Why we think this most recent stock rally is another head fake: Conclusion
Many analysts, gold bugs, and media pundits are shouting that hyperinflation is just around the corner, but our research concludes that we have been in a hyperinflationary spiral for over a decade. Apparently, “denial ain’t just a river in Egypt” may hold true, as seniors are forced due to Federal Reserve intervention, to take undue risk with their life savings in order to maintain their standard of living. Just look at the decline in the value of the US dollar and the massive increase in the price of gold, and one can clearly see that this is the case. Our research indicates that...
Read MoreWhy we think this most recent stock rally is another head fake: Part 4 Domestic and Global GDP
This research article is meant to explain why we have continued to be very conservative with our client’s assets, and why we have continued to maintain a very low level of both volatility and correlation relative to the equity markets. Domestic and Global GDP The US Gross Domestic Product grew at 1.7 percent for 2011, and the Economic Cycle Research Institute (ECRI) has stuck to their guns predicting that we will enter into another recession later this year. The charts below demonstrate their indicators of when a recession will occur. The shadowed areas show when the last three...
Read MoreWhy we think this most recent stock rally is another head fake: Part 3 Weak Volume
This series of research articles is meant to explain why we have continued to be very conservative with our client’s assets, and why we have continued to maintain a very low level of both volatility and correlation relative to the equity markets. Weak Volume The buy side volume has been extremely low ever since this most recent rally began in October. Ironically, most retail investors have been selling out of equity mutual funds over the past month or so. Where is the buying coming from? Most of the buying has come from stock buybacks. Public companies have been engaged in near...
Read MoreWhy we think this most recent stock rally is another head fake: Part 2 Equity Valuations
This series of research articles is meant to explain why we have continued to be very conservative with our client’s assets, and why we have continued to maintain a very low level of both volatility and correlation relative to the equity markets. Equity Valuations Contrary to what many people are saying in the media, domestic stocks are not cheap. Never before have we seen valuations this high if we were indeed at the end of a long term bear market cycle. Many believe the worst is now behind us, however we disagree. Because of revisions and how often analysts are wrong regarding...
Read MoreWhy we think this most recent stock rally is another head fake: Part 1 Employment
This series of research articles is meant to explain why we have continued to be very conservative with our client’s assets, and why we have continued to maintain a very low level of both volatility and correlation relative to the equity markets. Employment The employment picture is not as rosy as one might think, especially when we consider young people attempting to enter the work force, the growth of the adult population overall, and alternative measures of long-term unemployment. According to the Bureau of Labor and Statistics (BLS), unemployment for young people between the ages of...
Read MoreEnd of Fourth Quarter 2011
The year 2011 ended on a positive note, after some of the highest market volatility on record. The S&P 500 Total Return Index gained 11.8% in the fourth quarter after dropping almost 14% in the third quarter. When the dust settled, it finished the year up a slight 2.1% thanks entirely to its dividend yield. Foreign stocks failed to rebound significantly during the quarter from their 19% third quarter decline, leaving the MSCI EAFE Total Return Index with a loss of 11.7% on the year. Bonds continued their 30 year bull market as investors sought their perceived safety, with the...
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