Do you know that.....

High-yield bond funds are an interesting asset class and usually misunderstood by investors. Why? Because investors associate high-yield bonds with excessive high risk. And this is where the investment opportunities arise.

Example. Since January 2005, a typical high-yield mutual fund has broken even. Had you invested $100,000 in the S&P 500 you would have lost $20,000 as shown in the above chart (click on chart to enlarge).

Why the high-yield bonds perform so well? Two reasons. The first one is that the markets mis-price the risk premium. The second one is their high yield.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

The world is changing

News. New figures have shown that in December, for the first time ever, there have been more cars sold in China than the United States.

A total of 735,000 automobiles were sold in China last month, compared to 656,976 vehicles were sold in the US.

Bottom line. Things are happening in Asia. Good things. Do we believe that we are too big to fail ... like Citigroup or GM ? This kind of thinking has destroyed many big enterprises.

Are we ready for the challenge? Do we understand the challenge? Are we thinking about the challenge?

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Questions

What is the real financial purpose of the government programs?

To protect the financial viability of major financial and industrial corporations.

Why?

To protect jobs.

What is the ultimate outcome?

To protect the bondholders of these corporations from losing all their money.

How is this being achieved?

By transferring huge sums of money from the public to the bondholders. Large government deficits represent a transfer of wealth from us to the bondholders. They (the bondholders) get the interest from holding the bonds (or lending the money in the first place). The current administration is making sure this flow of money (interest) is not interrupted.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Time to panic?

News. The outbreak of disease in people caused by a new influenza virus of swine origin continues to grow in the United States and internationally. Today, CDC reports additional confirmed human infections, hospitalizations and the nation’s first fatality from this outbreak. The more recent illnesses and the reported death suggest that a pattern of more severe illness associated with this virus may be emerging in the U.S. Most people will not have immunity to this new virus and, as it continues to spread, more cases, more hospitalizations and more deaths are expected in the coming days and weeks.

So far ...one death.

Check on http://www.cdc.gov/flu/mmwrref.htm to find out the mortality rate of other types of influenzas.

Is this the time to panic? Some people hope so, so they will make a lot of money. Poorly tested vaccines may cause more damage than the original virus.

Let's try to keep cool and do not forget to put this issue into perspective. Of course, the first thing Obama did is to throw billions at the problem. Did I say someone is going to make a lot of money?

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

We are not yet out of the woods

News. Bank of America and Citigroup declined at least 6.8 percent in pre-market trading after the Wall Street Journal reported early results of the government’s so-called stress tests show the companies may need additional capital.

Bottom line. We are not yet out of the woods. It will take some time for the financial system to heal. Out financial risk indicator remains at high levels. It is crucial, in my opinion, to remain flexible and patient in the current environment. Risk management is very important in the current economic and financial environment.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Commodities and business cycles

The best analysts think commodities are going to soar. Maybe. What must be kept in mind is that commodities decline/do not rise when the economy is weak. Commodities are strong when the economy is strengthening and growing at a rapid pace.

Is the economy strong? Your answer will give you the outlook of commodities. Oh, one more idea. All commodities tend to go in the same direction. Beware of the few commodities that behave differently.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Questions

News: President Barack Obama said Thursday he is determined to get a credit-card law that eliminates the tricky fine print, sudden rate increases and late fees that give millions of American consumers headaches.

Both the House and the Senate are pursuing bills to give consumers greater protections as an expansion of new rules slated to take effect next year. Obama said his economic advisers will examine the various proposals and work with Congress and the industry,

Are we really so stupid? Why is everybody in Washington so concerned about us? Everybody seems to want to protect us..now. Where were they ...yesterday? How can we believe them?

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Commodities: the long view

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

The business cycle works...everywhere

News: Australia’s annual inflation rate slowed in the first quarter to the weakest pace in 18 months as the nation’s first recession in almost two decades deepens.

The consumer price index increased 2.5 percent from a year earlier, after gaining 3.7 percent in the fourth quarter.

Bottom line. A downswing in the business cycle forces inflation to decline ... everywhere. Even in Australia. Lower inflation will keep interest rates from rising. And this is good news for investors.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Commodities and business cycles

There is a lot of hype about commodities. Investors like commodities because they think/hope they will repeat the performance of 2003-2007. They forget that commodities rise when the economy is strong and the business cycle is on an upswing.

Commodities have declined and are staying at low levels since the recession started and the business cycle is on a downswing (click on chart to enlarge).

One more thing...beware of commodities that do not follow the general pattern.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Observations

I have seen this “movie” before in Europe and in particular in Italy where I lived for a long time. Washington is in turmoil as Congress sets the agenda. Checks and balances have disappeared. People are talking about socialism and fascism. The country is confused on what has to be done. Fascinating times for anyone trying to understand.

Example. The story is from Fox News. “The state is trying to shut down a New York City doctor's ambitious plan to treat uninsured patients for around $1,000 a year. Dr. John Muney offers his patients everything from mammograms to mole removal at his AMG Medical Group clinics, which operate in all five boroughs. His patients agree to pay $79 a month for a year in return for unlimited office visits with a $10 co-pay.”

In the land of free enterprise, it sounds like a good idea, especially if it helps the very people who need medical assistance. Next page.

“But his plan landed him in the crosshairs of the state Insurance Department, which ordered him to drop his fixed-rate plan - which it claims is equivalent to an insurance policy. The low-cost health care plan angered state officials and Dr. Muney has agreed to increase his fees. A department spokesman says Muney was violating state law by basically operating as an insurance operator without a license. Muney will charge $33 per visit for all but preventive care, which brings him in compliance. Muney's spokesman says he'll challenge the restrictions through legislation.”

In Italy, you cannot sell a newspaper or become a pharmacist unless you are licensed to sell newspapers or operate a pharmacy. These licenses are almost impossible to win. This is not socialism or fascism. Power groups influence government to protect their markets. It is not the government.

It is us, all of us, attempting to make our ideas accepted to achieve power and wealth. This is what makes the wheel turn. Marxism, socialism, fascism, and democracy are not ideologies. They are formulas to control power.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Relax.....have a nice evening....

The markets may be even more volatile next week. Time to relax listening to this great interpretation by Sarah Chang of Bach's "Air on a G string." Enjoy!

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

The business cycle: The force driving asset prices

Not surprisingly, profits are still slumping.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

Is the market too high?

The above chart shows the percent of stocks above their 50-day moving average (click on chart to enlarge). Almost 89% of the stocks are above their 50-day moving average. This is a very high percent and may indicate the market is overextended.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977

A profitable pattern of trading volume

Above average trading volume following a sharp advance is a strong signal a particular stock is close to a top. Every peak in SH (in July 2008, October 2008, November 2008, and March 2009) has been accompanied by unusually strong volume (click on chart to enlarge). This is the time when the crowd jumps in and the pros sell.

Note that volume dries up after a peak. The weak hands are left holding the bag. The pros, on the other hand, wait for the market to decline and volume to dry up before buying again.

The decline in volume reflects the indifference, indecision, and apathy of investors. Volume declines as the stock heads south. Eventually the pros find value again and start buying. And volume picks up again. This is exactly what happened in August 2008, November 2008, and December 2008.

This pattern suggests that the time to start buying is when volume stabilizes after declining from above average levels.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Since 1977

The markets always win

April 15 (Bloomberg) -- Fannie Mae and Freddie Mac are under pressure from lawmakers to revamp their operations as the mortgage-finance companies tap more government money to survive.

Among the options under discussion are combining the companies, breaking them up or reshaping their missions.

“It’s highly unlikely that they would return to the way they used to be,” said Ira Jersey, the head of U.S. interest rate strategy at RBC Capital Markets in New York.

Bottom line. It was a bad idea. The politicians wanted to give a home to all of us. But, we were not making enough money to afford it. Fannie and Freddie were supposed to "fill the gap". It did not make any sense and they have to disappear. No question about it. A monument to bureaucratic fiasco. The markets always win.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

Outlook for profits

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

Employment and bond yields

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

Observations

When I first arrived in the US, I found New York somewhat disappointing. Some streets were dirty. Some people were poor and badly dressed. Everybody and everything looked quite average. I surprised myself thinking, “How could these people win the war?” I was brainwashed by the American propaganda machine in Europe.

It was too early for me to know about the amazing American work ethics and entrepreneurship, the immense resources and wealth of the country with few restrictions on what anyone could do. One more thing impressed me. Americans were working to pay the banks. The banks owned them.

Fast forward a few decades. Why do we have a crisis? Since winning WWII America has been the strongest, the wealthiest, the most powerful country in the world. Its resources and reach were immense, dictating what should, or should not, be done to the rest of the world. Its people were constantly reminded of this truth.

For decades, people were encouraged to enjoy their unique place in history. They believed all the clichés coming out of Washington. Growth was the name of the game. Growth, however, does not come from complacency. It comes from the capacity of producing goods efficiently.

It was much cheaper to buy goods from others. People have been lead to believe it was OK to “hire” underdeveloped countries to produce what we needed. To compensate for the eventual decline in economic growth, we had to leverage. We were brainwashed to do it because we are the strongest and most powerful. The kind of mindset GM had when it controlled more than 50% of the car market. Now it is skirting bankruptcy.

The solution is not to encourage more leverage. We need to concentrate on re-building our industrial base. Populist social programs only transfer wealth to the bureaucrats. The markets always win. They will painfully force us in the right direction. The alternative is stagnation, the lukewarm growth plaguing Europe.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

Time to relax...

This is the Nocturne by Grieg. Beautifully played. Relax. Have a nice weekend. We might be facing turbulent times in the next few weeks.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

Employment and the business cycle

Bottom line. Employment is not, let me repeat, not a lagging indicator.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

The markets always win

WASHINGTON (AP) -- The increased use of ethanol could cost the government up to $900 million for food stamps and child nutrition programs, a congressional report says.

Higher use of the corn-based fuel additive accounted for about 10 percent to 15 percent of the rise in food prices between April 2007 and April 2008, according to the nonpartisan Congressional Budget Office. That translates into higher costs for food programs for the needy.

Bottom line.The markets always win. A bad idea is a bad idea. Like the program to facilitate the ownership of a house. Eventually it caused problems. The worse the idea, the worse are the consequences. Another bad idea? Washington is forcing GM to produce green cars. The USSR tried industrial planning. And the latest news is that it did not work. The markets always win.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

The fever chart of any economy..in space and time

Look at the level of interest rates in time and space and you will know what is happening in that country at that particular point in time. When the Spanish empire collapsed interest rates were 30%. Wow! During depressions interest rates are close to 0%. Wow!

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

The business cycle and farm prices

News from AP. Farming communities that were largely insulated from the recession last year by high crop prices and other factors are now feeling the nation's economic chill more acutely as corn, wheat and soybeans become cheaper, and land values fall.

Farmers across the Midwest and Plains states are increasingly cautious about spending on new equipment and land, and that is threatening businesses that until recently had been spared serious financial hardship.

At the John Deere dealership in Wahoo, combines and tractors farmers ordered last year with proceeds from $7 per-bushel corn are still being delivered -- despite the fact that corn prices are now closer to $4 per bushel. The activity doesn't yet reflect how frugal many farmers have become because of falling crop prices, dwindling land values and burgeoning problems in the ethanol industry.

BOTTOM LINE. The business cycle impacts the price of all asset prices. A weak economy is followed by lower prices of hard assets -- commodities (energy, agriculturals, metals,...), art, farm prices, real estate,...and the stocks of companies associated with these assets (click on chart to enlarge).

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

The business cycle and commodities

Commodities and commodity driven stocks tumbled today. The gurus buying stuff that hurt your feet when they fall were confused. This is a way to look at what is going on. There are very attractive asset classes right now, but not commodities.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

What drives interest rates...the Fed or the business cycle?

There is a lot of hype about the decisions of the Fed when the time comes to lower or raise interest rates. Look at the business cycle. The business cycle drives the trend of interest rates and of all other asset prices.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

Questions...questions...questions....

Who is running the show --- Obama or Pelosi? Major legislation is being passed with the President happily commingling with the global leaders.

Was this the most appropriate time to be out of the country? Should he have been in Washington and manage the agenda? Is he delegating too much?

Again ... who is running the show?

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

Let's keep our perspective

The market is up one month and all the prima donnas are screaming the rally is anticipating the end of the recession.

Let's keep our perspective. The market rallied several times for one month in the past and the economy kept sinking.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Since 1977

The employment data...An ugly report

The nation's unemployment rate jumped to 8.5 percent in March, the highest since late 1983, as a wide swath of employers eliminated 663,000 jobs. It's fresh evidence of the toll the recession has inflicted on America's workers, and economists say there's no relief in sight.

If part-time and discouraged workers are factored in, the unemployment rate would have been 15.6 percent in March, the highest on records dating to 1994, according to Labor Department data released Friday.

The average work week in March dropped to 33.2 hours, a new record low. Since the recession began in December 2007, the economy has lost a net total of 5.1 million jobs, with almost two-thirds of the losses occurring in the last five months.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Editor. Since 1977

Durable goods orders and the business cycle

The Commerce Department said orders for manufactured goods rose 1.8 percent in February, reversing six straight monthly declines and easily beating estimates of another drop. Other economic indicators came in better than expected Wednesday, including construction spending and pending home sales.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Editor. Since 1977

The business cycle and oil prices

The business cycle is the main force driving all asset prices. This is just one example.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD
Editor. Since 1977