Investors411 record – 4 1/2 years of beating benchmark S&P 500

Debt/Globalization


barr-july-1951

From the Editor


Debt is  bad. Globalization, and economic planing has led some countries to grow and others to suffer. Take a look at China and South Korea . Their managed economies (as opposed to our free market economy) have prospered over the last decade and continue to have stock markets that that are outperforming ours again this year.  In both these countries you see 10′s of millions of people who tended rice paddies a generation ago becoming the computer programmers and manufacturers of today.

These economies severely restricted their imports and benefited from other countries going into debt buying their exports. – part of globalization and managed capitalism. The USA went trillions of dollars into debt buying their products ( add some other countries especially those that sold oil) over the 8 year Bush administration.

Some companies and wealthy individuals grew rich in the USA as we personally and as a government fell further into debt running our unregulated free market system. This all collapsed when adding to this debt we discovered that shadow financial institutions were running a giant ponzi scheme of fake profits called credit default swaps on home mortgages, and other forms of credit.

Baddaboom, we almost had a world wide economic meltdown when just one shadow bank, Lehman Brothers,  collapsed. The cumulative debt hole is enormous.

Historically, in good times and wars (Iraq) you are supposed to pay down debt. We didn’t.

Historically in bad times you stimulate the economy and this does add to debt. We are.  The problem is that we re already up to our necks in debt. This debt was is not as bad as the debt that flatlined the world’s #2 economy for over a decade, but its very bad. To this you add a shrinking work base caused by globalization.

The real problem is we are sending more of our citizens to the rice paddies (unemployment) and our companies to maximize their profits send jobs overseas. This is one major part of the globalization mega trend.

We have fortunately seen a decrease in job loss since January from about 700,000+ in January to 500,000+ now. A good trend, but still a big loss. When many small companies reaches a certain size, (let’s guess 50 people)  they realize that everything from bookkeeping to information technology can be done for a cheaper price abroad. Where are the new jobs going to come from?

So simply as an Investment adviser – You’re far better off with economically growing managed capitalism rather than debt ridden free market of the USA – This is why Investors411 has a record of beating the S&P 500 . Why FXI, EWZ, EWS , and other managed economies are better investment choices.

The catch 22 – Of course, the more a US company outsources the better it will do (cheaper labor cuts cost), but the greater unemployment here will grow here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage % Volume
Dow +1.19% down
NASDQ +1.20 % up
S&P500 +1.14% down
Russell2000 +1.49% -

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

  • Brown = repeat statements
  • Green = usually bullish statements
  • Red = Usually bearish statements

Technicals and Fundamentals

The leading NASDQ again moved higher in increased volume. Even though it was not above average volume, the increase coupled with the break down of the dollar (-o.84% )(see below) is bullish for stocks.

Other major indexes have reached new closing highs, but have NOT had as much volume behind their moves higher.

Obviously US markets are now overbought and need a breather

Bernanke reports to the House today and the Senate tomorrow.

Whole bunch of companies reporting this AM. These fundamentals will drive stocks. Merck , DuPont, Coke , UTX. & Caterpillar all seem to have better than expected earnings. So many major S&P companies are hitting doubles triples and home runs. Rally is on again

Significant forecasting tools/Indexes for stock markets

BDI The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern. The BDI turned lower yesterday and the short term bullish pattern is getting wiped out. Longer term this is not good for the global recession recovery. BDI at 3511 and 2975 is the line in the sand support level that must hold . So no reason to throw in the towel yet but Bears are gaining momentum

In a nut shell the BDI is

  • short term - Bullish
  • mid term Bearish pattern
  • long term - Bullish pattern

$USD - The Dollar broke down through support levels yesterday . Down a significant-0.84% . The last remaining support level is the June lows at @78.4. The dollar index closed at 78.87 . The dollar goes down usually = stocks gold and oil prices rise. This contributed to yesterday’s rally. Obviously this is bearish for the dollar, but Bullish for US stocks. (not small but important one word change – this is bullish for US stocks in the short/mid term)

That 78.4 support level is very important.  A weak dollar does have its downside, but it certainly fueled the last rally stocks had this spring.


Positions

The whole Positions Section has been revised (Click on "Positions" at top of blog). Check it out

QLD – (2X what the NASDQ 100 does) which was bought at 38.2 was sold at 41.1 for a 7+% gain yesterday.  Why be greedy? We added a lot of positions last week. (QLD, IFN, EWZ, EWS ) Time to take profits on one.  Will buy back in on another dip. Taking profits now looks like a mistake . If the dollar keeps breaking down OLD will keep going up.

IFN - (India) The technicals behind this trade are just not as good at all the other trades. India has not broken out to a higher high and developed a series of lower highs and lower lows. Going to take profits. – Will put in what’s called a stop sell order (send me an email if you do not understand this)  Looking at S Korea (EWY ) as a better foreign investment.

Another reason to sell India is the BDI seems to be establishing a bearish pattern. (see above)


Long Term Outlook = CAUTIOUSLY BULLISH

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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