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Donate To The Philippines Today

 

typhoon

Those who know me personally know that I spend a considerable amount of time in the Philippines. What happened here over the weekend is BEYOND apocalyptic. 

One of the strongest Typhoon on record has essentially leveled a considerable part of the country. While Red Cross is estimating the number of deaths to be around 10,000,  I believe the number will be much higher. 

While the government is doing its best, the livelihoods of millions of people in the region have been decimated. They have nothing left.  Today….right now….there are millions of people sitting in rubble…..hungry, thirsty and cold. 

As you go about your daily life today, please take 5 minutes out of your day and donate anything that you can. Even if its just $5. Every penny makes a huge difference to these people in need. 

PLEASE CLICK HERE FOR MULTIPLE WAYS TO DONATE

Thanks

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Little Known Way To Save Your Net Worth

Bloomberg Writes: Value Fund Managers Go on a Buyer’s Strike

 overpriced

Wally Weitz beat 90 percent of his rivals in the past five years by buying stocks he deemed cheap. Now he says bargains are so scarce that he’s letting his cash pile up. “It’s more fun to be finding great new ideas,” says Weitz, whose $1.1 billion Weitz Value Fund (WVALX) had 29 percent of its assets in cash and Treasury bills as of Sept. 30. “But we take what the market gives us, and right now it is not giving us anything.”

 “We are having a more difficult time finding bargains,” Yacktman wrote in an e-mail.

Romick, managing partner of First Pacific Advisors, took a similar stance in his second-quarter letter to shareholders of the $14.1 billion FPA Crescent Fund. “We find it difficult to invest in an environment that seems manipulated to engineer higher asset prices regardless of business fundamentals,” he wrote.

Read The Rest Of The Article Here

I have mentioned this a number of times before, but  we are now getting confirmations from some of the top money managers in the world.

Given current market environment, there isn’t that much to buy out there.  Most stocks and markets are overpriced. Bullish sentiment is approaching all time highs and the situation is starting to get dangerous. Why dangerous? Well, this market is artificially maintained by massive infusions of cheap credit (QE) and speculation. Basically, there is no fundamental reason for most asset classes to be where they are today.  It is all artificial. All assets are grossly mispriced to the upside and that will have to be corrected, sooner rather than later.

While I do not provide financial advice directly, I would suggest that  people might want to look at the situation from the following vantage point. The market is providing you with an excellent opportunity to start selling and building your cash reserve for the next round of the bull/bear swing.

Can the market go even higher here? Sure, but the probability of a severe bear move in the near future is very high. Well, certain as per my mathematical work. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

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Stock Market Update, November 8, 2013

daily chart Nov 8, 2013

Summary: Continue to maintain a LONG/HOLD position

Not much has changed since the last market update to alter my opinion. The market continue to push through its daily highs as it marches forward.

While everything I have mentioned before is still in play (Please Click Here To View Previous Market Update), …..here is the difference. 

Since early September of this year I have maintained that the market is topping and will resume its bear market shortly. As of now there is categorically no adjustment to that view.  Yet, I have also mentioned that there were two possible time frames for the bear to begin. September -November of 2013 or March of 2014.  I have argued that if we are too see the bear market now (from September of 2013 top) the market must start its down move in October or early November of this year.  As of now, that window has basically closed.

That leads me to believe that March of 2014 will be the final top (even if its lower than where we are today) before a prolonged BEAR MARKET into the 2016-17 bottom.  My timing work doesn’t show any serious turning points between now and the end of the year.  That means the market is unlikely to experience severe volatility between now and December 31st.  The next inflection point I see is January 1st, 2014. I will discuss that later.

As such, I recommend holding a LONG position until the market tells us otherwise. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

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The Biggest Problems With Value Investing

 growth stocks investwithalex

Thus far value investing has been a perfect investment vehicle.  After all, what’s not to like. It steers you to buy wonderful businesses at highly discounted prices. That in itself minimizes your risk by creating a margin of safety while maximizing your return potential, creating a highly desirable low risk and high return type of an investment scenario.

At the same time Value Investing is not perfect. While there is a number of shortcomings associated with Value Investing, the most important one from our vantage point is the issue of “TIMING”. Please allow me to explain.

Let’s assume that you have been able to find a value stock of your dreams. Let’s imagine for a second that it falls into either a Waking Beast or a Rocket Ship category.  Let’s further assume that the company is clothe retailer who’s stock is selling at 70% discount to it’s Intrinsic Value. The company suffered over the last couple of years due to various financial and merchandising issues.  Same store sales are down 50% over the last 3 years and the company recently closed 25 underperforming stores.  As a result the stock price has collapsed over 80% in the last 2 years.  

At the same time your in-depth fundamental research shows that things are about to get better. The company recently restructured and brought on a new management team with an excellent track record.  That is already being evident in the companies same store sales and improved cash flow. The merchandise is hot again and the company is also getting ready to start opening up a lot of new stores over the next 2 years.  Based on your research and calculations the stock price should be at least double of where it is today and much higher if the company continues to perform well.  Overall, it’s a wonderful buying opportunity that you believe will make you a lot of money.

Yet, for some reason the stock price hasn’t moved to the upside yet.  The market hasn’t yet recognized the change that you see and hasn’t yet re-priced the stock.  If anything, the stock price continues to go down, on average losing about 1% per month.   The question is….why?

The answer has to do with TIMING. This has always been an issue with value investing.  While we can identify significantly undervalued assets, thus far no one has been able to determine WHEN these assets will begin to appreciate again to reflect their true intrinsic value.  As today’s value investors very well know such appreciation can happen at any time.  As in the example above the stock price can start climbing tomorrow,  a few months from now, a year from now or five years from now.  It can also never climb again.

The old value investing  mantra states that such a scenario is fine and that it shouldn’t matter. For as long as you buy a stock at a significant discount to its intrinsic value and hold it until the stock reaches that value or appreciates significantly enough, you should be fine. Yes, it could take a long time but your eventual capital gain and lower risk profile should make up for your “unknown holding period”.

I respectfully disagree.  (To be continued…) 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

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What Everyone Is Ought To Know About This Bull Market

 CNBC Writes: Smart Money: Smart money? Looks like it’s mom and pop

Happy bull investwithalex

For the most recent leg of the rally, it seems like the so-called smart money may not be so smart after all.

If that’s true, the smart money has been losing.

Employing even more conventional wisdom, that might suggest the market is forming a top and ready to fall, as retail investors are often thought of as the last ones to a rally.

That thinking, though, is getting challenged.

There’s no doubt the retail investor has warmed up to the market in 2013 after sitting out much of the gains since the March 2009 lows. The mom-and-pop crowd ripped just short of $300 billion out of mutual funds from the 2009 low point through the end of 2012 even as the market gained more than 110 percent during the span.

Read The Rest Of The Article

As I have mentioned in my previous posts, the overall BULLISH psychological backdrop is now at the extreme and flashing warning signs.

Various metrics aside, I see very few bears.  Even people who used to be bears and now bulls.  All popular media is overwhelmingly BULLISH. Even if the article mentions “a possible drop” such argument is immediately counter attacked by stating something to the tune of “If the market drops it would be a wonderful buying opportunity to add more stocks”.

The article above is no different. It clearly illustrates how bullish everyone is. It’s a well known fact that Retail investors are the last ones on/off and as such could not be considered as “smart money”. Over 200 years of market data teaches us that. Yet, somehow the article twists it to be so.  Simply put, neither the market nor investors can do wrong in this market.

Will this continue? I do remember seeing similar type of prevailing BULLISH psychology before, at 2000 and 2007 tops. We all know how that ended. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!   

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Are You A Genius -Or- A Delusional Fool? Find Out Here

Yahoo Finance Writes: 3 Reasons to Re-Think Bailing On Stocks at All-Time Highs: Belski

denial - investwithalex

Uncharted territory is always scary. Whether you’re trekking the nether reaches of the Amazon jungle, or simply trying to time the top of a stock market that is trading at levels never seen before, it’s nerve wracking to be someplace you’ve never been before.

1) Quality, Transparency, Consistency

Belski says he follows the investment axiom of “buying scarcity and selling capacity,” and right now, he thinks the U.S. alone offers what investors want most. In particular, while jokes that Europe may have great coffee, he argues that the structural reforms of the past ten to twelve years have left American companies in a unique – and investable – position of strength. “That’s the U.S.” he says.

2) Way More Bull Market Ahead of Us

“Fundamentally the U.S. is in very sound position, and we think it will continue to lead for the next three to five years,” he says. Broadly speaking, he thinks a lot of new investors fail to appreciate what a bull market really is, reiterating his belief that we are “in the midst of an 18 to 20 year equity bull market cycle.”

3) The Coming CAPEX Cycle

Belski says people not only forget that the U.S. is still the world’s largest economy, and as a result, “is poised to continue to take business away from Europe and the emerging markets as manufacturing capacity comes back here.”

Read The Full Article Here

No offence, but I think even bulls are starting to run out of legitimate reasons of why the market should continue going up. While it could be viewed as a good thing, reasoning presented here clearly shows how delusional most investors are.  Let’s just take a quick look at 3 reasons above.

1. Quality, Transparency, Consistency?  Is this guy being serious. What about looking at the fundamentals and investing in undervalued companies that make sense. Do you buy a $500 pair of jeans that was made in the USA or do you just buy an identical pair of jeans for $50.  His analogy makes no sense. Well, that is unless you like losing money.

2. Way More Bull Market Ahead Of Us? As I have mentioned here before, what bull market? If they are talking about the bull market from 2009 bottom they are talking about a bear market rally. The market has topped in 2000 and has barely moved since.  While the Dow and the S&P are up a little bit, NASDAQ is still down. One should understand where  they are in the economic cycle before saying that the bull market has already started. If you haven’t figured it out yet, we are still in the bear market that will only end in 2017. Read my timing work to find out why.

3.  The coming CAPEX cycle? What CAPEX cycle? He might as well have said that the US Economy will prosper because aliens will land soon and make the USA their home base. Bringing new technologies and prosperity for all along with them. I am sick of this crap. What kind of stupidity is this. What about the fact that the US Economy and its Financial Markets being artificially maintained by huge credit infusions and the largest credit bubble in the history of mankind. What about massive speculation in all asset classes and overwhelmingly bullish stance. No, I guess those things do not matter.

Anyway, if you believe in this nonsense your money and you shall soon be separated. I guarantee you that. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!  

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Are You A Bear Hater?

bear market investwithalex

It’s hard to be a bear. No one likes bears.  Here are the top 10 signs that you might be a bear hater as well. 

  1. You define a bear who got it wrong simply as “An idiot”.
  2. You define a bear who got it right as “An idiot who got lucky.”
  3. Short squeezes give you a hard on.
  4. When you go to Russia you always order a Grilled Bear Steak.
  5. You can’t stop laughing when Mr. Market mauls all the bears.
  6. You secretly wish that Mr. Bernanke would round up all the bears and ship them to where they belong….. Siberia.
  7. You think that throwing bears out of airplanes should be an Olympic sport. 
  8. When up in the mountains you steal “Slow Down For Bears” signs and replace them with “No Speed Limit” signs. 
  9. You believe all bears are communists. 
  10. You believe bear mafia controls the toilet paper market.

This goes to all the bears out there. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

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The Secret Behind Macroeconomics & Value Investing (Part 3)

putin on bear investwithalex

Step #2.  Use Common Sense

This is by far the best tool you have in your tool set.   As the saying goes,  “If it sounds too good to be true, it probably is”. Meaning and as you have probably noticed, most market pundits (whether it’s the economists, talking heads or the money managers) are perpetually bullish. No matter what the situation  is they are always talking about how great things are and how all stocks will be going up over the next 12 months.

That is an excellent point of view to have if you are working in the self-help inspirational type of an industry, but a dangerous one to have if you are working with stocks. If you haven’t noticed, stocks do go down at times. Sometimes they collapse (aka 2007-2009). That is why having your own, well researched common sense opinion is so valuable.

Case and point, today’s economic environment presents us with a perfect  example. (Written Nov 7th, 2013)

Majority Opinion:  Today’s stock market closed at an all time how with the Dow at 15,746. If you listen to the main stream media, the economists, read the newspapers and magazines, listen to market pundits and talking heads you would undoubtedly walk away with an overwhelmingly BULLISH opinion. According to most of them the US stock market and the US Economy are in the early stages of a major bull run and economic recovery. If fact, you would probably be so excited that you would invest  every single penny that you have.

Common Sense Opinion:  Yet, if you would listen to my or form your own opinion you would see an opposite point of view.  You would understand that today’s economic recovery is nothing more than a mirage driven by a massive infusion of credit into the system through monthly QE of $85 Billion, low interest rates and massive amount of speculation. After digging deeper you would see that all asset classes (stocks, bonds, real estate and even art) are in a massive speculative bubble that is unsustainable.

Digging even deeper and looking at the technical picture you would probably think twice about going long here. Instead of looking at the market and saying it’s at an all time high with many years of bull left on the table, you would probably look at the market and say, “Hmmm, this market is way overbought and given the current economic environment and the fact that everyone is so bullish I think the market is setup for a large bear move”. Instead of going long you would consider either getting out of the market all together or going short.  Your research and common sense understanding of the economic situation would clearly support that decision.

As you can see the difference between Majority Opinion and a Common Sense Opinion is vast. One would have you buying every stock under the sun while the other makes you want to run for the hills. Which one is right?  Well, that is for you to decide, but I would always pick a well researched Common Sense Opinion from a trusted source.  More often than not it pays to do so.  

In conclusion, following the two easy steps above will put you well ahead of the competition within a short period of time.  It will put you on the fast track of fully understanding the macroeconomic picture and what is going on in our financial markets.  More importantly, you will become self proficient and 99% more accurate than most of the economist and talking heads out there. You will be able to make much better investment decisions and avoid unnecessary losses most often caused by following the crowd.   

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!   

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The Secret Behind Macroeconomics & Value Investing (Part 2)

mad money investwithalex

With that said, how do you perform proper macroeconomic analysis that is useful for picking stocks?

It is very easy.

Step #1.  Read, Listen & Follow

Read and listen as much as you can. Yet, be very selective. Here is what I DON’T want you to read and/or listen to.

  • Most Economists
  • Professors of Economics/Finance
  • Technical Economic Papers (they are worthless when it comes to market applications).
  • Talking Heads On TV
  • News, Newspapers or Magazines
  • Politicians
  • Market Pundits

Be aware of these sources, but do not take them at their core value.  Simply put, their interests are not aligned with yours. They either want your attention or they are trying to sell you something. Plus, in the majority of the cases,  all of these sources are simply recycling the old news and putting their own spin or analysis on it.  Yes, their view could be accurate, but it is rarely so.

At the same time, here is what I DO want you do to.

I want you find market practitioners (money managers, hedge fund manager & investment advisers) who have a very good track record when it comes to stock market or economic predictions. I want you to start following these people. I want you to read, listen and study everything that they have to say.  These people have a proven track record and for the most part they do not have time for nonsense.  Just as your money is on the line, so is theirs. This aligns your interests and ensures that their opinion is at least backed by capital.

For example, you can follow my blog at www.investwithalex.com if you believe the opinion I share on it is an accurate one. There are too many other smart and capable money guys that I can recommend, but I will not. Discovering these people is part of the process of learning who you should follow and who you should avoid.  Just as you should never buy/sell stocks based on somebody else’s advice, you should never blindly follow someone and their opinion.  Even though they might sounds very smart, they might also be wrong.  Remember, you must always perform your own research in order to form your own conclusions.

With that said, here is the best part. Being an independent thinker in the investment world pays off….big time. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!  

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Are All Economists Retarded?

Bloomberg Writes: Why Germany’s Export Machine Is Under Attack

 EconomistsMessedUp

Imagine someone who runs a thriving luxury car dealership, yet does the weekly shopping at a no-frills discount store. That pretty much describes the Germans. The global No. 3 exporter is famously thrifty at home, so Germany runs a trade surplus equaling nearly 7 percent of its economy.

Now, imagine telling the Germans that this is bad. That’s what is happening as a growing chorus of international critics warns that Germany’s trade surplus is endangering global growth, and putting Germany’s own future at risk.

On Nov. 5, the European Union threatened to probe Germany’s trade surplus, which since 2007 has exceeded EU guidelines of a maximum 6 percent of gross domestic product. Germany must boost consumption and raise wages “to open the bottlenecks to the growth of domestic demand,” EU Economic and Monetary Affairs Commissioner Olli Rehn said.

Rehn’s comments follow recent criticism from the International Monetary Fund, which says German export policy is hindering Europe’s economic recovery. A “significantly smaller current account [surplus] would be useful,” David Lipton, the IMF’s first deputy managing director, said in Berlin last week.

The U.S. has weighed in, too, with a recent Treasury Department report (PDF) warning that German policies were placing “severe pressure” on troubled European economies and creating “deflationary bias for the euro area, as well as for the world economy.”

Not surprisingly, the Germans are furious. Trade surpluses “are a sign of the competitiveness of the German economy and global demand for quality products from Germany,” the country’s Economy Ministry said on Oct. 31. “There are no imbalances in Germany which require a correction of our growth-friendly economic and fiscal policy,” spokesman Martin Kotthaus told reporters in Berlin. An article in the magazine Spiegel 

The critics, though, aren’t really asking Germany to export less—although that certainly would help such EU trading partners as Spain and Italy, which are struggling to export more of their own goods. The Germans are mainly being asked to spend more money on themselves. Over the past decade, Germany has dramatically lowered labor costs and reduced unemployment by creating a large number of low-wage and part-time jobs.

Read The Rest Of The Article Here

Sometimes I feel like I live in the parallel universe where only stupidity is rewarded.

Germany is running its economy as any responsible country should (well, besides being a part of the European Union) and IMF/USA have the balls to tell Germany to that it is doing everyone a disservice by not spending more.  I have never heard anything more ridiculous.

While I understand the reason behind such a statement, this is equivalent to having a friend who has already maxed out all of his/her credit cards telling you that you should live it up a little and instead of saving money should blow it all on coke and hookers.

It is terrifying, but that is the state of our economic leadership today.   It leads to nothing more than an eventual  decline in economic standard or worse…..an economic collapse that is just around the corner.  

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!