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National Georaphic – Great Wall of China (Emerging Markets)

Trends, Wars, & YOUR Money

Investors411 has followed 3 or 4 major investment trends over the last decade - Globalization, Peak Oil, Spread the Wealth & The Great Recession (the later needs some revision).  Global politics and events have impacted these trends and therefore investment choices.

• Fall 2008s financial meltdown proved again Free markets need regulations or they form boom and bust cycles . Even, arguably, the #1 proponent of self regulating free markets Alan Greenspan admitted he was wrong
• Working middle class taxpayers in the USA and around the world bailed unregulated markets with stimulus, packages, printing money, TARP programs, taxes , etc. This was socialism for the rich . It further expanded the gulf between the rich and poor in many countries.
• Emerging markets have kicked our asses as far as growth is concerned for almost a decade. Globalization and Spreading the Wealth to a growing, not shrinking, working class were the primary causes behind this.
• Most emerging markets have a managed or planned economy vs. our more unregulated economy. Few emerging markets were involved in highly speculative trading vehicles (example – Credit Default Swaps)

More recent events impacting trends.

• Wars - The US weapons budget has exploded over the last decade to the #1 budget sector and to @ 50% of the world spends on weapons. Obama has increased the weapons budget and the secret war in Pakistan is no longer a secret.
• Trade war brewing – Relationship between the world’s #1 economy and the world’s fastest growing economy is souring. Check out NYT’s stories on China over last few months
• China – has moved to defuse a growing housing (people moving to cities for better jobs) and a possible  inflation bubble before it pops. Decent month old editorial on this. Remember Chinese banks did NOT sell credit default swaps on housing, so this housing bubble is not as sever as USA’s. But, this is still a serious problem.
• JOBS – While the job losses have declined in the USA from -700,000 to @ -50,000 a month, we increased last month. Obviously US jobs over the last decade have been lost to globalization and consumers in the USA are now saving more. Considering the above 3 bullet points its hard to see stimulus plan alone keep this figure from flattening or falling. (more later)

Bottom Line – Let’s try to be as objective as possible and look at the technicals. In this case, the chart of either the FXI (China) or EEM (Emerging Markets)

Both charts are similar, but China (FXI ) is a little more sever. Notice how fast they exploded in the first 1/2 of 2009 and that growth slowing in the last 1/2. Now for the first time the 50 day moving averages are heading down . In fact China is trading below its 200 day moving average. The countries led us out of recession (Indonesia, Brazil, India, & China never even entered a recession)

It certainly looks like growth has peaked and emerging markets are now in a correction phase.

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	-0.26%	down
NASDQ	+0.04%	down
S&P500	-0.55%	down
Russell2000-	-0.55%	-

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

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

US Markets basically held onto the significant gains of the last two days – an oversold bounce. Holding onto gains = short term Bullish

CSCO – again had a great earning report and is putting 2000 to 3000 new people to work.

Hard to see a major  move in stocks in front of – The Monthly jobs report t on Friday Each of these reports becomes more and more important.  In November we reached positive job growth (+6,000 ). But this is looking like retailers hiring folks for Christmas buying season.

Best Read of Tea Leaves – You’re NOT going to be happy with the jobs numbers.

Significant indexes

• McClellan Index at -32,18 = We’ve pulled way back from -90 or oversold levels two days ago. Over -60 + Oversold
• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 and is keeps falling. Yesterday the BDI closed at  2673.= Bearish However the rate of decline is SLOWING and this almost always indicates at least a short term reversal.
  

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends – will try to update last few weeks today) – These are positions I actually own

SELLING & BUYING

Thanks to 5 of you who sent in suggestions fo r Stock Watch Lis t!

ETF’s – were still 6% FXI (China), 10% EWZ (Brazil), & 10% MOO (Agriculture) – Since we have rallied would consider selling  another 5% (hopefully in a rally – which seems unlikely today)

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Happy New Year

EWZ (Brazil) – Investors411 #1 holding up +117% this year

This issue of Investors411 is the beginning of a 3 part series on ETF’s, stocks & economic forecasts for 2010. It is designed to educate YOU on how to make the same kind of money others have by following some simple investment strategies that Investors 411 has used for years to beat almost all major US indexes for the last 5 years. But first a word about

Avatar and IMAX

I’ve now seen the movie and it is truly jaw dropping . Some of the genius belongs to Director James Cameron and the rest to the Imax (a publicly traded stock) theater technology. To quote Time magazine "Look around! Embrace the movie – surely the most vivid and persuasive creation of a fantasy world ever seen in the history of moving pictures – as a total sensory, sensuous, sensual experience. " It’s like The Wizard of OZ going from black and white to c o l o r .

The IMAX theater concept is an investment choice suggested by one of you.  Right now the stock (which was on our list of YOUR recommendations) is exploding higher (LINK to chart) in HUGE volume. I’m going to nibble on/invest in the first small dip.  It will be hard to top Avatar, but IMAX is the future of movies & 3D TV is on the way.

2010 Economic and Stock Forecasts

Part 1 Positions

For 2010 Investors 411 is going to keep its focus on basically 4  core positions that it has held, throughout most of the last five years. These are the ETF’s (Exchange Traded Funds). An ETF allows you to buy a market basket of stocks or an actual commodity for less than it costs to own a mutual fund and it gives you a better tax break because it trades less (buys/sells different stuff) than most all mutual funds. ETF’s also trade like stocks and have NO hidden fees.

The fundamentals behind the choices of these core positions are simple and  explained in greater depth the OVERVIEW section on the top of blog LINK These mega trends include-

• Globalization – The key force that is allowing some countries to develop faster than others.
• Peak Oil – The world has a limited supply of commodities  and we are running out. As we run out these commodities get more expensive.
• Share the Wealth – Countries that have growing middle classes expand faster that counties that have wealth oligarchies that hoard their money.

Over the years these Investors411 core positions have outperformed almost every major US stock index are-

• EWZ – Brazil
• FXI – China
• GLD – Gold
• EEM – Emerging markets

Especially this year Investors411 held a lot of related positions and some stocks. You can find a list of these at the POSITONS section on the top of the blog LINK (check these out NOW before they change for 2010)

Investors411 did stray too far from its core holding – partly because of the enormous swings in the market this year. Top gainer was EWZ held from the beginning of the year (8% of portfolio total holdings) gained +117% . The biggest loss was a STUPID hedge on China (FXI) position. It was made because of fears about the Swine Flu epidemic seriously impacting China. FXP and ETF that is a double short of basically the FXI. Translation – if Chinese stocks go down FXP goes up @ twice as much.  The short term FXP trade (2.5% of portfolio total) lost -13%

Several NEW position may/will be used in 2010

• MOO – Agriculture based ETF – Will outperform because the huge growing middle classes in especially China & India will eat better. Already opened a position here
• EDC – This is an ETF that does 3 times what emerging markets do. Lots of risk here so it will only be bought or sold under specific conditions involving the McClellan Oscillator (see below & more later)
• ROH & TYM – Technology. Again like EDC these two involve lots of risk because they do 2 and 3 times what tech stocks do. Only to be bought/sold under special circumstances and are short term trades. (see above)
• Commodities – There are many ETF’s that are solely based on a commodity like GLD and not based on a company. Diminishing resources and increased demand for these commodities make for a decent investment.
  
• Stocks – Because YOU asked for it some stock positions like IMAX will be suggested. (see last few Investors411)

Tomorrow Economics – The Good ,The Bad, The Ugly - 2010 Forecast

KISS & Stocks

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	+0.03%	flat
NASDQ	+0.13%	up
S&P500	+0.02%	flat
Russell2000-	+0.04%	-

Investors411 record – 5 years of beating benchmark S&P 500

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

Technicals, Fundamentals & Analysis

Weak volume continues. Most technical analysts consider flat trading (stocks have gone basically nowhere for the last few days) after a trend (upward in this case) a sign  that the trend is revering itself (bearish).  The problem here is it is usually accompanied by strong volume.  All in all THIS IS A BORING WEEK for analysis on stocks. YAWN – Investors are waiting for the monthly employment report at end of next week.

Weekly jobless claims number at 8:30 came in better than expected  Weekly claims fall to lowest since 7/19/2008.

The McClellan Oscillator (see below) has wiggle room on the upside but is slightly overbought.

FEARLESS FORECAST – same as before "Up to flat week" – Historically this is an up period (Santa Clause rally) Even though we are entering overbought territory – hope of a positive employment report for Dec. & historical bullish factors should keep stocks on the up.

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

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Significant forecasting tools/Indexes for stock markets

The Dollar & the BDI have been temporarily eliminated. Right now how overbought we become is taking on more significance.

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$NYMO The NY Stock Exchange McClellan (EOD) Index measures how much the NYSE is oversold or overbought .

The index closed at +22.57 This is a slightly  Overbought Position. This chart has recently formed a series of higher highs and higher lows over the last 5+ weeks.  So it looks like there is a possibility of one more swing higher before we get to a clear oversold position (over +60).

Oversold conditions (@-60) = buy, Overbought positions (@+60) = sell The closer we get to +/- 60 the better our chances of making money with a shorter term buy/sell signal

Positions

The  Positions Section (top of blog) to see all the latest buys and sells (Updated over weekends)

These are positions I actually own

Resource for ETF’s -MSN Money has 821 ETF’s listed according to performance 1,4,13 weeks 1, 3 5, years on a 20 minute delay for daily prices. LINK

SELLING & BUYING

One of the ETF’s we are going to use in 2010 is EDC – an ETF that does 3 times what emerging markets do.

Still holding onto all of UWM.

When/If McClellan Index gets back above +60 will sell some more.

Long Term Outlook = CAUTIOUSLY BULLISH