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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. 

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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. 

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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. 

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What Does The Bear Say?

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People keep asking me why I don’t short the market right now if I am such a bear and believe in my forecast.  I believe this is a very good question that requires an explanation.

First,  I am not a bull or a bear. I am a money manager and an investor. My job requirements are fairly straight forward. To make money in both bull and bear markets.  My current bearish stance does not come from a position of being a “Permabear” (as some people out there), but from a very well researched and analyzed position of being a money manager.  Further,  I often shift gears but only when the time is right.

For example,  I was a BIG bear starting in 2006 warning anyone who would listen that our credit markets, real estate, the stock market and the overall economy would blow up shortly. Not many people have listened to my advice. Then in early 2009 as everyone was freaking out I came out and said that the bear leg is almost over and the time to buy will come in March of 2009. I was an all out Bull when everyone was crying and shorting the market.

Now, with the market approaching all time highs and fundamental picture deteriorating significantly, I am once again a bear.  Both my fundamental and my mathematical timing work clearly indicate that the stock market and the overall economy are about to implode again.  As I discuss on this blog I have no doubt about that.

However, I am not the dumbest bear in the woods.  That means you have to follow the market and only short when the time is right. The timing is not right…… just yet.  As I have mentioned many times before on this blog it is highly probable that the bull leg that started in March of 2009 will complete in March of 2014. Once it does, the market should roll over and head down hard.

Until that happens and until we get the confirmation that the bear market is in full swing there is no reason to go short.  Quite the opposite. The market is still trending up and smart investors should continue to HOLD their LONG positions if they have any.  Just as my advice indicates. (Although I wouldn’t buy any more right now).

I hope this helps with the understanding. 

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Bill Gross Shares A Valuable Tip

CNBC Writes: Gross: The stock market and asset prices are ‘bubbly’

 drastically-overpriced-investwithalex

Bill Gross, the co-chief investment officer of Pimco, said he thinks the stock market and “all asset prices are bubbly.”

“Bond prices, stock prices … and profit margins are bubbly to the extent that [if] any of them can be sustained, I guess, is the ultimate test,” Gross said on CNBC Wednesday.

He said the Federal Reserve‘s QE program is a “rather blunt instrument in terms of elevating, and perhaps, bubbling stock prices.”

“Margin debt is at historic levels to the extent that they want to simmer down equity prices [but] they don’t have to attack it through tapering … they can raise margin requirements.”

“The bond market is bubbly because the policy rate at 25 basis points is artificially suppressed. Investors and savers are not receiving what they have historically … in historical terms would probably be around 2 to 2.5 percent,” he said.

I have very little to add here. Mr. Gross is right on the money. I have been saying this for a while as well, everything is overpriced. Big time. The only thing I will add into the mix is my timing and mathematical work. Once again, it is predicting the beginning of a severe Bear Market that will only end  in 2016. There is no stopping it. 

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Secret Stock Market Structure That Is Truly Mind Blowing (Part 2).

Long Term Dow Structure

 

This post continues to look into the mathematical work that I have been doing. Once again, indicating prefect structure in the financial markets. 

The numbers derived above stem from my own unique way of looking at the stock market. They are 3 dimensional calculations that combine price and time into one number. The calculation itself is basic high school math, but I will let you figure it out if you want to pick it up from here.  

I cannot overstate how amazing this chart is. Just a few points. 

  • The move between 1994 bottom and 2000 top was 11,800 UNITS. The Dow topped at exactly 11,800 in January of 2000. Amazing!!! 
  • The up move between 1994 bottom and 2000 top was 11,800 UNITS. The down move between 2000 top and 2002 bottom was 6,483 UNITS. When you combine both values together you end up with a value of 18,283 UNITS. The move took 9 years. 
  • The up move between 2002 bottom and 2007 top was 10,156 UNITS. The down move between 2007 top and 2009 bottom was 8,137 UNITS. When you combine both values together you end up with a value of 18,293 UNITS.  The move took 7 years. 

So, the combined move took 16 years and there was only 10 UNITS of variance between the moves. And you still want to argue with me that the market is random? It Is Not. Once you know and understand this structure you can time the market with great precision. 

For example, if you understand the structure you know that the move from 2007 top will be exactly 8,127 UNITS. With such knowledge you can know the exact time and point location of the bottom in 2009. I mean to the day and long before it happens. Just as I predicted in 2008. So, while everyone is freaking out and trying to figure out where the bottom is you can be laying on the beach while making crazy amounts of money shorting the market. 

The sample structure above is just a small sample of how the market truly works. This type of measurement is available on the daily charts as well as the long term charts. 

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The Secret To Not Losing Money On Wall Street

CNBC Writes: Dow could rise 10 percent or more in 2014: Siegel

bull investiwthalex

Wharton School professor Jeremy Siegel told CNBC on Monday that the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) could rise 10 percent or more in 2014.

That may not be on par with this year’s roaring return but is still historically robust, he said, considering that 2013 has been an “extraordinary year” for stock gains.

“I think they are going to kick the [budget] can down the road a whole year,” Siegel said. “So that’ll be off our plate and that will be a very, very positive factor [for] first-quarter 2014.”

Read The Rest Of The Article

This post is to quickly remind you of two very important facts.

1. Most financial media is worthless. Half the time they don’t even know what they are talking about.  They continuously recycle worthless stories that have no impact on financial markets or individual stocks. As I have said many times before, news do not drive stock prices. I want you to be aware of that.

2. Never listen to teachers when it comes to real world applications. Most of them have the theory down, but that’s it. They do not have what it takes to be on Wall Street. If Mr. Siegel knew anything about the markets he would be managing money and making millions of dollars each year. Instead he teaches. Those who can…do and those who can’t….teach.

Anyway, what kind of garbage is this…..only 10%?  Why not 50% or 100%. Might as well just say that. As a matter of fact, any number will do.  The point I am trying to make and the secret I am sharing is this…..

If you listen financial media and/or take advice from those who do not directly participate in the financial markets, your money and you shall soon be separated.  

Okay, I am done bitching for today. 

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Stock Market Update, October 25th, 2013

daily chart Oct 25, 2013

Summary: Continue to maintain a LONG/HOLD position

In the last couple of updates I have mentioned that the market will bounce to the 15,300-15,500 on the DOW in order to close all the gaps and to satisfy all of my requirements. Well, we are here, what’s next?

This is where the picture gets a little bit fuzzy.  According to my mathematical work there is no doubt that we are at the inflection point with two possible outcomes.

  1. September 2013 top was indeed the top and the bear market down leg will resume shortly.
  2. The final top (a little bit higher or lower than September 2013 top) will be set in March of 2014. Thereafter the market will roll over and begin its bear phase.

As I have mentioned many times before, my mathematical work is clearly showing that the bull is ending and the 2-3 year Bear market is just beginning.  I would call the exact date, but there is just too much interference right now.  Unless a severe down leg starts over the next 2 weeks, we will have to wait until March of 2014 for the Bear to start. Until that happens a lot of ups and downs without so much as going anywhere.  The rest of my analysis remains the same.

Over the next few weeks we will find out if the if the bear market has already started or will start in March of 2014. Should the market break below 14,600 over the next two weeks, the probability is high that we have already started the bear market leg into the final 2016 bottom.  The market is certainly going back into the 14,800 as it left a huge gap there, but a firm break below 14,600 will give us a confirmation that the bear is back.

At the same time we cannot yet ignore the technical picture with the market being near an all time high. As such, I continue to advise you to maintain a LONG/HOLD position while waiting for the confirmation that the bear market has indeed started.  

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Warning: Another Hedge Fund Manager With A Perfect Track Record Is Predicting A Market Crash

CNBC Writes: Scary! This bearish call points to 40% market drop

 market crash investiwthalex

The stock market is trading at unsustainable levels that could eventually lead to a major sell-off, with a possible 40 percent drop in stock prices, hedge fund executive Mark Spitznagel told CNBC Wednesday.

“The simple answer, the mom and pop answer, I think, is just to step aside,” said Spitznagel, founder of Universa Investments and an associate of “Black Swan” pioneer Nassim Taleb.

Spitznagel, incidentally, has some Street cred when it comes to predicting downturns: He called it in 2000 and 2008 and made one of the biggest profits on Wall Street during the 2008 financial crisis, while many other investors were losing money.

Appearing on “Closing Bell,” Spitznagel suggested the Federal Reserve, which last month reaffirmed its policies on bond purchases and record-low interest rates, is basically propping up stocks and otherwise distorting the market.

“It’s a market that is sort of set up, I think, for a major crash, a major sell-off,” said Spitznagel. “I would argue all the major tops we’ve seen in the market over the last 100 years look very much like it does today.”

“The ultimate causes of crashes is the distorted environment we’re in,” he continued. 

In turn, Spitznagel recommends retail investors step aside and wait for opportunities to come.

Watch The Video Here 

I agree with his analysis 100%. The only thing I would add is my mathematical timing work. There will be a 40% decline but it will happen over the next 2-3 years and not in a crash type of an environment. It will be very similar to the 2000-2003 move.  Further, my work indicates that this decline will really get going after March of 2014.  

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Greenspan The Oracle

Bloomberg Writes: Greenspan Says Stocks Are ‘Relatively Low’ and Headed Upward

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Former Federal Reserve Chairman Alan Greenspan said the stock market has room to rise from record levels.

“In a sense, we are actually at relatively low stock prices,” Greenspan, who guided the central bank for more than 18 years, said in an interview with Sara Eisen on Bloomberg Television today. “So-called equity premiums are still at a very high level, and that means that the momentum of the market is still ultimately up.”

Greenspan said the stock market is “just barely above 2007” and the average annual increase in stock prices “throughout the postwar period” is 7 percent, which leaves room for a rise.

Read The Rest Of The Article Here

I am not sure why anyone even listens to this guy anymore.  Greenspan only has one gear. To lower the interest rates and to flood the market with cheap credit. Let’s take a look at just some of his accomplishments.

  • 1998 Asian Bubble/Crisis
  • 2000 Tech/Stock Bubble and Crash
  • 2006 Real Estate Bubble/Collapse
  • 2007 Financial Collapse
  • Current Developments

Do I blame Greenspan for all of that? Absolutely. That’s what happens when you flood the market with cheap credit. You start a perpetual cycle of bubbles and crashes. The money has to flow somewhere and when it does, it creates a bubble. That bubble eventually pops and wrecks havoc on the entire economy. That leads Greenspan or Bernanke to flood the market with even more money/credit until it recovers and creates another bubble. So on and so forth until the whole thing blows up.

Greenspan has always claimed that you cannot sport bubbles. I disrespectfully disagree, but him claiming that stocks are cheap is nothing short of adding insult to injury. Anyone listening to Greenspan in this matter is likely to see their money vanish.

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