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Elliott Wave Theorist Video

Jim Musselwhite — Mon, 21 Jul 2008 19:20:06 +0000

Dear Investor, Do you have a big-picture market [...]

Looking Forward

Roger Nusbaum — Mon, 07 Jul 2008 12:27:00 +0000

A reader left a question that I think is pretty damn good. He asked "what are the variables that I use that allow you to do a forward analysis of an asset with any meaningful probability of being right."

As someone who believes in top down management I focus on big picture issues and then try to figure the best way to invest toward the big picture while at the same time building in some sort of counter strategy in case my assessment is wrong.

So instead of looking at a stock from the bottom up and saying ok, here is a stock with such and such valuations that will make more widgets next year for a slightly smaller cost and buying it, top down looks at the world for things like supply and demand issues, turning points in cycles or big long-lasting themes as examples. The world is not going to have enough drinking water, the US had an unsustainable real estate price boom built on very low rates or China is going to be much more globally relevant over the next decade.

Another type of analysis might be at the sector level. Take a couple of years ago when the curve inverted. The history of curve inversions is bad. Is there any reason why this might be different? Are the arguments made by the people saying it's different this time compelling? Based on a bunch of excesses we all knew about, even if we could not quantify, no, those arguments were not compelling.

The best way I could describe the above is that I am trying to put the odds in my favor as often as I can by trying to find the forest. This is far more important than the stocks, or funds, that are ultimately chosen to capture the big themes.

Before the financial sector blow up I used to say, as an example, the best thing would have been to sell all tech in the summer of 2000 as opposed to trying to find the one or two names that might have gone up as the Nasdaq dropped 80%. Now the financial sector is another example. The best thing would have been to sell all financials instead of trying to find one or two that might to do well.

Once you know that things look good for the oil market (using an example from a couple of years ago that shows how simple this can be) what then is the best way to capture this effect taking into account a good balance of potential price appreciation and volatility? Over the last five years it would be very difficult to pick a stock that went down, save for maybe Yukos. Clearly some energy stocks have been relative laggards or leaders but if you got oil right one way or another you probably have a winner on your hands.

For me the energy theme meant looking at foreign stocks because every country has a big oil company, this is an easy sector to add foreign exposure. Having done a little reading I knew that Norway was (and obviously still is) an important destination for oil.

There aren't too many big oil companies in Norway. If oil up is good for Norway it must be good for Statoil (STO) was the thinking. I could have been wrong of course but the wind was at my back when I bought it. Obviously I still had to learn the company. Norway's production is declining, the company is very unhedged, they have a big global footprint and I had to learn the numbers but it would have been hard for that stock to have been a horrible pick.

I think this is all very simple, you either see it that way or not but sorting out the big themes and then looking for the best way in is the best description I can give.

Another reader left a comment that included the following;

Diversify. Eat right. Have friends. Work out. ~~Buy~~ Adopt a dog.

Pretty hard to argue with that. If you can't really eat right how about just cutting out the soda?

Western Union (WU) is gaining momentum

Eric Cheshier — Mon, 23 Jun 2008 06:14:44 +0000

The Western Union Company (NYSE: WU) shares are on the rise – up 15% in the last 3 months. The debt markets are in a panic, and the mortgage industry has all but evaporated like the foam in your freshly poured beer. But money-transfer kingpin Western Union scoffs at the rest of the pitiful companies in the financial sector.

Here’s why

The Sound Business Sense of Crawford & Company (CRD-B)

QualityStocks — Tue, 10 Jun 2008 14:26:04 +0000

Insurance is a durable business. No professional enterprise can do without it, in good times and bad. Insurance is also a vital form of security for stock investors. There are abundant and compelling reasons to favor stocks in the insurance business when markets are depressed, under cost pressures, or with uncertain demand trends. Insurance spawns other [...]

MARKET COMMENT June 4, 2008 MarketWatch bullish pundit states: “…if it weren’t for the financial news, the market would be doing pretty well right now.

David Fry — Wed, 04 Jun 2008 22:18:45 +0000

MARKET COMMENT June 4, 2008 MarketWatch bullish pundit states: “…if it weren’t for the financial news, the market would be doing pretty well right now.” And, he added, “In the bigger picture technology has less exposure to the financial issue going on, and people are still optimistic for a recovery of some degree.” Bernanke chimed in with more “happy talk” saying that the economy has dealt with the oil price shock comparatively well. How are you folks dealing with it?

Mid Morning

Roger Nusbaum — Wed, 04 Jun 2008 15:24:00 +0000

My recent post about Plum Creek Timber, client holding, was re-run on Seeking Alpha and a reader left the name of a stock I had never heard of before; Timberwest Forest (TWF-UN.TO in Canada and TWTUF on the pink sheets).

Timberwest is one of these Canada listed products that ties in with some sort of resource and pays an enormous dividend, the hydro funds fall into this category.

The chart goes back a year and compares Timberwest with Plum Creek Timber and Macquarie Infrastructure (MIC), which is also a client holding. Timberwest and Plum Creek are obviously both timber companies and Timberwest and MIC are both not so simply constructed businesses with high dividend payouts.

An investor who bought MIC or Timberwest at the wrong time may not have necessarily known that this sort of stock would have gone down in this manner perhaps in conjunction with the financial sector so just owning one of these in moderation is not a big deal. If one of these are down chances are something else is up.

I do think an investor could realize what MIC and Timberwest have in common and realize that they might go down together even if they did not know when they would go down or understand what would take them down.

Banks are horrible but if WaMu and Wachovia go lower, buy now

Ted Gottsegen — Tue, 03 Jun 2008 16:07:50 +0000

Wachovia Corporation (NYSE:WB) is 25 Cents from its 52-week low and Washington Mutual, Inc. (NYSE:WM) is just 5 Cents away. The Financial sector is going down in flames, but the world is not ending.

MARKET COMMENT May 28, 2008 Today was a replay of yesterday with bulls doing more news cherry-picking [Durable Goods orders better than expected] while buying toward the close again perhaps from the same unknown source.

David Fry — Wed, 28 May 2008 22:17:17 +0000

MARKET COMMENT May 28, 2008 Today was a replay of yesterday with bulls doing more news cherry-picking [Durable Goods orders better than expected] while buying toward the close again perhaps from the same unknown source. Don’t ya love headline writers? This one’s from MarketWatch. Anyway, volume remains sluggish and breadth unimpressive.