Investors 411 Blog

by Barr Jozwicki
April 4, 2010

Best & Worst of March

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , , , ,

The Best & Worst of Investors411-March

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Psychologist Kahneman & Pandemic expert Brilliant

Economics, Politics – Editorials

The Best

  1. The Israeli/American nobel prize winning father of behavioral economics Daniel Kahneman video on how one memory of a longer term experience can impact YOUR happiness and pain. (Thanks to one of you who discovered this valuable presentation) LINK
  2. Perhaps the world’s most renowned epidemiologist Dr Larry Brilliant video His case for “Informed Optimism” is outstanding and different from the 3/22 video LINK. His case for how poverty causes worldwide epidemics, from Small Pox to Ebola, and those that are doing something about it impacts everyone.
  3. The Cleveland Clinic’s Dr. Cosgrove’s interview in Fortune magazine brought new insight into the health car debate. Of course health care is going to cost more as the huge baby boomer demographic gets older and technology simply gets better at treating illness. However the root causes of American’s self indulgent problem is “Obesity, Smoking,  & lack of exercise” LINK

The Worst

  1. In general – I sensationalize. From headlines like “Baby Killer” to “The Black Widows” I do this first to attract your attention
  2. Stereotyping one side in a debate is just plain over the top. My excuse – sometimes you just get sooooo angry that emotions overwhelm logic.
  3. Too much time is spent on pointing out what’s broken and not enough on how to fix it. Although long term readers, of Investors 411 should notice that”s changed over the years. There’s a lot more HOPE or SOLUTIONS (Kahneman, Brilliant, & Cosgrove) but there’s still more to go.

Stocks

The Best

  1. The March 5th upgrade to Cautiously Bullish -US Markets have gone from negative to over a 5% gain when they open tomorrow.
  2. YOUR Stock List – It’s time consuming to produce but offers a wealth of ideas. Lead by SHOO and IMAX many have had solid runs higher this month.
  3. (these are from past months) Introduction of McCellan Oscillator (it works on broad markets, but nothing works forever and its certainly not 100%) and IMAX (recognition of 3D technologies potential)

The Worst

  1. Prediction – Obamacare’s passage was going to hurt the US  stock market. !00% wrong. People’s mouth(Right wing investment community) were in one place, but there money was in another. If anything Obamacare juiced the markets, because the rally blinked for a 1/2 hour then continued.
  2. Reluctance to be more fully invested. For longer term investors still think this is good. Nothing’s been fixed financially, the problem has been underestimated & hidden, and there are more shoes to drop. However for riskier investors who have the time, discipline, and understanding to be in and out of a stock/ETF within a day, week, or month(s) its a mistake.
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March 4, 2010

Happiness

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , ,

Behavioral Economics

Nobel Prize winner Daniel Kahneman is “widely regarded as world’s most influential psychologist” who is also the father of Behavioral Economics. “The Riddle of Experience vs. Memory.” is a very powerful & worthwhile video presentation on understanding why/how your perception of happiness and pain are impacted by memory vs. experience.  The Q&A at the end is especially significant.

From stocks to politics reality is one thing but how you experience that realty determines your action. Investors411 has reference Kahnenman in the past and will in the future.

Millions in America are addicted to pompous windbags screaming and ranting. Kahneman has scientific and logical insight into something that might actually help make you HAPPIER.

Make Markets Be Markets

In less than 18 days we handed out almost $800 billion to financial shadow institutions. In 18 months of the Bush & Obama administrations we have done nothing to fix the problem. The Roosevelt Institute featured a conference on financial reform with perhaps our best hope for some sort of protection Elizabeth Warren as one of the feature speakers.  Lots of other significant personalities attended

Health Care’s Last Stand

Here today’s NYT Editorial on health care – “Congressional Democrats can either move forward legislation to fix this country’s broken health care system or throw away a once-in-a-generation opportunity.”

Many of you over the past year have posted comments on this. Including the last one from Popeye (a public option supporter) who thinks “we are kicking a dead horse”

Personally, this legislation does not “fix” health care – it is way too watered down. But, the NYT is right – you will see no significant reform for a generation if it does not pass.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage Volume
Dow -0.09% down
NASDQ -0.00% down
S&P 500 +0.04% down
Russell 2000- +0.15% -

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See PositionsStrategy , and Overview for changes made over weekend. (No changes this weekend)

Another day that saw stocks rally and fold at the end of the day. Investors are selling into the rallies because the general market conditions are oversold. = Bears taking over.

The big data point is tomorrows jobless number.

Investors clamored to buy Greek debt. Good news for Greece and European Union. But this problem is far from over.

Overbought markets can be very sensitive to bad news.

Significant Indexes

  • McClellan Oscillator fell to +54.74 yesterday We are now just below +60 or Overbought territory. Still time to seriously consider selling into any rallies.

Positions

The  Positions Section = latest buys and sells – (Revised positions last weekend) - These are positions I actually own

  • recently bought (added to) EWZ (Brazil) was sold at 72.00 Sold the shares bought on 2/11 for 65.75 Still holding onto shares bought last year at 59.5.  @+6% profit
  • IMAX – Sold 1/2 the shares when it hit stop/loss order at 13.4.  @+6% gain. Wish I had sold earlier into the rally as I suggested.

Investors411 has sold the rest of TYH. & 1/2 of MOO, EWZ & IMAX. Will sell more positions if McClellan rises significantly. Plan to buy if it drops. Will probably buy some at $NYMO (McClellan Oscillator) reaches zero.


Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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February 23, 2010

Fear and Greed

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , ,

Holder

At. Gen. Holder defends American Justice System

Fear and Greed

These are the two basic factors that move stock markets and a whole lot more.  Of course they sometimes go under other names- sex, survival, desire, risk etc. but we are manipulated by them. (see yesterday’s update)

Let’s take a look at some work done by two Israeli scientists in 1979 Kahneman and Tversky that show how we all miscalculate data when confronted with simple financial choices.

Group 1 was given $1000 Israeli pounds and given a

  1. 50% chance of winning an additional 1000 pounds – 16% chose this option
  2. 100% change of winning an additional 500 pounds – 84% chose this option

Group 2 was given $2000 Israeli and given a

  1. 50% chance of losing 1000 pounds - 69% chose this option
  2. 100% chance of losing 1000 pounds – 31% chose this option

In this and other experiments K&T showed a striking asymmetry. Fear (risk) of a financial loss was about 2 1/2 times greater impact than a simiar financial gain. FEAR WINS BIGTIME.

Bottom Line – From Investing to politics to anything involving human behavior, almost all of us succumb to this fear biasThe trick or path is to overcome this fear bias and you will get better results. Of course, there are other cognitive traps. (see yesterday’s pop quiz)

Justice System Nails Another Terrorist

The headline says it all. The American justice system worked and we bagged another terrorist yesterday.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage Volume
Dow -0.18% down
NASDQ -0.08% down
S&P 500 -0.10% down
Russell 2000- +0.10% -

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See PositionsStrategy , and Overview for changes made over weekend.

Low volume and nothing really happened. Technically, the longer we remain flat the greater the chances of a fall. Difficult short term call here – but it looks like a small correction then another push higher into oversold territory.

ETF’s- Selling a little (taking profits) into small rallies and more in BIG rally. Sold 1/3 of TYH yesterday at 139.00 for @ +18% profit. Still have 5% of portfolio position in TYH

Significant Indexes

  • McClellan Index fell to +46.16. Basically +60 = overbought and usually a time to sell or lighten up on positions. This is NOT a hard and fast rule but guideline. There has been a sharp fast change and a lot of upside momentum last week. So there is still psychologically a lot of positive momentum out there.

Positions

The  Positions Section = latest buys and sells – (Revised positions last weekend) – These are positions I actually own

Mea Culpa – Should have added more to stock positions while McClellan Index was down at -60. Since stocks rallied dramatically last week so should any stocks we have on our watch list. Unless there was a special circumstance, these stocks should be outperforming the major US indexes.

Thanks to several of you who are sending in additional lists of prospective stocks. Have not had a chance to study them all yet, but will include them in future lists. Trying to keep list under a dozen stocks. This watch List comes from the stocks YOU send in. Tried to pick best of the ones you sent in. As stated before I’m more confident with ETF’s than stock picking. Since the McClellan Oscillator is close to +60, or overbought – buying now is more dangerous.

Last Update 2/11/10. Recommendations from 2/11 in black. New thoughts in violet

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

  • AAPL - Formed a double bottom trading pattern @ 190 - a buy the dip opportunity Now at 200, but showing danger of breaking down – May be dropped from list
  • CAAS Broke down though 50 day, but has some STRONG volume up days. A China play that will follow FXI. Tempting Lots of volume behind rally days and yesterday had big breakouthold if you own or buy the dip.
  • PCLN Fell below 50 day moving average. Formed a double bottom bullish trading pattern. A buy the dip opportunity Big earnings breakout – market leaderwished I had bought itNow wait for dip.
  • FOversold, and well down from highs. Has formed a base at 10.5  - a buy the dip opportunity – Flatlining or Forming a base
  • DRWI - Big exporter to China -  Sitting on 50 day MA support level  No big volume as stock dropped= good sign. Buy the dip . Weak volume behind move upMay be dropped from list
  • ENOC New – Reduces costs for utilities 50 day MA acting as support Potential buy the dip Breakdown
  • IMAX Great long term chart – Poor short term chart. Lower highs and lower lows  Investors411 has a 2% of portfolio position in this stock. Sell at least 1/2 into next rally. Now own 3% Due for correction - sell 1/2 into rally – buy on dip – or just hold if you’re a long term investor
  • GS, Often considered the #1 Shadow bank seems to have formed base at @ 150 Tempting. Up a bit but volume dropping Not Interested
  • CSCO, Techs new leader Moving up despite rocky market a by the dip Up, but tech not leading markets now – Better than AAPL – Not Interested
  • SHOO, Great long term chart. Pulled back and is forming a base. Would like to see a bigger base, but tempting Moved up to old high/resistance level - Needs breakout- Tempting
  • ICON, Did NOT form lower low over last two weeks as markets toasted a buy the dip Slow steady move higher with breakout yesterdayA buy the dip
  • VPRT Another stock that weathered recent pullback well a buy the dip Moved up to breakout level and pulled back yesterdayA buy the dip
  • DGIT Thinly traded, but potential winner – just broke above its 50 day MA a buy the Dip Had breakout in big volume and is now dipping - A buy the dip
  • CTCT Rebounding stock, has a of good volume up days has breakout potential Broke out and is in pullback- A little weaker than other choices, but buy the dip
  • VCI Good volume, good chart Somewhat overextended A buy the dip underway – Major breakout, then rallied more and yesterday big dropToo volatile for me

AnalysisNotice that the vast majority of these stocks moved higher as conditions of overall US equities went from oversold to (almost) overbought. Big lesson here is to buy when markets are OVERSOLD. YOU have chosen some pretty good stocks.

I’m familiar and use VPRT & PCLN. Plan to own them on dips hopefully sooner than later. Others that look decent on dips are CAAS, ICON, DGIT & CTCT

Caution – Markets are close to overbought

Will go over a few of the new stocks you have sent in later in week or early next week.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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