire European community couldn't even borrow the amount of money they wanted this last week (read bond offering).  Belgium, one of the only other responsible adults just got their debt downgraded by S&P.

Europe is a hot potato that no one wants to touch.  This next week, the rest of the sinister family is going to see if THEY can borrow enough money to pay their bills.  The more reluctant investors are to lend them money, the higher the interest rate will be.  The higher the interest rates, the lower our stock markets will go.  Have I spoken about dominos before?  A very interesting week is lining up on the heels of a very interesting weak.

I can't help but use this opportunity to plug technical analysis.  As many of you know, wall street says the only way you can invest is to buy and hold.  Asset allocate and diversify.  Bend over, grab your butt and hope for the best.  If that were truly the case, our portfolios would have experienced much larger losses from their highs than the 2 to 5% we've experienced while the S&P 500 gave up 20%.  Our models are currently about 15% above the market since February.

Rodrigo Campos of Reuters said in an article this week that euro zone crisis is causing stocks to be sold regardless of the underlying company's strength.  This is one of our underlying tenets of technical analysis vs. asset allocation or individual stock selection.  When the market goes down, it takes everything with it.

As we have mentioned so many times, technical analysis isn't about always being right.  Its about being wrong just a little when you are wrong and letting your winnings run when you are right.  We know there isn't a perfect investment approach out there, but actively managing the one you have does wonders.

Normally you will see a bounce up after record breaking downs.  We will see how that plays out this next week with so many European countries trying to borrow money.  Don't expect market volatility to decrease yet.

Please visit the Briefing Room to get that warm feeling that goes with the Holidays and the knowledge your money is being looked after on a daily basis.

U.S. Stocks Decline Sharply

Don't Get Caught In THIS Interview!

The headlines this morning for the market "Stocks Open Sharply Lower" in and of itself is a good reason why you should read this weeks briefing room.  Don explains why we are not participating in this market.  This morning's large losses in the market shows that our outlook on the situation is correct.

It appears in the Euro Zone's infinite wisdom putting their big deal together, that they missed some unexpected consequences.  Many institutional investors are ditching the bonds (loans) of Euro Zone Countries, which is making it more expensive for these Countries to borrow.  This is akin to your credit rating dropping like a rock, so when your loan comes due at the bank and you must refinance it, the interest rates go through the roof.  The only thing keeping Italy and Spain interest rates below 7% is the European Central Bank's buying up the slack as best they can.  This is like having your dad be the president of the bank, but soon he must report to the board (the market).

We will continue to watch these developments as they create major amounts of volatility for our markets.  You can rest assured we are doing everything in our power to insulate you from the negative developments that will only continue and probably get worse.

The bright side?  These sharp downturns always create nice upturns.  It doesn't take too many of these upturns to make for a nice annual return.

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I've updated the chart for our Moderately Aggressive and Moderate Models.  I also included the risk and reward tables.  Our value, spoken in terms of return compared to the S&P 500 is about 12% for each.  You can see by viewing the charts that the ride is a little smoother for the moderate model.  Both actually have positive returns while the S&P 500 is down 12.84% from its high (Current Draw Down).  This has been accomplished with substantially less volatility than the index.

Now THAT'S Italian!

November 14, 2011
	The briefing was updated yesterday and can be found in The Briefing Room. I mentioned last week that we didn't have much going on within our economy so the reporters could focus on Europe, and that they did.  Italy has risen to the forefront and caused our market much volatility this last week.  They have a lot of their debt coming due this next year and since they don't have the money to pay it off as it matures, they need to borrow more to make the payments.  Unfortunately, their credit isn't very good anymore and the credit card company (the market) is increasing their rates.  It is said that if their rate gets to 7% then they will go broke.  It hit 7% this last week.  They say Italy is too large to save, rather than too large to fail.  The reason Italy's debt is only at 7% is because the European Central Bank is the one lending them money (maybe because the actual market doesn't want the default risk?). What some say was a draft of the actual letter, Standard and Poors released (accidentally) a notice that France was being downgraded from AAA status.  If (when) this occurs for real, then the bailout fund for Europe is worth no more than the paper it is written on (since it is only IOU's in the first place). More comes to surface regarding the Greek bailout.  As it turns out, the banks voluntarily (under coercion) forgave 50% of Greece's debt to them.  At the same time, the International Monetary Fund, European Central Bank and others who forced the bank's hand, didn't forgive ANY debt that Greece owed THEM.  This means that the public is being told Greece can now afford their new package, when in all reality their total debt only decreased by 20 or 30 percent rather than 50.  Some well informed people believe 90% will need to be forgiven before Greece can grow their way out of their mess. Ireland's banks went bust and their people were stuck with the bill.  They just paid the European's $1 Billion dollars of interest and aren't happy about it.  It isn't fair they got stuck holding the hot potato and are looking to toss it at their first chance.  They know their chances are coming as other Countries begin to fail. The way out of this mess?  Either years of recession and depression in most of Europe as they rebalance all this debt OR talk the European Central Bank into printing more money.  The ECB is in Germany and so far has absolutely denied they would EVER do this.  This situation reminds me of when we left the gold standard.  We first made a rule that we would only print X amount of dollars compared to the value of our gold reserves.  Then when we needed more than that,  we changed the rule.  This happened 4 times before we simply took away any rules as to how much we could print.  Look where it has gotten us today. I have quite a busy week, so I'm going to end this here.  This week could be interesting as Italy has found a new leader.  So far, the market is pointing downward to begin the week as it digests this news and the news that Germany absolutely won't allow countries to issue joint government bonds (similar to printing money). Please read the briefing this week.  It breaks down the technical aspects of the market  as Europe throws us to and fro. Have a great day!! John Norquay CEO PivotPoint Advisors		In order to view the graphs and charts in our newsletter, please click the link at the top of your email to "always show images from PivotPoint Advisors" Resources Check out our Youtube Channel  Like our FaceBook FAN Page We manage money inside 401k plans. Know anyone who may want to use us? Click "Forward to a friend" (immediately below) to share this newsletter with friends you think may appreciate our services. Forward to a Friend Twitter Subscribe to the Weekly Briefing Report Unsubscribe Update Subscription Preferences View Email In Browser

The Only Thing That's Guaranteed? . . . Change.

November 7, 2011
	The briefing was updated yesterday and can be found in The Briefing Room. When we are fed up with the status quo, we elect public officials who promise change.  Does the change they are promising ever get here?  I'll leave that up to you to decide.  We at PivotPoint, however, are giving a few of you some un-promised change.  Fortunately, it is change that is designed to help. Up until now, we have managed accounts utilizing 4 different risk profiles, Aggressive, Moderately Aggressive, Moderate and Moderately Conservative (A, MA, M and MC).  To date, since we haven't gone through multiple long term cycles, the A's and MA's return and volatility are very similar as are the M and MC's.  Also, a vast majority of those who have completed Risk Profiles have been rendered into the MA or M models.  In order to save administrative time and expense, we are going to combine the A's into the MA's and the MC's into the M's.  If you are an A or an MC and have any questions regarding this, please let me know and  I will work through this with you.  We thank you in advance for understanding our desire for efficiency in making this change. The Economy Many of you may wonder why I have spent so much time writing about Europe recently.  The reason is because it is effecting the volatility and direction of our markets.  In fact as I was writing this update last Monday, the U.S. was experiencing its first casualty due to the European financial debacle.  MF Global isn't a household name like Bank of America, but it is very well known to investors.  Its bankruptcy is the fifth largest from a public  financial firm in the history of the U.S. after the likes of Lehman and Countrywide. MF Global was run by the ex chief of Goldman Sachs who then became A Senator for New Jersey and then New Jersey's Governator.  He was an insider to Wall Street, bet on European Countries as investments, and took the MF Global ship down.  This on the heels of Dexia, the largest lender in the world to municipalities, failed.  Are these two dominos, like Bear Stearns and Lehman in 2008?  Only time will tell. This morning Italy is in the news.  It seems the cost of their debt is skyrocketing beyond what they can pay.  They weren't expected to be a problem so quickly.  For goodness sakes, Greece isn't even solved yet.  Remember I wrote a few weeks back that once they begin to make deals EVERYONE will want a deal?  There isn't much on the financial docket this week due to earnings season winding down, so the news will be paying plenty of attention to the details of the Euro Big Deal. Anyone with a human side to them will want to read Don's last blog posts.  When a huge company like MF Global goes down, it wreaks havoc on millions of families.  Most news stories only cover  the effect it has on Wall Street.  Few readers hear about how a reckless few leaders can cause devastation to literally millions.  Some of those can be your best friends. In this weeks briefing, Don speaks about our last investment sequence and his thoughts on what may be the next.  You will enjoy the new layout and appreciate knowing his thoughts. Have a great day!! John Norquay CEO PivotPoint Advisors		In order to view the graphs and charts in our newsletter, please click the link at the top of your email to "always show images from PivotPoint Advisors" Resources Check out our Youtube Channel  Like our FaceBook FAN Page We manage money inside 401k plans. Know anyone who may want to use us? Click "Forward to a friend" (immediately below) to share this newsletter with friends you think may appreciate our services. Forward to a Friend Twitter Subscribe to the Weekly Briefing Report Unsubscribe Update Subscription Preferences View Email In Browser