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.

Change in Long Term Stock Outlook

See Positions section below for why stock outlook was upgraded and editorial

CNBC – Las Vegas/Glenn Beck

CNBC is easily the #1 financial channel. With shows from “Fast Money” to “Mad Money” CNBC hypes the quick buck on Wall Street by combining the glitter of Las Vegas and the antics of Glenn Beck.  The blatant emotionalism sells for CNBC and their advertisers – the stocks they want you to buy. Confession – I have CNBC on a lot as background when I work and its on right now waiting for the 8:30 jobs report.

CNBC so lauded Greed based Capitalism (“Free markets” as opposed to rules based capitalism) it can be said it was a significant contributing factor to 2008s economic meltdown.

Jon Stewart’s Daily Show took CNBC’s star Jim Cramer to the woodshed over this. CNBC has put together a formula of hype, emotionalism, screaming that sells to fear/greed short term investment crowd.  Indeed this is a style diametrically opposed to the one Nobel prize winning psychologist and founder of Behavioral Economics Daniel Kahneman uses.

(to be continued)

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!

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. (No changes this weekend)

Stocks rallied (minor rally) in weak volume AGAIN.  This is the Bull markets mantra. (See editorial and change in Long Term Outlet below) Fundamentally there was some good weekly jobs data, but the big news is the monthly jobs numbers coming out at 8:30 EST this AM

Jobs Report -  February employment numbers  – Unemployment held at -9.7% and jobs down -36,000, a bit better than expected -60,000. January revised down -6000 (minor)

This is about as good as it gets for stocks. The fact that employment is NOT declining means interest rats will stay low and the Fed will keep flooding the economy with money.  Expect a rally.

Good news is monetary policy has helped stabilize the employment decline and we are down from 3 months ago.  The bad news is we are still at 9.7%

Significant Indexes

• McClellan Oscillator slipped slightly to +52.43 yesterday We are now just below +60 or Overbought territory. Stockcharts has a better version of the McClellan chart ($nymo) LINK We are still close to oversold territory, but have fallen over 10 points in last few days. This gives us a bit of up side wiggle room. However, still holding onto the sell more into any major move higher.  The McClellan Oscillator would have to at least get 5 or 10 points above recent high of 62+ to sell.

Because of the change in Long Term Outlook to Cautiously Bullish - any pullback in the McClellan Oscillator to say +20 would be an opportunity to nibble again.  This market wants to move higher.

Positions

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

Even though markets are close to being oversold in the short trm – the Long Term Outlook has been upgraded to CAUTIOUSLY BULLISH. from NEUTRAL The reason for this is technically that the benchmark S&P 500 (see chart) has for 4 days traded above its 50 day moving average. It has also formed a series of higher price highs and one higher low. Yes, volume, the #1 confirmation factor, has been weak, except for the first two+ months of the Bull Market that started in March. In fact, the chart shows volume has basically declined since May.

Behaviorally – there are many investors out there who have been burned by the Capitalism of Greed that they are holding onto other investments like bonds. There are two main possible ways (perhaps more) that these traders would buy into stocks

• Greed based capitalism becomes Rules based capitalism – Some transparency is reintroduced into US financial markets – From standardized mark to market accounting to regulated Credit Default Swaps to eliminating to big to fail institutions.
• Seeing the markets move higher, greed overwhelms those on the sideline and they jump in building another bubble. Its hard to predict exactly what behaviorally would trigger those that are seeking safer havens than US equities.

For decades volume has been the #1 confirmation factor of a price move. This is simple supply and demand economics. The more people that want to buy something (demand) – the higher the price grows (assuming basically the supply of stocks is relatively constant).  In the end something has to give. However, technically, higher highs and crossing the 50 day moving average are both bullish indicators. The lack of volume is the caution.

NB – We are in a position of change and sometimes markets can reverse themselves quickly.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING