|
Small Portfolio
|
XLF & IAU
|
10.95%
|
|
|
Position
|
Date
|
Return
|
Days
|
|
VG
|
10/27/2011
|
-35.87%
|
289
|
|
BT
|
1/4/2012
|
13.03%
|
220
|
|
SAI
|
5/30/2012
|
10.12%
|
73
|
|
XEC
|
6/5/2012
|
24.90%
|
67
|
|
DECK
|
6/15/2012
|
-6.27%
|
57
|
|
CVX
|
7/5/2012
|
5.76%
|
37
|
|
RIMM
|
7/16/2012
|
14.34%
|
26
|
|
UEIC
|
7/30/2012
|
17.92%
|
12
|
|
QSII
|
8/6/2012
|
6.86%
|
5
|
|
CECO
|
8/9/2012
|
-4.05%
|
2
|
|
S&P
|
Annualized
|
3.76%
|
|
|
Small Portfolio
|
Annualized
|
9.13%
|
|
|
Large Portfolio
|
Annualized
|
18.41%
|
A lot happened last week that wasn’t in the news.
There was a great deal of money-flow shifting between the industry
groups. Rather than rotate one stock
around the end of next week, I had to
rotate two last week.
So, what’s left?
Well, if I were sitting on 100% cash, here’s what I would
buy on Monday per the model:
|
Ticker Symbol
|
Industry
|
|
CAJ
|
ELECFGN
|
|
DECK
|
SHOE
|
|
QSII
|
HLTHSYS
|
|
CECO
|
EDUC
|
|
CHFC
|
BANKMID
|
|
NSC
|
RAILROAD
|
|
SEAC
|
ENTECH
|
|
TEF
|
TELUTIL
|
|
FCX
|
MINING
|
|
CVX
|
OILINTEG
|
We are already holding 4 of these on the model, and we held
FCX a few weeks ago for a quick 9.96% profit in only 10 days. If I could do that all the time I’d be living
on a beach somewhere.
In any case, what do these industries tell us? Why THESE industries?
When you look at them, they’re a mixed bag. ELECFGN, early bull; SHOE, mid bull; HLTHSYS,
mid bear; EDUC, early bear; BANKMID, late bear; RAILROAD, early bull; TELUTIL,
mid bull; MINING, mid bull; OILINTEG, late bull.
Right, there’s no consensus there at all. CVX, FCX, and NSC could give a bullish
inflation case, and CECO is in the target industry for the next Fed liquidity
bubble (at least, as Zero Hedge sees it).
And that might just be what happens: another Fed bubble.
But the CONTEXT for such a bubble looks like 52 card
pickup. Everything is scrambled, and
throwing more money into the mix will just scramble it even further. At some point the imbalances will be more
than Bernanke can deal with.
And there’s also the question of whether Bernanke will do
anything at all, or when.
I get one message from the money-flow, and it ain’t
pretty. There isn’t a lot of strategic
investment going on out there. It’s just
a bunch of speculation.
Beware the speculation.
In 2003 my apartments were being converted to
condominiums. It was a crappy place with
paper thin walls and I knew EXACTLY when the couple downstairs were having
sex. I felt sorry for the poor woman,
because he just snored immediately afterward…
In any case… we had to move out or buy, and I didn’t want to
pay 300,000 for a two bedroom place with paper thin walls.
One of my neighbors was eager to buy, though. So I asked him why. It wasn’t WORTH 300,000. He just smiled and answered that it was worth
300,000 now because someone would pay him more for it later.
Here’s the difference between speculation and investment: an
investment is something that you buy based on what it’s worth TO YOU;
speculation is something that you buy based on what you THINK someone ELSE will
pay for it.
You can still TRADE investments, but it’s always a good idea
to trade INVESTMENTS rather than speculations.
A stock has value because of the company behind it. The price fluctuates around that value based
on speculation – but it eventually comes back to value.
The industry configuration my model is seeing is that of an
economy running on speculation.
I hate to say it, but we almost NEED a bear market to get things
back into a business context, rather than just running after the next fix the
Fed may or may not be offering in its methadone clinic today.
Oh, and on top of it all, there are those HFTs I keep
complaining about:
Nice, scary graphic there.
No, I’m not timing the market. I don’t know WHEN the market will crash –
only that if it keeps running on methadone it WILL crash.
This reminds me of Reagan’s first term. Volker wanted to kill inflation once and for
all, and the way to do it was to jack interest rates so high that they would
choke the life out of all the speculation out there. Reagan backed him up and had one of the
scariest recessions of market history.
But it worked.
Problem is that he couldn’t have won the election if he had
PROMISED to choke the life out of the economy and force it to reboot.
Ryan is like Reagan – his only problem is that he’s honest
about it. Romney just based his
political future on the voters’ ability to do basic math. He’s doomed.
People are terrible at math.
And the speculative money-flow I’m seeing between the
industries just proves it.
Tim
No comments:
Post a Comment