 | |||||||||||||||||||||||||
| |||||||||||||||||||||||||
 | |||||||||||||||||||||||||
 What happens in Greece, DOESN'T stay in Greece. It seems that Spain and Greece are vying for the greatest illegitimate child award. It gets tiresome writing about these guys, but you can't ignore them since they are the ones moving our markets right now. Although it looked like the market may have shown a short term bottom a week or so ago, I was happy that our client's money wasn't exposed to the Greek election this weekend. Currently the market seems to be digesting what was a 10% loss at the bottom. Had the election gone the wrong way, the digestion process could have been over followed by a voracious appetite for further losses. As it is, the "Austerity" party eeked out a win and believe they can put a coalition government together that will continue the cutbacks required to receive further bail out funds from big brother (Euro Zone). This new party has a glaring challenge in front of them. Nearly 2% of all bank deposits in the country are leaving each week. Any of you who know how the fractional reserve banking system works, this means that 9 or 10 times the money that is leaving must be reigned in from what is loaned out (to businesses and individuals). We have heard this called "de-leveraging" in our own debt crisis. If a bank loses a dollar in deposit then they must decrease what they have loaned to others by approximately 10 dollars. At this rate, simple math tells us it won't even take a year for the banks to have zero deposits. In all reality, unless something changes, the 2% per week will increase dramatically as more become aware that it could be headed for zero and decide to leave as well. With the cash gone, the collateral is worthless and well . . . you get the point. Spain looks like Greece did three years ago, but with a couple exceptions; their economy is worse and theyalready have a banking crisis. As Spain's loans come due, they don't have the money to repay the principal, therefor must borrow to repay. Unfortunately the market won't lend them money now at a rate that Spain can pay back. The term for this is being "shut out" of the market. Its like a person with bad credit trying to get a loan. The bank with reasonable rates turn you down while the loan sharks step in to make a killing from you. This leads up to the saying in general "When an accident is waiting to happen, it usually does." At PivotPoint, we would rather lose a few opportunities of quick money to avoid the loss of principle. As Don mentions in the briefing this week, we look like fools on days the market jumps up and we are sitting on cash. On the other hand we look like geniuses on days the market takes huge losses and we don't - due to our large cash position. We simply must hold to our conservative convictions until the market conflicts resolve themselves. Don has laid out our position very clearly in this week'sbriefing. Please take a peek!
Have a great day!!
John Norquay CEO PivotPoint Advisors |
 |  | |||||||||||||||||||||||
Monday, June 18, 2012
An Accident Waiting To Happen . . . Does:
Wednesday, June 13, 2012
You Don't Have To Go Down With The Ship
| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
The bug that had gotten into Don's system on his vacation to Aruba had gotten into his joints as of the last briefing but now is in his muscles as well. This has caused great and continual pain for him, thus making the briefing difficult at best. I again ask for those of you who pray to keep him in your prayers. The briefing was updated Monday and can be found in The Briefing Room.
Ignoring that, you'll notice the rest of it is in pretty good shape!
I'm sure all of you have heard on the news or read about the Euro Zone fiasco. So many newsies want to spin the situation as a current buying opportunity. This may very well be true for hang gliders, bungee jumpers and asset allocation devotees, but for the rest of us . . . well . . . better safe than sorry. I worked at a large wire house two recessions ago. I will never forget all the articles that began coming out regarding the "discounts" that were occuring in the market. Every new low brought out a new reason why this was the bottom and the market hadn't been on sale this cheap for "X" amount of years for "X" reason(s). You could term it "All buys, All the time!" Never did they give you a reason to head for the sidelines "cause this thing is volatile right now and may give you sea sickness."
I wrote many times how the Euro Zone could act like a game of dominos. Nearly every Country except Germany was in financial trouble and as soon as they began bailing out the first Country, we knew the rest would begin lining up. John Mauldin wrote over a year ago that the situation was so bad the bailouts wouldn't even work stating Greece would probably leave the union even if it were bailed out. Now we see not only a Greek exit as a reality but Spain and others considering that same fate. This will not bode well for our markets. Someone asked me why the U.S. will be effected negatively if the Euro goes under. My quick response was "haven't you heard of Globalisation?" The truth of the matter is the U.S. and Europe account for about HALF of the entire world's economy. One or the other account for the largest part of trade or investments for nearly every Country in the world. When the U.S. or the Euro Zone gets a cold, the rest of the world gets the flu. Its as simple as that. This is why feel the need to be very cautious right now with our portfolios. We tried twice recently to make a few bucks and the market both times proved it hadn't reached a bottom yet. We do realize that the market will reach a bottom at some point. We want to have all our portfolio values intact when we reach that point. We would much rather give up some upside for not having to take the downside. Nothing is perfect, but our objective to not lose money is clear. Please check out the briefing. You may also want to check out the results of our Moderately Aggressive Model. You may also goto www.JohnNorquay.blogspot.com to review any of the briefings I have written.
Have a great day!!
John Norquay CEO PivotPoint Advisors |
| | |||||||||||||||||||||||
Tuesday, May 22, 2012
Video Blog
| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
Don Miller after a trade didn't work out!
This week I decided to do a video since the topic addressed was easiest to explain by actually showing you instead of writing about it. Please watch and if you have any questions after viewing, please email me with them. Lots has happened in Europe, but I guess that will have to wait. The video should help you understand our thoughts behind buying and selling utilizing actions within our MA portfolio the last few months for demonstration.  The video shows the past. As I always say, the past doesn't matter in investing, only what is next matters. Go to the Briefing Room to find out what we plan to do next if the market decides to co-operate.
Have a great day!!
John Norquay CEO PivotPoint Advisors |
| | |||||||||||||||||||||||
Tuesday, May 8, 2012
Let The Euro Hangover Begin
| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
You ever notice how a good crisis seems to change the rules? This is how we got the "Patriot" Act and now Europe is getting the same kind of hangover that the Patriot Act is. The heads of gov't are rolling as the people strike back in the polls. The people are saying they are sick of Big Gov't in cahoots with Big Business. We could probably slip in Big Banks as a sub category to Big Business in Europe's case.
France just elected a President from the Socialist party. He promises to tax the rich up to 75%. There is already talk of the wealthy crossing the channel to the UK to protect their wealth. Will this increase jobs in France? Greece had a huge uprising in their polls as well. The powers that be are being replaced rapidly. In fact the Neo Nazi party just won a bunch of seats in parliament. Doesn't sound like a positive movement to me. The people don't want "austerity" and seem to be willing to take something with the potential of ending even worse.
I read an article by Chris Oliver recently labled "Capitalism is dead, credit new king, says Duncan". Duncan believes capitalism died in 1914 when Europe abandoned gold-backed currencies. It only became worse when the U.S. abandoned the need for gold reserves backing the currency in circulation. Since then global credit has expanded from 1 Trillion to over 50 Trillion. If you aren't sure how much a trillion is, remember this: 1 million seconds is 12 days of seconds. 1 billion seconds is 33 years and 1 trillion seconds is 33,000 years of seconds. Only 9 out of the last 50 years did U.S. credit grow less than 2%. 4 of these 9 years, this slow credit growth caused recessions. We quickly began "printing" or "growing" much more rapidly to pull ourselves out of the recession. This last recession caused us to double our monetary base and many believe we are still in the last recession. This will definitely lead to inflation at some point.
There are about 1.5 Trillion US dollars in circulation in the United States. There are about 15 Trillion US dollars in Europe and Asia. As countries continue to drop the US dollar as the international currency, these dollars will flow their way back to the U.S. If there was 1 dollar in circulation today and 2 dollars tomorrow, do you think yesterdays dollar would have as much buying power? Me either. In fact the definition of inflation isn't prices getting higher, its your money buying less.
Europe is turning over as we speak. Our markets are trying to absorb all the information regarding the changes and longer term affects. Don uses this briefingto describe some of the things going on in the market and our reactions to them. Bottom line is we are exercising great caution as these unknown changes are taking place.
Have a great day!!
John Norquay CEO PivotPoint Advisors |
| | |||||||||||||||||||||||
