Today's Market
by Dr Invest


Today we had more WILD SWINGS with the DOW taking a 1% plunge. The Ivy Portfolio with TIP and BND swung into the positive today at .10%. It is not the 2% that I had hoped for by the beginning of July, but anything moving toward the postive better than a negative position.

As discussed in the Weekend Report, you need to be on alert regarding bonds. The FED's continued strong-arm of purchasing bonds and competing with investors, lowers the yeild. This action on the part of the FED will eventually make BONDS as worthless at interest at a bank and force investors to move their money out of the safehaven of bond investments.

For theory's sake, if you invest $100 into TIP (an exchage traded fund) and it grows 1% over a month and then invest another $100 into TIP at the beginning of the next month, your total return for the entire $200 over that month and a day would be .50% or 1/2%.

Keeping this theory going, at the end of second month, if your $200 gained 1% and you invested another $100 into TIP, your total gain for the combined value of the portfolio now at $300 would be .666%. 

What is happening, is when you make another investment into TIP it dilutes the original gain but only based upon the percentage you add. Although we added three separate but equal amounts of $100 into our portfolio, the second $100 was 50% of the total portfolio and the third $100 was 33.3% of the the total portfolio. When you add to your portfolio, it dilutes your overall percentage gain but gives you an greater potential if TIP continues to climb. For example 1% of $200 is more than 1% of $100 and 1% of $300 is more than 1% of $200.

The danger of slowly entering a position in a volatile market is that the opportunity could end before buying a full position.























Our Goldman Sachs stock is a good example. Using the Ivy Portfolio, we don't see a buy signal until Feburary 24th and we will not buy until the first of the month on March 1st. For theory's sake, we invest $100 into GS on March 1st, and another $100 on April 1st, and by May 1st, we are getting SELL signals. Because the market is volatile, there was no way to really enter the position before it was time to sell the position.

This is the dilemma, to take a long-term position that will be safe and is not a STUPID SPECULATION. Listen, the market is going to drop 20% and possibly 30%, regaining its footing as we move toward the presidiental election. There is a lot of money to be gained and a lot of money to be lost, but we just don't want to be in that game at this time.

Honestly, holding your money in a brokerage without gain is better than losing 20% or 30% of your portfolio. Even if your timing is not perfect, when the market had declined 30%, there is a greater likelihood that the market will not decline much more. And if you wait until the market begins an upward trend, though you had not "timed the market" perfectly, your can still capture a 20% gain.

Remain patient. Stay alert. Keep a STOP-SELL on your TIP and BND investment set at 3% below the closing price of TIP and BND. By the time October arrives, your gains should be more toward the positive.

(Note: The above article is for entertainment purposes only and not to be used for investment advice.)

Weekend Report
by Dr Invest

Stay Alert!  The market is constantly changing and in ways that are totally unpredictable. If I said that I wasn't NERVOUS, I would be lying. The FED has been purchasing 10 year treasurys, driving down the yield. The yield on 10 year treasurys sits at 1.6% but many analysts believe that they will be eroded from 1.6% to 1% by the end of the year by the FED's quantitive easing.

For us, that means that purchasing treasurys will NOT BE A SAFE HAVEN from market downturns. This is the very thing that the FED wants, that is to drive investors back into stocks. Peter Schiff said on Tuesday, U.S. Treasurys are JUNK! This means that if you have purchased BND and TIP exchange traded funds, you need to be prepared to minimize your losses. USE A STOP-SELL to limit your losses.

In May, I purchased BND and TIP. These bond funds rose 1.26%. I added another equal purchase of TIP and BND on the 1st of June. Look if you buy $100 of a stock that grows 1.26%, and then a month later buy another $100 the stock, your total gain on that $200 is .63%.  Since, in this case, you have already a .63% total gain in your portfolio, you would deduct .63% from 3%, leaving you to set your STOP-SELL at 2.37% below the purchase price of TIP and BND in June.

Odd behavior in the market is the sole reponsibility of the FED. The FED has already messed up stocks and now they are intent on messing up bonds. As of this weekend, my TIP and BND bond portfolio has declined to -.27% in June.  This is not reason for alarm, but does put an investor into the ALERT MODE.

My View

My best guess is that bond funds could remain weak until the end of July and rebound in August and September as the market falls further, but these are guesses based on 30 year seasonal charts. Weakness in Europe could push the market into an early decline but I expect the seasonal trends to prevail.

The trading rules of the Ivy Portfolio is to wait until the 1st of the month and then see if the price of the ETF falls below the 10 month simple moving average. We will remain alert this coming week to see if there is improvement in the TIP and BND exchange traded funds.

Meanwhile, we will remain on ALERT, setting our STOP-SELL on TIP and BND and hoping that the continued FED TWIST doesn't ruin even the minimal returns that come from a Bond Portfolio.  Welcome to the real world of investing. When the market is climbing, everyone is a wise sage; but when the market is diving, wisdom is getting out before real losses set in.

Note: the above article is for entertainment purposes only and not to be used as investment advice.

Today's Market
by Dr Invest

The dog days of summer drive a crazyness that comes from just too much sun, at least that's what I'm thinking. The past two weeks have brought some of the stupidest moves ever made by the trading community. At least that how it seems to me.

We lost 2% yesterday, we gained 1/2% today and already some are touting that we have seen the bottom of the bear run. The suggestion is that from now until the end of the year is nothing but gains-land. This is just about as nutty of a suggestion as I have ever heard.

This year's market has been marked by unusual contrast. There is no doubt that the 12% gains at the first part of the year was highly unusual, but contrasted to the gains was the breath taking decline that virually erased that 12% gain in the first part of 2012. Once again, the market rose in June 8% and now, we are seeing that 8% erased. There is nothing unusual here.... you can't have a GNP of 2% or less and expect a gain in the market of 20% or 30%. Money has to come from some place for the market to grow. How about Europe? Will Europe provide that influx of cash from trade with the U.S. No! They are in the middle of a recession with some countries having unemployment at 25%. How about China. Will they buy our goods and send us cash. Uh...you haven't heard that their ecomony is shrinking? I think you can see the dilemma here.

There is no place from where we are going to get this burst of cash into the economy. That is why businesses are not hiring and not producing (much) because people are not spending. Keep in mind the principle: Money in > money out! You can't spend what you don't have. You can also imagine how TAXING companies, when they don't have money coming in, will destroy the goose that lays the golden egg. Companies don't have money to spend unless people are buying things.

CONFUSING SIGNALS

From Bernanke

Over the past 6 months, so much money has been lost that traders are desperate for an advantage that will make the money. Already used to the temporary market expansion that comes from QE-1 and QE-2, traders have expected QE-3 and even demanded QE-3 from the FED. The actual expansion of the market from the QEs has lost its effectiveness with the length in which the market is affected becoming shorter and shorter. There are reasons for this that I won't go into here, but adding two or three hundred billion when it will only affect the market for two or three weeks just doesn't make sense unless the market is truly tanking. It is like crying, Wolf! Wolf!  There is no need to stimulate the economy for benefit of traders. (Wall Street) Bernanke though, has held out that an new QE was eminent should the market turn down. Well the market did fall 12% with no QE-3. Traders keep thinking to themselves, now should be the time for the new QE-3. So the traders bid up the market in hopes of a new QE-3. When it doesn't materialize, the market falls once again, erasing billions of dollars of investor's money. (So much for that 2% fee to your financial adviser who sold you the promise of glorious gains.)

From Finanical Institutions

On March 21st of this year analysts at Goldman Sachs (GS) announced that it was the best moment to get long stocks in at least a generation. In a report Goldman's Chief Global Equity strategist Peter Oppenheimer made the case that stocks were historically cheap relative to bonds and the anticipated growth rate. The work is largely forgotten now but created a lot of buzz with the S&P over 1,400 at the time.

As first reported by BusinessInsider.com yesterday morning, Goldman Sachs clients received an email advising clients to short the S&P 500. Authored by Noah Weisberger, the Head of Goldman's Macro Equity team, the report cited evidence of economic weakness as the catalyst for an expected drop of 5%. The email was sent at 10:52am et at which time the S&P was trading at 1,351 and on its way to a 2% drop for the day.

There's nothing legally wrong or even particularly sleazy with being bullish all Spring then flipping the script the first full day of summer. Most people are happy to give Goldman a pass on the "generational buy" call being made 4% higher than the insta-short suggestion. Trading isn't a sure thing, even for the sharpies at Goldman. http://finance.yahoo.com/blogs/breakout/goldman-sachs-short-long-always-winning-153900357.html;_ylt=A2KJ3CdQCOVPW3QAP67QtDMD

The problem we have is that opinons from analysts and fund managers are as widely varied as the ups and downs of the market. What is important is that Goldman Sachs likely profited from their positions, but more disturbing is the possibility that Goldman Sachs lost investors money-O-plenty.

Let's look at your Goldman Sachs investment below:

Notice the dates...January to Present. Please....Oh, please notice the yellow circle with an arrow pointing to it. I read the percentage of my return as -1.81%. If I had invested $100,000 with Goldman Sachs, I would now have $98,190. I didn't get tagged too badly, BUT...your financial adviser takes 1/2% each quarter for investment advice, so subtract another $1,000. Now your nest egg is valued at $97,190. Does this seem like a good investment of your money?

You be the captain of your ship. Goldman Sachs doesn't need to instruct me about the ups and downs of the market, when their investments are clearly DOWN.

(Note: the above article is for entertainment purposes only and not to be used as investment advice.)

Today's Market
by Dr Invest

If I had told you that the DOW would fall 1.96% today, you would have called me a LIAR. Didn't we just get FED TWIST extended? Now we remember all those brave...uh...stupid...er... speculators who put there trust in QE-3. Here lies the remains of their decimated stocks and the hopes that they would have doubled in price by Bernanke's good will toward the investment institutions. And didn't we just hear from someone at Goldman Sachs, telling us that the market would rebound with the market ending 15% higher by the end of the year?

Maybe you didn't hear that Goldman Sachs shorted the S&P 500 today, showing their lack of confidence that the market would move higher. This sudden change of investment strategy simply shows how the big investors get out....and let the small investors take the fall.

Here are some truths. Truth 1: You shouldn't be in stocks right now anyway! There is no safe harbour in stocks at this time. Repeat after me. Stocks are going down in price! Stocks are going down in price! Stocks are going down in price! Is there something you don't understand about prices going down? By the end of October, there may be buying opportunities for stocks; but for now, stocks are going down in price. Truth 2: The U.S. economy is in the dumpster. The economy is better than it was four years ago, but unemployment is still at all time highs and debt suffocating any potential for U.S. growth. (See HussmanFunds.com) (Read the latest reports and weep) Also look at Mauldin's report. http://www.mauldineconomics.com/images/uploads/pdf/mwo061812.pdf

If stocks are going down in price, bond funds are typically going to go up in price. I have chosen two, TIP and BND.

FORBES

iShares Barclays TIPS Bond Fund Experiences Big Inflow

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares Barclays TIPS Bond Fund (AMEX: TIP) where we have detected an approximate $108.5 million dollar inflow — that’s a 0.5% increase week over week in outstanding units (from 191,800,000 to 192,700,000).

The chart below shows the one year price performance of TIP, versus its 200 day moving average:

Looking at the chart above, TIP’s low point in its 52 week range is $109.65 per share, with $121.43 as the 52 week high point — that compares with a last trade of $120.48. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique.

The above article, drawn from forbes.com gives you a synopsis of TIP performance. The next two or three months BOND FUNDS should show good returns. I am using the Ivy Portfolio along with seasonal charts to make timely investments. Keep true to your Ivy Portfolio trading method and don't permit people to turn your head. If the market is rebounding, you won't need any one to tell you.

WHO CARES ABOUT THE PRICE OF COPPER

As copper goes, so does the stock market. Don't ask me why, it has just always been true. Below is a chart that shows the price of copper over the past 90 days:


I am suggesting that copper prices indicate a declining stock market and as I suggested in previous blogs that the dip began back toward the middle of April. Now I realize that some of these methods are a bit simplistic. Some economist insist on making much more complicated analysis, utilizing varied charts, CPI, GNP, etc.  But most of this is over analysis. Look at the price of copper and most of the time the price of stocks will follow. Traders use real time charts showing the price of copper next to the stocks they are trading to warn them of impending downturns. You too can use this little trick for your own investments.

WHO CARES ABOUT THE PRICE OF GOLD

Now for my GOLDBUG friends. Today the price of gold fell $49.50.  I have warned some of my friends that during a deflationary season, commodites will deflate as well. Gold is a commodity and is not exempt from the loss of value.

As with all investments, you don't want to lose 20% or 30% of your gains even if gold had grown 119% since you first purchased it. Remember rule number one in investment: Don't lose money!  Especially remember rule number two: Remember rule number one!

Below is the gold chart prices for the past six months:

                

Unless the Euro rises in value against the U.S. dollar, gold will continue its decline. If the U.S. dollar declines in value against the Euro, we will see gold strengthen. Should gold fall below 1550, there will be a race for some investors to get out of gold.

Long-Term Outlook for Gold

As a positive note, with all the liquidity in the market inflation will be hard to control when the economy returns to life. I don't know when our economy will strengthen, but it could be two or three more years before we see economy spark to life. Yes, we will have some rebounds, but until we deal with the U.S. debt problem, real growth is not likely.

You have heard it said, You can't spend more than you earn.  But with the magic of debt, governments can continue to spend until they become distrusted by people buying their BONDS. Without loans, governments can no longer continue business as usual. After DEVALUATION of a market, it is able to climb from its lows to the highs once again. People who have seemingly lost everything, get jobs, save money, buy houses, purchase cars, make investments, and the economy heats up again.

GOLD WILL CLIMB HIGHER! But as an investor, I can't enjoy the luxry of holding on to an investment that is not making money. If the direction of the price of gold moves higher, it would be a worthwhile investment.

I am not willing to hold on to an investment that has only returned a little over 1% in the past year, when my investment into TIP and BND exchange traded funds (BONDS) has returned over 12% in the past year. Let's see $100,000 invested in gold brings a return of $1,000 in the past year, versus $100,000 invested in TIP and BND brings a return of $12,000. Which was the better return? $1,000 or $12,000?

(note: the above article is for entertainment only and not to be used for investment advice.)

Today's Market
by Dr Invest

Ho..Hum!  Some are wowed by the rise in the DOW today.  I guess .76% is acceptable. But as in the past we have more speculation that Bernanke will stimulate the market and there will be an immediate climb of 6%, taking us back to this year's high. Before you start believing all this dribble, understand that neither the U.S. economy nor the International Economy is that good. In fact, it is bad!

Spain is only weeks away from bankruptcy, Greece has not resolved the underlying fundamentals that put her into bankruptcy, and Italy is teetering financially. Other than the hopes for a QE-3, there really is nothing more that can spur the U.S. market. Sales are slowing, unemployment is rising, and people are not spending, need I say more.

There's no real support for an uptrend in the market. When comparing the SEASONAL TREND for the DOW, there is nothing spectacular here and because of slipping international markets, we are falling below the seasonal trend. As we move toward August and September, we will see the seasonal drop in the market. It is then, that Bernanke would want to stimulate the market. Some think that QE-3 would be even less effective that it's predecessors. There are many reasons for this including the already low interest rates, but the length that the stimulus had effected the market became shorter and shorter. So now, the expectation is that a QE might only have an effect on the market for several weeks. What is notable is that speculators are still putting billions into the market, thinking that this time Bernanke will stimulate the market and I will make millons. As long as this kind of reckless investing continues, there is no need for a stimulus package. Hope keeps investors pumping money into the market. Only hopelessness will bring a strong market decline and the need for more stimulus.

THINKING ABOUT WHERE TO GO

At this time, there is really no place to go. Stocks have significantly declined in 2012, falling to zero gains and recently rising 6%. With certainty, stocks will decline further in the next three months and most likely another 20% downward. Bonds have become almost worthless and CD's are returning less than 1/2%. Gold has some promise, but with continued decline in the value of the Euro against the U.S. dollar, the U.S. dollar appears to be a strong currency.  Consequently, gold seems pathetically weak. Look at the chart below:

A recent article pointed out that the wealthy had returned to fixed assets like real estate to maintain long-term wealth.

My view is that you need a reliable investment method and remain consistent in implementing it. Read the blog for May to learn how to get invested. I have 1/3 of my portfolio invested in TIP and BND and will remain in that investment until it falls below the 217 day simple moving average. At the end of October, I will be looking to see if VTI will be a viable investment. VTI is an ETF index of U.S. stocks. I will also look at individual stocks such as FDO, DLTR, CATM, or PETM for seasonal trades during the Thanksgiving/Christmas season.

For now, stay out of the market. DON'T FEEL THAT YOU MUST MAKE MONEY. There is still opportunity to do well at the end of 2012. If you are going to buy something, buy TIP and BND but only if the price is above the 217 day simple moving average. As always, put a stop-sell into place.

(note: the above article is for entertainment purposes only and not to be used as investment advice.)

Today's Market
by Dr Invest

Idiotic! At this point, there is NOTHING that makes sense in market behavior. Should Greece leave the EuroTribe, the immediate result to the market would be quick and dramatic.

Still, someone heard scuttlebutt from Bernake's staff that stimulus was eminent. Bernanke only makes promises that if there is a significant downturn, he has a plan. The market has risen signficantly on several occasions over the past two weeks on the rumour of stimulus; likewise, the market has also significantly fallen as well.

So here we are again, SPECULATORS bidding up the market with billions at stake on hopes that Bernake will stimulate the economy once again. The train is going over the bridge with all the signs warning "BRIDGE OUT", yet the engineer responds by adding more throttle. This is Idiotic!

Meanwhile

Greece will get its election. There is a strong possiblity they will have a new Communist PM who promises to do away with the AUSTERITY and reassures the people that they will not be removed from the Euro. He reasons, "There are many countries that want to finish with Greece in the Euro. This doesn't seem like it will turn out well and Germany cannot cover all the bailouts by itself. France, Germany's partner, is resistant to austerity. Their new socalists PM, Hollande, believes that the Euro-economy simply needs to GROW ITS WAY OUT OF THE RECESSION. Of course this only works if you are using Germany's money and France is having their own problems. (Likely, Hollande is the secret ally of Greece and has offered support of keeping Greece as part of the Eurozone without austerity.)

No one knows how this is going to turn out, but I would not have my money in stocks at this time. Today, my investment in TIP and BND rose .45%, one of the highest one day moves since June 1st. This is indicative of agressive buying of Bond Funds in anticipation of a fall in the market. Still, stocks rose .91% indicating an expectation of a return to a strong stock market. It is the day of reconing, this week-end will determine whether billions are made or lost.

Here's my recomendation, STAY OUT OF THE STOCK MARKET RIGHT NOW. Nothing good can come from these volatile market moves both up and then down. The water is frothy and murky and underneath are swift undertows, just stay out of the water. The market will calm down and the water will become clear once again, so be patient.

(note: the above information is for entertainment purposes only and not to be used as investment advice.)

Today's Market
by Dr Invest

More confusion remains in the market. One analyst says, expect stocks to collapse and the dollar to strengthen. He also claims that a recession is eminent. Another analyst says, the FED must stimulate the economy now and expect the market to rise 30% before the end of the year.

Today a rise in applications for unemployment for the fourth straight month was reported. All the while, analysts have been talking about how strong the economy is and debating the unemployment figures. While some analyst are busily arranging the chairs on the sun deck, the ship is going down.

Wait no longer

Your stocks are not going to go up in value. That is my view. Not only have we lost most of the gains from stocks in 2012, we have also have a recession in Europe. Hopes have risen for another stimulus paid for by the U.S. taxpayer. Time is running out. Euporia is beginning to sink. One day, the market rises 1%, the next day the market falls 1%. There is not a DEFINIATIVE DIRECTION in the market at this time. Who can know... but this SIDEWAYS movement is indicative of either a strong breakout or a significant downturn. Hmmm....let me see.... uh, I'm guessing DOWNTURN? Look, is there anything in the market that would make you think that we are on the edge of a prosperous upturn? If not an upturn, then the only other possibility is a DOWNTURN. And in the face of worldwide economic slow down, I'm gonna suggest that if you are holding on to stocks right now, they will only go lower.

Sure, a little stimulus will spark the market for only a short while, but without real changes in the world-wide economies we are set for an immediate downturn and possible years in a pathetically poor GNP.  Wait no longer! Get out of stocks and if you invest back into stocks, only do so when it is most favorable for a positive return.

Being Prepared

When a "recession" returns it will no only affect stocks, but bonds as well. I have suggested utilizing ETFs because they are easy to get into and to get out of. Always, always, always, limit your losses with at STOP-SELL. Do not be caught flat footed! Determine now how much you are willing to lose and if you have any, and I mean any securities, put a STOP-SELL on them.

Listen, I would never lose more than 10%. If I have been invested in some type of security and it has already made me money...and I knew that the market was nearing collapse, I would move my STOP-SELL closer to the daily closing price to get as much profit as possible. (questions: drinvest@mail.com)

This market is nothing to TOY with. It is in this kind of market that fortunes are made and lost. I don't want to do either...I just want to survive. There are complicated ways to HEDGE, but even professionals trip on their shoestrings.

So let's keep our trades simple and make money when we know it is most possible.

A Home for the Cash in your Portfolio

This week, I have been researching the best money market accounts or Certificates of Deposit where you can invest your money an keep it safe. Let me be blatantly honest with you! The FED has made CDs worthless, so you will be forced to buy stocks. They are devaluing BONDS as well with the use of TWIST. More of these actions will take place by the FED because they don't want you to have a "safe harbor" for your money. Even gold, has recently been driven down by designed market pressures. The goal is to GET CASH MOVING. If you invest in real estate... a safe-haven I do believe, someone else may use that cash to buy a new car...or money will flow to real estate brokers, bankers, and mortage brokers... some where, some one, hopes the government, will spend cash.

At this time the safest place for 1/3 of your portfolio, set aside for cash, is in a CD. I also see Real Estate as a viable option, but your cash would become less liquid. There is also the difficulty of a deep-recession devaluing your real estate. But on the other side, inflation has to take hold at some point, where real estate could grow in value 20% to 40%.

Gotta go...if I think of some new ideas, I will share them.

(note: the above article is for entertainment purposes only and not to be used a investment advice.)

Today's Market
by Dr Invest

Shocked! Only a few minutes ago, I had looked at the DJIA (DOW) seeing it down only 30 points. Passing by my screen later, I could see it had declined 50 points. I assumed that the market had closed and the DOW was somewhere around 50 points down. Looking closer, I saw the DOW down almost 143 points.

Spain had been given 125 Billion by the EuroTribe but it did not quell the sick feeling that contagion would sweep into Portugal, Ireland, or Italy. Furthermore, the Greek elections will be held this coming week-end and new political winds are likely to blow Greece out of the Euro currency and back into their Drachma currency. There is complete uncertainty about how this would effect the EURO.

Some think that as countries escape from the EURO they will print as much of their currency as they want. Then a domino effect will take place. Other countries would say, "Forget this austerity, I can print my way out of debt! If I owe China $500 Billion in EUROS, I'll return to my own currency and print enough of my fiat currency to payoff that loan.

In Greece 20% -25% of the people are public sector employees. Many more are retired and dependent upon the liberal pension funds they receive from the government. Printing more currency helps the government meet the immediate demands by the people, but they are paid with an inflated currency. The new French president, Hollande has proposed that the EURO should grow its way out of the recession. "Borrow more money.", he says, "Then invest into infrastructure to pay workers, who will buy things, and companies will produce more, and all of the EU will be flying high." Kinds sounds like our present plan in the U.S. doesn't it. COULD I VOTE FOR HIM IN THE UP COMING U.S. ELECTION?

Someone said, "It is like 10 very poor countries voting in a union of eleven countries, that the one rich company (Germany), should cover all their debts." That's a nice idea if you have no money and can't manage your own financial affairs, but a poor idea if your nation has worked hard, saved, and exercised good financial management.

Some of you Kensians are going to disagree with me, but economies are limited in growth by the lack of demand for product. For example: I make 20 widgets to sell in my neighborhood, but there are only 5 people that live in my neighborhood. Even if 100% buy a widget, 3/4 of my widgets would remain unsold. Even if I went from house to house giving all 5 of my neighbors one-thousand stimulus dollars, there is no gurantee that they would spend it on my widgets.

G. Bush stimmulated the economy by giving each household a check. I got one! Do you think I went out with my $200 check and bought a "new thingy"? Look, I put that money so deep into a bank account, that I still can't find it! I'm sure many people spent theirs right away, but others were like me and horded their check.

OUTCOMES

The last minute drop in the DOW was a surprise to me, I wrongly thought that Spain's bailout would have insured a rise in the market. I am not invested into stocks at this time, nor gold. The BOND FUNDS, TIP and BND both rose today in value. If the EURO continues to fall in value to the U.S. dollar, gold will also fall. I don't really see an end to the downtrend in the Market at this time. Look at the technical chart below.

Remember that technical analysis is not a science, it is more of an art. The market moves in "real-time" and there are no absolutes. A sudden war with IRAN will change every rule used to interpret a chart. For example, look at the YELLOW BOXES. These represent hopes by the market that Bernanke would stimulate the economy with your tax dollars. Even though there was  clear "head and shoulders" pattern in May, the expectation that Bernanke would stimulate the market, led to a spike in speculation. Most recently, and documented in this blog, was the expectation that Bermanke would absolutely stimulate the economy as defined by the last yellow box. So the technical analysis becomes difficult when an "Irrational Exuberance" pushes the market higher by hopes that the FED will do "one more stimulus package".  Even today, a trader was talking about Bernanke coming to his senses by the end of the month and doing a stimulus in the U.S. economy.

The red lines indicate an average fall in a downturn. (see blog on May 16th) Sometimes the DOW turns down more other times less, but most of the time the downturn is as illustrated on the above chart and used to project the possible downturn over the next four months.

I think it likely that we will see the DOW move down to 11,200 and that is is possible that it will move down to 10,200.  These are only estimations and not reliable for trading. For instance, we don't know how quickly it will move down. The DOW could move sideways for weeks and then plunge down or plunge down, rebound, and plunge down again. I think what is important is that it doesn't seem like the DOW is suddenly going to rebound to hit 14,000 points.

Regardless of where the immediate moves may take the market, stick to your Ivy Portfolio trading strategy. TIP and BND seem to be a good investment position to take. Use the 10 month simple moving average as a sell or buy signal. When the price of TIP or BND falls below the 10 month SMA, sell....but only if it is the first day of the month. According to Harvard Business School, this is a desireable method for investing. See http://www.advisorperspectives.com/dshort/updates/Monthly-Moving-Averages.php

(note: the above article is for entertainment purposes only and not to be used as investment advice)

Weekend Report
by Dr Invest

The past week broke market records from the lows to the highs. Friday, the market still seemed to be on an uptrend, but with the economic uncertainty in Europe, there was an overall nervousness in investors. Still, the "talking heads", with their poker-faces, made claims that the market would rebound and new highs would be set for 2012.

Let me repeat myself once again: "The market is the sole determinate of its price". It cares nothing of what I think, of what the President thinks, of what any economist thinks. When you jump in, you are like a cork in a stream, the stream will take you where it wants. One element of control you possess is that of determining when you want to get into the stream and when you want to get out of the stream.

Actively Managed Portfolio

An actively managed portfolio simply means that someone is taking advantage of market opportunities and BUYING when they are apparent; the same person is SELLING when the market is declining.

The reason that people don't actively manage their portfolios is because of “the fear of failure”. The surprise here is that there are many people actively managing their own portfolios, cutting out the investment adviser's 2% and beating the market.

If you choose to go with an investment adviser, ask him to give you five of his actual portfolios that are beating the Dow and S&P over the past five years. He doesn't need to name his clients, but he does need to show you his performance. Let him know that you are not interested in what an investment instrument should do, you want to know what it did.

There are reasons why a “Buy and Hold” can't work in the present market conditions. The best way to see that is with a long-term chart of the market's behavior. What we see is that between 1975 and 2000, the “Buy and Hold” method would have been out standing. But look at the chart below and examine the behavior between 2000 and 2012.

You will find a less than desirable choppy market with big losses and big gains.

Every time the market falls you loose the original value. For example a $100,000 portfolio falls 30% and at the bottom your CORE investment is only $70,000.... now when the market recovers, you gain 30%. What is 30% of $70,000? Yes, your right, it is $21,000. So without adjustment of deflation or inflation, your ORIGINAL PORTFOLIO valued at $100,000 is now only worth $91,000. On the second dip, your portfolio looses 30%, falling to a value of $63,700. The market regains 30% yet again and your new portfolio value is $82,810.

We are getting setup for yet another fall in the market. John Hussman at <hussmanfunds.com> estimates the next fall in the market to be 30% or larger. At the next 30% drop in the market, your portfolio will be valued at $57,967. Assuming it recovers the 30% lost, your NEW PORTFOLIO BALANCE will be $75,357. Over an estimated 15 year period, you will have lost 25% of your portfolio's value and that is without adjusting the inflation.

One more point, a conservative estimate of inflation is 2% per year. Multiply 2 times 15 and your new loss will be 30% to inflation. So our final portfolio's value, inflation adjusted, is $52,750.

Oh, and did I mention the Finanical Adviser's fee of 2% per year. So take off another 30% for adviser's fees. You can't survive an investment that is steadily declining. The final question is... DO YOU WANT TO BUY AND HOLD?

My Approach

 First, if you need an Finanical Adviser at all, pay him an hourly fee. An adviser can be of great help in preparing an investment plan to achieve your financial goal. And my suggestion is that you DO NOT LET HIM SELL YOU ANYTHING. Sells equals earnings for your financial adviser and he will drain you with annual fees, hidden fees, and kick-backs from the companies that are now keeping your money. No matter how good the product he is selling sounds, IT IS NOT!

Second, get a TRADING METHOD. You need a method of investment that consistently works and if it doesn't, you need a new trading method. DO NOT BUT A TRADING METHOD OFF THE INTERNET. Academia is your best source. What methods have been tested by Business Schools and Universities? I am suggesting that as a begining investor that you buy the book "IVY PORTFOLIO" and learn how to use this system.

Third, NEVER LOSE MONEY. Use stop-sells to limit your losses. Before you ever buy an investment, determine how much you are willing to loose. Set your stop-sell at that point and always sell at that point if your investment continues to fall in value. On the other hand, if the investment rises in value (price), move your stop-sell higher.

My Example

 On the 2nd of May, I purchased  $1,111 of BOND FUNDS called: TIP and BND, putting a stop-sell 3% below the purchase price. By the end of May, this investment had gained 1.32%. I  purchased $1,111 more of TIP & BND the first of June which has decreased about .42%. So both May's purchase and June's purchase show an overall increase of .13%. (Go back to previous blogs to learn how to invest in the Ivy Portfolio.) My stop-sell is placed 3% below the purchase price of TIP and BND on the 1st of June.

I will make another purchase in July of $1,111 of TIP and BND, when a full 1/3 of my $10,000 portfolio will be invested into BOND FUNDS. If the price of TIP or BND moves below the 9 month simple moving average will I not purchase more and will sell what investments I have made into BOND FUNDS, unless the prices of TIP & BND rise above the 9 month simple moving average.

Look, had I invested my total $3,333 set aside for BOND FUNDS on June 1st, I would have lost .42% as of this date, but by having bought in stages, I still show a profit in my total BOND PORTFOLIO. I think in August and September, we will revisit the lows of 2011. So I expect that over the month of June, we will see bond funds rising and stocks continue to fall. Remember that BONDS don't move much up or down, so 1/2% per month is good. That returns 6% per year. I don't believe that this year the GNP will see 8% -10% growth. Even the FED predicts a tepid 2% growth in GNP. Bond ETFs should continue to grow modestly and I am expecting a growth of .89% to 1% monthly.  So eventhough I entered the BOND ETFs in MAY, I am still expecting a 6% to 9% return from TIP and BND by the end of 2012. (note: I invested a total 1/3 of my portfolio in May because I wasn't fearful of the risk. Still, you should see 6% in returns. <these are only estimations and you could lose money.>)

As always, the objective is to reduce risks, but raise gains. If the economy tanks, I will stay out of stocks in the fall, but it is most likely that stocks will come alive during the presidental election because of the hundreds of millions spent on the campaign, possible stimulus by Bernanke, and the seasonal gains from Halloween, Thanksgiving, and Christmas.

So the goal will be to place 1/3 of the $10,000 portfolio into stock ETFs in October, like VTI. Projected returns 8%-10% for a stock portfolio. Furthermore, some of the 1/3 held back in cash, may be invested into out performing seasonal stocks like FDO, DLTR, CATM, or PETM. These could move 10% to 14% or more. Other seasonal stocks could be identified.

OVER THE NEXT WEEK, I HOPE TO SHOW YOU WHAT YOU CAN DO WITH THE 1/3 CASH YOU ARE HOLDING IN YOUR PORTFOLIO. I will try to give you some CDs and Money Market Funds that will return some income back into your portfolio.

In such a volatile market, an 8% return on invested money would be commendable. Perhaps we can move that closer to 9%.

(note the above information is for entertainment purposes only and not to be used as investment advice.)

Today's Market
by Dr Invest

There's really no new news today. (Read yesterday's blog.) The scenario is really the same as expected. Traders thought a QE from Bernanke was a certainty, but Bernanke made it clear that the Fed would take action if needed and that no action as eminent.

Just as I had said yesterday, the worst is yet to come and when we slide to last years lows, Bernanke will rush in to bolster the market just before the elections. Now is not the time Bernanke is going to stimulate the economy.

The traders were sorely disappointed that the Federal Government was not going to keep the gains coming. http://finance.yahoo.com/news/stock-index-futures-signal-pause-093302524.html Listen to the attitude here:

"Bernanke threw traders a curveball. After his vice chair made it seem like QE was a foregone conclusion, he really messed people up. We tried to shake that off, but there was a lack of follow-through and we lost momentum," said Phil Flynn, senior market analyst with PFG Best in Chicago."

Oh, really? And this guy is managing money for investors? The gains in the market over the past two days have been because financial managers have been betting that Bernanke was going to stimulate the economy. Now that no immediate stimulation is evident, what will happen to the market.

You can expect the market to remain flat, if not to begin a slow decline. OK, it may take two or three months, but in the end we will revisit the lows of 2011. Weakness is still in the market and there is no evidence that Europe is any closer to resolving their own economic disaster. China's economy is slowing and the U.S. economy is also showing signs of a slow-down.

About Gold

I have been trying to get excited about gold. Read my previous blogs on the subject at the first part of June. As explained to my Gold-Bug friends, gold is an investment and deserves your money ONLY, if Gold is rising in price and is in a uptrend. Gold, is no different than a STOCK. If gold is selling-off, get out of gold just as I did in February of this year. If gold shows a consistent rise in price, buy!

The problem is this, Gold has been slowly sliding downward in price. Today it fell $31.20 according to KITCO, a little over 2%. The danger here is gold falling below $1550. There has been a sideways movement, but nothing is really definative either up or down.



As I've said before, I'm not holding gold at this time. I would steer clear of gold for the present, unless it moves into a clear uptrend. For the last few days, gold has been moving lower, this isn't good news. If you bought gold when it was cheap, good for you. I'm glad you gained 20%, 30%, or 100%, but why take a 20% haircut to hold gold when you can sell at a profit and reinvest when gold continues its climb upward.



You will not like what I have to say next, but my investment in to the BOND ETF called TIP, has returned 4.3% YTD. Gold has returned 1.3% YTD (year to date). Please, in no way am I claiming that a BOND fund will out perform GOLD. What I am claiming is that your investment needs to be based on performance, not what is bright and shiney. If gold doesn't perform, dump it! I'm not in love with gold, oil, or stocks, I'm in love with a portfolio that is gaining.

As senseless as it is to attempt a "Buy and Hold" investment method over the past 12 years, it is equally as senseless to use a "Gold Hold" investment when gold is declining or failing to perform.

By April of 2011, I had gained 12% from holding oil stocks. (APA and HK) I sold the stocks with the crisis in Egypt and then repurchased HK. HK (Petrohawk) was purchased by Billington with a gain of 48% to my stock price. In November, I purchased DLTR, CATM, FDO, and PETM with gains of another 12%. There was no fancy trading here, just simple straight forward buys and sells. I promise, my return was better than the rise of gold in 2011.  Hands down, a return of 20% to 30% in gold for six of the ten years reported above is impressive, but those days are over.

Little matters about the returns of 2011, what matters are the decisions made this week, this month, and this year. Gold may surprise in 2012, but at this moment in time, I am underwhelmed.

(Note: the above article is for entertainment purposes only and not to be used as investment advice.)

Today's Market
by Dr Invest

"Market conviction" is a firm belief that what you know as truth will ultimately prevail. At this moment the market is scurrying upward, with no real truth to underpin the rise in market. Today's unexplainable rise is due to the "Irrational Exuberance" remaining in the market. Here are some things that this morning's traders are assuming: 1.) Europe will work out their economic problems; 2.) Bernanke will introduce a new TWIST to stimmulate the economy; 3.) That stimmulus will promote new growth and both the U.S. and International economies will be booming once again. (Listen, I got a bridge I want to sell you! Yeah! The Brooklyn Bridge!)

As said in my previous blogs for May, I do expect to see a small rise in the market from June to July but with the overall market remaining largely flat as demonstrated by the "seasonal chart" for the DOW JONES. I do expect that more bad news coming out of Greece and Spain will continue driving down the market to the lows of 2011. I also expect that Bernanke will attempt another "stimmulus program" to create bragging rights for the encombant president, but not so much that the Republican challenger can't point to the presidents dismal record in handling the economy. (I call this the ole political stand-off. The political playing field has to be leveled so there is a fair election and Bernanke will do what all his predecessors have done in a political year.) My view, is that stocks will be a great buy toward the end of October and will continue a strong up trend until the end of 2012 because of Bernanke's stimulus. But watch out in 2013!

The Truth

No! You can't handle the truth! 1.) Problems are going to persist in Europe - The debt is just too large and budgets too bloated to stop the trend downward. 2.) We now know that Bernake's stimmulus programs only did two things reliably - inflated prices and gifted Wall Street with a rising market. A more appropriate name for Bernake's packages is "a Wall Street Stimmulus Package". There has been no dramatic rise in unemployment and one could argue that whatever marginal decrease we haves seen in unemployment has been due to seasonal effects. 3.) If recovery comes at all, it will be measured in years, not months.

Playing the Game Your Way

Don't let the talking Wall Street heads convince you to play the market their way. "Their Way" is to get your money invested in what will profit them, then sell when the time is right to make money for their clients. I promise, you will see that you are left holding and empty bag. Now, more than any previous time, you need to make carefully crafted investments and guard yourself from frivolus emotion driven investments that will rob you of potential gains later.

You will hear a term called, "Chasing the Market". Chasing the market is when you are attempting to buy the hottest stock...but the rally for that stock began many months before it got HOT. Now that you hear about the "Hot Stock", you buy just before all the real traders sell. Your purchase simply sweetens their gains, so when they sell as amateur investors are attempting to buy, they reap the gain and leave you with the bill.

When you have a dip in the market of nearly 2% one day, and a few days later a gain of 2%, it is hard to catch that gain. Most amateurs sell after loosing 2% and when they see a rise in the market of 2%, they buy once again only to see the market descend yet again. Total losses to the amateur? They lost 4% or more. If you do this only three times in a year, you have lost 12%. Ouch!

This is why real traders use a "TRADING SYSTEM". It insures that decisions are made without emotion and that you stick to your "TRADING CONVICTIONS".

Bond Investments Down (for now)

I just bought BND and TIP, first in May and then in June. I am still to the positive in the overall investment, but the past 6 days has not been nice to bond type investments. Don't get panic, people are speculating on a stimmulus in Europe and the U.S.  The Ivy Portfolio trading method is not concerned about rumors or speculation. The method is built on fact. If the price falls below the 9 month moving average, sell! And according to the rules, you only sell at the FIRST OF THE MONTH. You just bought the stock! FOLLOW THE TRADING METHOD.

Wall Street is so attached to government stimmulus, they expect it! No! They demand it! I don't think that Bernanke can do anything right now, other than make promises. For example, Bernake stimulates the economy and then three months from now, the economy tanks again..... would he stimmulate the economy once again before the election.....come on! You don't really think so, do ya! No! Bernake is only going to use the stimmulus when he knows it will provide a fair election for the presidental election in November. DON'T EXPECT A STIMMULUS PACKAGE RIGHT NOW! Expect promises, but not a package.

More bad news is on the way from Europe and when it is clear that no stimmulus is immediate, the market will continue its tumble. Get some conviction and stick to your TRADING METHOD. (See Sidebar)

Update (added at 3:30)

Remember what I predicted earlier in today's blog, no stimmulus until August or September when we may reach last year's lows. I can't help but laugh at the AP headlines: Fed survey: US economy, hiring improve at steady though moderate pace. This is so far from the TRUTH, that it should be criminal to print it.  http://finance.yahoo.com/news/fed-survey-finds-us-growth-180200698.html 

"The U.S. economy grew moderately in most regions of the country this spring and companies kept hiring, according to a Federal Reserve survey released Wednesday." The TRUTH reports that the  unemployment rate just rose from 8.1 to 8.2 last week?  

"The positive survey, which is anecdotal, also makes it less likely that Fed policymakers will take further action in the coming months to lift the economy. The survey doesn't suggest the economy is in dire need of help, many economists said." The TRUTH is that the VIX (fear index) has been rising and recent influxes into the purchases of BONDS and TREASURIES reveal the level of that fear. Finally, as I said, Bernanke will not commit to stimmulus until just before the election.

"This report (I thought it was a survey.) was more upbeat than probably anyone expected," said Jennifer Lee, an economist at BMO Capital Markets. That suggests that "some of the soft reports on payrolls, auto sales, and manufacturing may be temporary."  The TRUTH is that all this positive ooze has no basis of fact, other than a survey. And note: This survey moved from a survey to a report. And note the well crafted wording: SOME OF THE SOFT REPORTS......MAY BE TEMPORARY.

If you are to grow into being a good investor, you need to identify the difference between spin and truth. After one, two, or three days, a market that has decimated your investments for 2012, suddenly is reported as growing moderately with hiring improving. Think with me for a moment. Is this possible that you could lose all the gains in the market for 2012, see a decline in employment, and believe a SURVEY.

Positive news spin supports the "Irrational Exuberance" and spurs the innocent to invest into a market destined to decline in the days, weeks, or months ahead. Stear clear! JPMorgan believed their own PR (public relations) and got scalped 2 Billion. Trained economist and financial analysts are believing this to and guiding your portfolio. When the lies are exposed by the truth, there will be billions more in losses.




(Note: the above article is for entertainment purposes only and not to be used as investment advice.)

Weekend Report
by Dr Invest


The past week has been "Breath Taking" with the rise and fall of fortunes in the Stock Market. A 275 point fall in the DOW over one day is a significant downturn, but some of the great falls in the DOW have exceeded 700 points in only a day. Typically, a sharp one day downturn is followed by an upswing the next trading day. I would expect an upturn, however short, on Monday; but continued expectation of bad news may curb any possible rebound.

The market itself is in a SEASONAL DOWNTREND; and when you add a tepid economy here in the U.S. coupled with a faltering world economy, an upturn in stocks right now doesn't look very favorable. There will be "bold traders" that will try to play this market, and they will either lose a lot of money or gain a lot of money. These kind of "stock traders" do not stay in the market for long. In spite of spectacular gains, there are also spectacular losses. Jesse Livermore, possibly one of the greatest traders in his time, gained fortunes and lost fortunes. At the end of his career, he had lost everything, saving a few million in a family trust. The crowning response to his failing career as a "stock trader" was to extinguish his own life.

At this moment, the market "dicey". In other words, stay away from stocks right now. The trend is not following the seasonal chart for the market at this time. The market will tend follow the seasonal chart and typically the real downturn doesn't take place until August or September. I think we can already see that this has not been an ordinary year and many are thinking that the best of 2012 is behind us.

I think the bubble has burst for the moment and that many investors are coming to the recognition that the bull run of 2012 is over. Monday will determine whether investors are moving toward panic or ready to take-on more risk because in their exhuberance they believe the present lows are buy opportunies. I am in the panic camp, my stocks sold in April when they hit their stop-sell.

My Purchase on June 1st

I recorded on this blog, my purchase of TIP and BND exchange traded funds this past Friday. My original investment into TIP and BND of $1,111 in May, had grown 1.32%. I purchased another $1,111 of TIP and BND that grew 39% on Friday. As of the closing on Friday, TIP and BND had a total of $2,222 invested into the positions with a total gain of 76%. The goal is to see TIP and BND gain a total of 2% by the first of July, when a final $1,111 will be invested into TIP and BND.

We will wait until the end of October to see if there are viable opportunities to invest into stocks at that time. Using a $10,000 portfolio, we have set aside $3,333 for investment into stocks, but we know that NOW IS NOT THE TIME TO INVEST INTO STOCKS.

About Gold

I see gold coming alive once again, but not enough to feel comfortable in investing into the commodity. Below is the recent chart on gold prices. Until gold breaks above $1740 per ounce, an investor would only be speculating that gold would continue a long term uptrend.



Because the downtrend in stocks is going to continue in the near future, gold could continue to rise in price. A speculator might buy in at $1,660 and hope that gold climbs to $1,900 again. If you chose to practice this kind of speculation, limit your losses with a stop-sell. And be prepared to lose some money.

If you just like the idea of having gold, then buy it and walk away. Come back in two or three years to check your gains or losses.

Other Speculation

During a downtrend, some people choose to buy INVERSE EFTs.  You can look at the chart below. Here is my view: Don't speculate! More times than not, your speculation ends up in a reversal of fortunes. That mean that the market gets your fortune.

UltraShort (2x) Sector:

ETF Name	Ticker	Benchmark Index
UltraShort Basic Materials	SMN	Dow Jones U.S. Basic Materials
UltraShort Consumer Goods	SZK	Dow Jones U.S. Consumer Goods
UltraShort Consumer Services	SCC	Dow Jones U.S. Consumer Services
UltraShort Financials	SKF	Dow Jones U.S. Financials
UltraShort Health Care	RXD	Dow Jones U.S. Health Care
UltraShort Industrials	SIJ	Dow Jones U.S. Industrials
UltraShort Real Estate	SRS	Dow Jones U.S. Real Estate
UltraShort Semiconductors	SSG	Dow Jones U.S. Semiconductors
UltraShort Oil & Gas (Read this first)	DUG	Dow Jones U.S. Oil & Gas
UltraShort Technology	REW	Dow Jones U.S. Technology
UltraShort Utilities	SDP	Dow Jones U.S. Utilities

Never the less, if you have plenty money to burn, you might speculate by "betting that the market will go down". If you get weak in the knees and nausea comes easily, I would recommend staying away from these kinds of investments.

Early in my stock trading career, I invested in what was the "hottest stock". I imagined getting a 20%, 30%, even 40% return. I could envision myself announcing to my wife,  "Dear, I just made $6,000 today. Let's pack our bags and head for Rome, I'll make another $6,000 from my telephone as we are flying there!" Any real investor knows that the stock market doesn't provide these kind of returns.

There is no sicker feeling than investing into a stock, then seeing it decline $500 the first day, then another $1,200 the next day. All the while, you hope that the economic winds will bring a reversal and your stock will begin to climb again; but after a month or two of losses, you finally conceed your loss and sell, happy that you only lost $6,000. Did I ever tell you about the time I invested into GE? It seemed like a good idea at the time. After several months of losses, I finally sold the DOG. I expected to see GE suddenly turn upward, but GE continued its march downward until I thanked God that I had such a small loss... as opposed to what I could have lost.

(Note: the above information is for entertainment purposes only and not to be used as investment advice.)

Today's Market
by Dr Invest


We have an investment strategy called, "Ivy Portfolio" by Mebane Faber. This well tested method has brought some remarkable returns. The idea is to use a 9 month simple moving average and when price of the selected EFT (exchange traded fund) falls below the 9 month SMA, you sell the ETF. To sweeten the investment, I use SEASONAL CHARTS to buy at the most favorable time. As the price of stocks begins a decline in May, bonds will move inversely, gaining in value. As predicted, as my stop-sells sold my declining STOCKS, I purchased BONDS.

My portfolio to invest is set at $10,000 for my example below.


My diagram above, shows the $10,000 portfolio divided into thirds. Then, we see the bond investments divided into thirds, so that over a three month period one can safely enter a bond position.

I made my first purchase on May 2nd, investing a total of $1,111 into two ETFs, TIP and BND. I also placed a STOP-SELL 3% below the purchase price of each ETF. Today, I purchased another investment of $1,111 of TIP and BND.

Five shares of TIP was purchased at $120.70, while six shares of BND was purchased at $84.50. The total investment today was $1,231.20. A STOP-SELL was placed at 3% below today's price for TIP and BND. (So my previous gain into TIP and BND was 1.32% as of today. Even if the price of TIP and BND fell 3% and was sold, the actual potential loss would only be 1.68%. Assuming that we see another 1% gain in June, the potential loss will only be .68%. And by the end of July, assuming another 1% gain, even with a 3% stop-sell, set at the most recent closing price, the investor would see a .32% GAIN. This is precisely why we slowly enter a position, whether a stock or bond. )

Should we continue to see bad news coming from Europe and the U.S., your investment into TIP and BND will only grow. I do believe that some form of "Quantitive Easing" or new "Twist" will be applied by the Federal Reserve, but not until we hit the lows of 2011. We we continue to lose 275 points on the DOW for several more days, we will be at the low of 2011.

For the first time this year, we saw PANIC in today's market. THE SMART INVESTORS KNEW IN APRIL, THAT THE MARKET WOULD PLUNGE. Still, Wall Street kept to the mantra, "Buy! Buy! Buy!", while many were SELLING as the "Little Investors" greedily snapped up the opportunity to buy stocks that were valued a historic lows...at least according to the "talking heads" of Wall Street. Go to yahoo.com and call up the DJI chart for yourself. At the first of April there is a "sell off", Wall Street calls it a "buying opportunity" and little investors snap-up what they percieve as "undervalued stocks". When the big decline takes place in the middle of May, the smart money has left the building and those with a "buy and hold" philsophy, plus the greedy, are left with the losses. As of today, 12% losses for the year.

I am a little alarmed by the intensity of the decline. Along with me, are other investors who predict a 20% to 30% decline before hitting bottom. Some notable examples of Institutional Investors that were caught "flat footed" was JPMorgan Bank, who lost 20 billion or more. Their analysts expected a market rally.

Preparing for Potential Losses

Listen, the examples I have cited are important to you as an investor. You can't always believe what you hear on CNBC or read in Money Magazine. These are typically slick media events to spur investment into a fund, a stock, or other investment vehicles. It is a form of "Pump and Dump".

Second, when you invest, you must recognize that you will NOT ALWAYS BE CORRECT in your assessments. The object lesson here for the "small investor" is to get out of a declining investment as soon as is possible.  If you invest, you will lose money. Fortunately, you will gain money too! But when investing, you want to lose as little as possible and gain as much as is plausible.

(note: the above article is for entertainment purposes only and not to be used as investment advice.)