2010 Has been an interesting year in the markets, WITH ALL THE MAJOR INDICES NOW ECLIPSING LEVELS NOT SEEN SINCE THE COLLAPSE OF LEHMAN BROTHERS IN SEPTEMBER OF 2008.
The bulls will no doubt have plenty to cheer about as the Santa Claus rally puts the exclamation mark on the already impressive gains. Since July 1st, the Dow, S&P 500, and the Nasdaq Composite have seen gains of 19%, 22% and 27% respectively.
Here's the white elephant in the room: How much is left in the tank?
It's impossible to definitively know when we'll see a pull back, or how intense it will be. Eventually the markets will correct, but having cleared some pretty key levels of resistance, there is plenty of meat left on the bone if we go higher from here. The market has been clearly intent on finishing 2010 very strong. It's shrugging off daily downgrades of European Sovereign credit ratings, persistent high unemployment, a sluggish housing recovery, potential military conflict on the Korean Peninsula, and the tightening measures in China to slow down inflation.
Instead, the market is feeding off the very loose monetary policy employed by the Federal Reserve (QE2), the ECB's stepped up measures to buy shoddy European debt to contain the crisis, and the newly minted fiscal stimulus that was attached to the tax cut extension bill, which prompted economists to ratchet up GDP estimates for 2011.
When will the rally end?
There are many technical signs that we are potentially close to a market top. The market internals and breadth are losing their strong momentum, but still maintain a bullish advance. The price action is consolidating with tighter trading bands as the sloping pattern flattens.
Bullish sentiment hit 38-month highs, according to the latest reading from Investor's Intelligence, which polls the mood of financial advisors (many have been consistently wrong in this group) And several days ago, the S&P 500 volatility index (VIX) -- otherwise known as the "fear" index -- closed at 15.45. That is not only below the low set from the April market top, but the lowest reading since July, 2007!
The point here is that when there is so much bullishness, that's got to be bearish. Overbought does not necessarily mean over, but the market is prime for a correction. Not only is the VIX a contrarian sentiment gauge, but it's a measurement of how expensive options are in the market place. After all, options are an insurance instrument, and when there is fear of a market decline, prices rise. When there is complacency or lack of fear, option prices deflate. With all the bullish sentiment, high equity prices, and being that the next two trading weeks will be shortened by Christmas and New Years, the price of options have been slashed like big ticket items at Best Buy!
By selling out your long stock positions and replacing them with some well placed CALL options, you can reap many benefits ...Lock in your profits, Free up your cash flow, Maintain equivalent bullish positions to capture further advances.
Protecting your portgolio and making damrt decisions about money requires strategic planning and keeping your attention focused on all the proper strategies available to you.
Saturday, December 25, 2010
Monday, December 20, 2010
Common Sense!
In the end Smart Decisions about Money actually come down to common sense. Simply, silly incredibly effective common sense. I will give you the complete due diligence necessary to make very common sense decisions about your investing focus. My definition of due diligence is as follows: Full disclosure, complete compliance and Clear Transparency. These factors create a full due diligence in any investment decision regardless of sophistication level. In fact let me say the more sophisticated something appears the greater the chance of being a scam. Now please don't become jaded because everything isn't a scam, sometimes great things come in small packages and wonderful investment opportunities show up in all types of disguises.
I would like to help educate my audience on the world commonly referred to as ALTERNATIVE INVESTMENTS. This usually includes Hedge Funds, Small Cap Companies (including Micro cap or so called Penny stocks) Pre-public private placements, private placements and PIPEs. This world is for the investor who has a strong risk adverse profile. How do you measure this risk adverse profile? Real simple, if you can stand suffering a COMPLETE LOSS of dollars invested then you are risk adverse. For the most part you are a speculator and not an investor in these types of investments. The difference being a spectulator is looking for absolute return while an investor is seeking return through long term ownership (stockholder).
In the coming days and weeks we will explore the types of Alternative Investments and help identify how to participate. As with all your smart decisions about money, there is a time, place and percentage of your overall portfolio that should be considered in these areas. As the investment climate is changing rather rapidly and the economy is shifting dramatically you need to stay up on all the investment areas open to you. The days of Buy and Hold and simply no longer effective, being a day treade isn't the alternative either. There is a happy and healthy medium in all your investment decisions. Diversification is still a major obligation for your long term Financial Health.
Stay with us and follow closely and we will make the complicated seem very simple and help you understand how to maximize your financial welfare both now and in the future.
I would like to help educate my audience on the world commonly referred to as ALTERNATIVE INVESTMENTS. This usually includes Hedge Funds, Small Cap Companies (including Micro cap or so called Penny stocks) Pre-public private placements, private placements and PIPEs. This world is for the investor who has a strong risk adverse profile. How do you measure this risk adverse profile? Real simple, if you can stand suffering a COMPLETE LOSS of dollars invested then you are risk adverse. For the most part you are a speculator and not an investor in these types of investments. The difference being a spectulator is looking for absolute return while an investor is seeking return through long term ownership (stockholder).
In the coming days and weeks we will explore the types of Alternative Investments and help identify how to participate. As with all your smart decisions about money, there is a time, place and percentage of your overall portfolio that should be considered in these areas. As the investment climate is changing rather rapidly and the economy is shifting dramatically you need to stay up on all the investment areas open to you. The days of Buy and Hold and simply no longer effective, being a day treade isn't the alternative either. There is a happy and healthy medium in all your investment decisions. Diversification is still a major obligation for your long term Financial Health.
Stay with us and follow closely and we will make the complicated seem very simple and help you understand how to maximize your financial welfare both now and in the future.
Saturday, December 26, 2009
The BIG SCAM!
"Business as usual" Of course Pres Obama ran on a platform that was going to put an end to this philosophy. I remember the platform of full disclosure, clear transparency and other rhetoris. Now we see that the Obama adminstation not only mislead the America voter, they intended to become the MOST corrupt administration we have ever had in office. The buying of votes for the totally dysfunctional Heath care" or Health Insurance" reform bill proves that this is well beyond business as usual. Now there are states that have been finanically protected buy the Federal government and states that will need to pay the bills for the favored states. Let's put aside that this obviously cuts across party lines so in essence it is a form of political blackmail, what really happens here is that this administrtaion has begun a count-down to re-igniting a civil war! How many states are going to sit back and pay medicare, and health bills for other states who cut sweetheart deals to vote for a dysfunctional act to begin with? Forget about battles in court over constitutionality, get ready for a tea-party unlike anything seen before. WIll you really sit back and fork over hard earned dollars so States that were bribed for votes can stay fiscally sound. This not only stinks it is rotten to the core. And you thought that Red vs Blue was the next danger?
Talk about hypocrisy, let's look at the compensation Czar. This week, GM, Fanny Mae and Freddy Mac all had their CEO's pay approved. The lowest in this group was $6 million dollars. Coincindentally all these companies are Government controlled, the same Government who has ripped private enterprise and the so-called abusive salaries of those in management. Of course the excuse was these companies failed and still got big salaries, forgive me but it seems that GM, and the Fannies failed and potentially their failures led to the so-called failure on Wall Street, they at least contributed largely to the failure. Yet it is perfectly sound for these companies CEO's to have the so-called abusive salaries. This is not the only hypocrisy coming out of Washington. The FAA's recent confernce spending abuse proves that they are differnet from AIG having the sales and marketing conferences. More retoric and spin, we certainly deserve better than this.
Wake up and realize that BOTH parties have just made a huge money grab from you the American taxpayer by using several smoke-screens. Health care and Cap and trade are both red herrings. The health Bill is the first pay now and get benefits much later piece of legislature ever proposed and passed. You will never see an ounce of benefit from this legislature, nor was there ever any intention of you getting any benefit. This is simply a way of getting you pay for the decades of excess that has finally come due. The Federal government must make you believe that you are paying for a major benefit and the fact that this benefit doesn't begin for 6yrs or more is simply a small inconvenience. Imagine buying a house, car or any other useful commodity and making 6 yrs of payments before you can move in, drive away or use the product? Would you do this? Well both parties have just pulled the woll over your eyes and they have made you believe that this wasn't done bi-partisanly! It is a bi-partisian decision. In fact it is the very type of decision that should make you fired up come election time, this entire Congress and Senate need to be shown the door! We need leaders who welcome, TERM LIMITS, TORT REFORM and a strong ANTI-CORRUPTION act. From here on any politician caught taking bribes both public and private should be shown the insides of a Federal prison for a Long-Long time. Lets clean up the political system, and stop relying on the lies that are constantly perpetrated by smoot talk and no action. Let the Obama administration be the best thing that ever happened as it can be the bell ringer that opened everyone's eyes to the LIES, CHEATS and THIEFS that consistently gain the Americans vote. Just say NO to all incumbents and send fresh blood to our leadership.
Talk about hypocrisy, let's look at the compensation Czar. This week, GM, Fanny Mae and Freddy Mac all had their CEO's pay approved. The lowest in this group was $6 million dollars. Coincindentally all these companies are Government controlled, the same Government who has ripped private enterprise and the so-called abusive salaries of those in management. Of course the excuse was these companies failed and still got big salaries, forgive me but it seems that GM, and the Fannies failed and potentially their failures led to the so-called failure on Wall Street, they at least contributed largely to the failure. Yet it is perfectly sound for these companies CEO's to have the so-called abusive salaries. This is not the only hypocrisy coming out of Washington. The FAA's recent confernce spending abuse proves that they are differnet from AIG having the sales and marketing conferences. More retoric and spin, we certainly deserve better than this.
Wake up and realize that BOTH parties have just made a huge money grab from you the American taxpayer by using several smoke-screens. Health care and Cap and trade are both red herrings. The health Bill is the first pay now and get benefits much later piece of legislature ever proposed and passed. You will never see an ounce of benefit from this legislature, nor was there ever any intention of you getting any benefit. This is simply a way of getting you pay for the decades of excess that has finally come due. The Federal government must make you believe that you are paying for a major benefit and the fact that this benefit doesn't begin for 6yrs or more is simply a small inconvenience. Imagine buying a house, car or any other useful commodity and making 6 yrs of payments before you can move in, drive away or use the product? Would you do this? Well both parties have just pulled the woll over your eyes and they have made you believe that this wasn't done bi-partisanly! It is a bi-partisian decision. In fact it is the very type of decision that should make you fired up come election time, this entire Congress and Senate need to be shown the door! We need leaders who welcome, TERM LIMITS, TORT REFORM and a strong ANTI-CORRUPTION act. From here on any politician caught taking bribes both public and private should be shown the insides of a Federal prison for a Long-Long time. Lets clean up the political system, and stop relying on the lies that are constantly perpetrated by smoot talk and no action. Let the Obama administration be the best thing that ever happened as it can be the bell ringer that opened everyone's eyes to the LIES, CHEATS and THIEFS that consistently gain the Americans vote. Just say NO to all incumbents and send fresh blood to our leadership.
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