Investing Wisely -- Update with Recommendations and Personalized Follow-Up
In my last Update, I bemoaned the fact that I passed on investing in the current rally and said that I had obviously made a mistake in being too conservative. Well, I was correct in my forecast but my portfolio did not grow very much - holding cash.
The market is now seriously setting up for yet another Pullback, and I intend to do my best to 'participate'. My current forecast is that this anticipated pullback is perhaps a few days, a week but not much more, down the line.
So, with the above brief update and mini-forecast in hand:
I believe that specific Company - Short Sales - (Shorts) and Inverse ETF - Buys - Recommendations will be provided by me to SafeHaven rather soon, just like in my April 8th Update / Recommendations.
I posted a couple of articles here in SafeHaven using my valuation analytics for XOM and the Coal Industry Group last Thursday and Friday. I hope you have a chance to read them.
Special Assessment of the Current Marketplace:
Although I have edited this "Story" - I must apologize to those who have read my missive before. I believe these paragraphs are very timely and important to your "Investing Wisely".
My "Forecasting" is doing very well, but what is happening currently in the marketplace cannot be adequately explained in a "Forecast". So, I would like to tell you a Story, and it is about the "Indices" vs. the "Internals". Few Investors really understand the principle of "Internals" because they are so obscured and concealed by both the data itself and the media who seldom writes accurately about it.
The same information and date is true about "Rotation" and the two are deeply interlinked.
In brief, the good guys are the "Internals" / "Rotation" and the not such good guys are the "Indices".
Let me see if I can explain. Every single indice, sector, industry group and security on all exchanges is constantly Rotating in and out of favor and perhaps back again. This is a fact on both a fundamental (Valuations) basis and on a technical (Cycles) basis. (My two most trusted forms of internal analytics).
At this stage in the current rally, internally there is much rotation going on and are a number of inter-woven cycles doing their thing, day after day, with individual securities / companies. Each of them, including their industry groups are jumping from cycle (a) to cycle (b) and then to cycle (z) in a complex and random and "rotating" manner. The (a), (b) to (z) metaphor includes the English and all other alphabets of all other languages on the planet. Now I would call that - "Complex" - and it is!
There are always many companies and industry iroups that are currently NOT making new highs along with the Indices in bull market environments, or new lows along with the Indices in bear market environments. The Banking Industry Group, most recently had an inter cycle pullback, within this current rally and started to rally again, only to fall back even more. You might want to look at some of the Bank securities one your charts and follow these guys in the coming weeks, and you will see what I mean. Their cycle was recently not in phase with the marketplace, but maybe this coming week it will get back in phase and maybe not? You may also want to review my SafeHaven, Oct. 18th Article on Bank of America.
If you are still following me - then you will understand that industry groups "Rotate" in and out of favor, both fundamentally and technically. So as an example, last week and next week, etc., etc. a new Industry Group (perhaps several other Industry Groups) will definitely rotate out of phase with the Indices and do the same in the week beyond, etc., etc. That's how it works and that is why I often say in my Blog: it was a "Balanced" week. Most Investors would understand my remark to be that the marketplace was flat, neither up nor down very much. (this past week was an excellent example of an unbalanced week because it was substantially - down. The same would be true if it was substantially - up). What I was actually sharing (about being 'Balanced') is that while one Industry Group was going down another Industry Group was going up, thus creating a "Balance". That means that there was "Rotation" going on "Internally" and the Indices had no clue. They simple presented the numbers with no details. It's the 'details' that permit making profits, not the simple data that the media presents each day in some biased form or another.
It's a "Choppy" and "Bifurcated" marketplace, and that is why everyone seems to be saying "they can't figure it out". It is not that hard to 'figure out' if you have the tools.
With all this Rotation is going on - Internally - a very high percentage of the Investors, Financial Analysts and Asset Managers just can't see it, picture it, get a handle on it, or understand it! And that, my friends, is why they are losing money, and I am in CASH!
I hope you are beginning to understand, just a little more about my rather unique analytics / work. Fundamentals must carry the heaviest weight and Technical Analysis is a necessary supporting and confirming part of the matrix.
Now I will try to make you smile just a bit and offer yet another point. It is rather simple but often not what Investors do when investing their money. It is - sustained "Momentum" (a trend), in one direction or the other that is necessary for you to make money consistently. It is said, and I agree, that the General Market has about a 60% influence on whether or not you are making money. That means - Being in Phase with the marketplace is a requirement. Until an Inflection Point occurs, and - at or around that Inflection Point you invest your money - I suggest you are wasting your time, and you are just churning your money around in circles.
In this current "Choppy" and "Bifurcated" marketplace, that is what most Investors and nearly all Mutual Funds are doing. Kind of dumb and a waste, don't you think?
So that is my Mini-Forecast and Story for this Sunday. Maybe I'll be back to a normal / simple - mini-forecast next Sunday or beyond.
My Current Bottom Line:
* I am holding 100% Cash.
* Patience and Discipline - waiting for my list of Fundamental, Consensus and Technical - "Conformations" to all fall into place is part of the necessary process for "Investing Wisely".
* Inflection Points historically have occurred historically about three - five times per annum. We have already had 5 clear and meaningful Inflection Points so far this year. Investing at or around the time of my Inflection Points has proven to be a profitable way to invest.
* In my late August posting, I said: "The Market is now (very possible) setting up for another meaningful but likely (short in duration) Rally!" It certainly did rally!
* Now it looks just the opposite. One of these days this choppy and bifurcated market (late April to date) will do something meaningful and the next possibility of that is a Pullback.
* High Volatility may not currently be showing up on VIX - lately, but it is clearly - alive and well.
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Thank you for your time in reading my "stuff" and continued interest in my work.
Smile, have Fun - "Investing Wisely",