3/31/10

Managing demographics in China

Is China being forced to change the one child per family policy they started in 1978?

The Chinese population is becoming older and China is bound to slow down around 2030 because of the decreasing role of the "big spenders" (age group 40-50 year old).

They understand their predicament all too well. So, they might change their one child policy so that today's newborn can replace the decline in spending due to the aging of the "big spenders".

Very clever indeed .. if true.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

This is the problem with large deficits

News. March 31 (Bloomberg) -- Greece may pay about 13 billion euros ($17.5 billion) more in interest on the debt it sells this year than it would have if yields had stayed at their pre-crisis levels relative to Germany’s, according to data compiled by Bloomberg and Credit Agricole Corporate and Investment Bank.

My view. This is the problem with large deficits. Not inflation, as I wrote several times in the past. The interest to the bond holders has to be paid. Who is going to pay it? The populace, of course. How? From the their own pockets.

The outcome is even lower standard of living and depressed purchasing power.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/30/10

Interesting volume pattern

Volume can tell you a lot about the direction of the market.

Gold, for instance, spiked in January with strong volume. It was a sign gold had to rest for a protracted period of time. And it did.

Strong volume is bullish when it happens at the end of a correction. It is bearish if it jumps at the end of a rally.

What caught my attention has been the sharp rise in volume in XLF (the financial ETF)(click on the chart to enlarge it). It is too early to say for sure. But strong volume and no action in the price after a strong move it is not good news.

This pattern should be watched closely because it may have repercussions on the overall market.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Let's hope he is right.

News. ALEXANDRIA, Va. — President Obama signed legislation on Tuesday to expand college access for millions of young Americans by revamping the federal student loan program.

The new law will eliminate fees paid to private banks to act as intermediaries in providing loans to college students and use much of the nearly $68 billion in savings over 11 years to expand Pell grants and make it easier for students to repay outstanding loans after graduating. The law also invests $2 billion in community colleges over the next four years to provide education and career training programs to workers eligible for trade adjustment aid after dislocation in their industries.


My point. The government is increasing its reach. Housing. Healthcare. Autos. Now student loans.

The government is going to do a lot of good things for us. They all seem to be good ideas. Somehow I still think that all this lending is going to make us poorer. We work to pay interest to the banks or to the government (mortgages, cars, student loans, interest on the deficits, and taxes).

I hope they know what they are doing. Another thing that is bothering me is that our income is not growing. How do we pay for all this?

Hopefully Washington knows what needs to be done.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/29/10

Wait a minute....let's not jump to conclusions

News. Consumer spending up 0.3% last month. Disposable personal income down 0.4% in January and flat (0.0%) in February (after inflation, of course).

My reaction. Now, I would like to know where is the good news? Why is everybody so excited? We are spending but we are not making any money.

I do not think this situation can last too long. I guess I am too pessimistic.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/28/10

And the winner is ....

Healthcare. A lot of confusion about what will and will not do.

Socialized medicine. Possibly. The government is likely to gain more power. It is getting bigger and bigger. Is it good or bad for business?

Time will tell. Time and the markets have a knack for uncovering the wrongs and the rights of government decisions. See what happened to the housing sector, Ginnie Mae and Freddie Mac.

What is interesting, I think, is that in spite of all this talk about socialized medicine, the insurance companies (ETF: KIE) have been one of the strongest sectors since February (click on the chart to enlarge it).

Are they the real winners?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/27/10

Time to pay the piper

News. BRUSSELS (AP) — German Chancellor Angela Merkel praised a hard-won deal to rescue heavily indebted Greece from its financial woes, insisting Friday that it will steady the wobbly euro and showed that Europe could cope with the crisis despite having asked the International Monetary Fund to join in on a bailout package.

My point.The Greeks, like GM workers, thought they had it made. Ask, get great benefits, defying the low of economic gravity.

Now the time has come to pay the piper. The banks and other bondholders will have to be payed a huge interest bill. The Greeks will have to pay. The wealth and comfort they achieved has to be payed back. Like for GM and other companies, it is going to be painful.

This is the problem with big deficits. They tell how much money will have to paid to the piper. The bondholders, that is.

Brace yourself. All the benefits we were given, are going to be taken away slowly. Either through higher inflation or higher taxes, or both. The piper has to be paid.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Most attractive commodities?

Most commodity charts show erratic price movement. Most of them are weak. (I still think commodities are telling us the economy may not be as strong as the official statistics seem to suggest.)

These graphs show the trend in copper and platinum (click on the graph to enlarge it). They seem the most attractive ones. (Source: Bespoke Investment Group).

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/25/10

I am confused

I am confused about Cramer's forecasts.

Before the passage of the healthcare bill he was recommending to sell because....not important.

Now, after a major market reversal, he is recommending to buy the dips. Who are the people in his audience? How can they follow what he is talking about? Is this how people invest their money? Incredible!

I am confused. Are you?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Interesting reversal

Interesting reversal.

Market very strong: 1.03% at 1:00pm. Then...big time reversal.
Dollar finished strong
S&P 500 down .17%
Transportation down .63%
Bank stocks down .09%
Utilities down .64%
Gold at a support level
CRB down .60%
Metals and mining down a huge 3.46%
Energy stocks down a sharp 1.68%

Is this a top?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/24/10

One way to develop an investment strategy



I have been using the business cycle to teach businessmen how to develop business strategies and make decisions in tune with economic conditions.

I also used it to show portfolio and hedge fund managers how to develop investment strategies and time investments.

Business activity grows at an above average pace (phases 2&3) or grows at a below average pace (phases 4&1). Markets behave in a uniques way in each of these phases.

The investment strategies implemented when the economy grows at an above average pace are totally different from those when the economy grows at a below average pace.

I am going to give an exercise (once an educator always an educator!).

Take the following ETFs: XRT, KIE, KRE, PSP, XLY, XLP, XME, XLE, and GLD. Compare their performance since January 2010.

Do you recognize a pattern? Which sectors are strong and which ones are weak? What is their performance telling you about the business cycle? If the economy is going to slow down, which sectors are more likely to outperform.

By the way, these are the kind of issues I deal with in each publication of The Peter Dag Portfolio.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Off-the-cuff

I have to subscribe to foreign press if I want to find out what is going on outside the USA.

When a US correspondent reports from overseas it is more often than not from the UK. There other countries which are stronger than the UK. Yet, we have little or no news, say, from Germany or France or China.

These countries are mentioned several times. But little is been said about them and what is going on there. They are only mentioned when they are doing something unfavorable to the US.

But, what is really happening in these countries? I guess, we do not really care. This is probably the reason why most US citizens do not even know where they are.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Why?

News. New-home sales fell to the lowest on record. The supply of homes at the current sales rate increased to 9.2 months’ worth, the highest since May, from 8.9 months. It was the fourth consecutive month of declines and the worst showing on records dating to 1963. January's results, meanwhile, were revised upward slightly to a pace of 315,000.

Congress extended the deadline until April 30 and expanded it to cover existing homeowners who move. But economists and real estate agents say the extension has not had much of an impact on sales.

My point. I do not understand all this emotion about the housing industry and the fact that we have to own a house.

It is quite clear from what we went through in the past few years that we are bound to face financial and economic disaster if we encourage people who cannot afford it -- who do not have the money -- to own a home.

What is wrong with renting -- people do not have to pay property taxes, they avoid maintenance costs, and save because do not have to buy furniture and appliances.

I know. It sounds against the conventional wisdom. But the markets are winning and eventually will force a large portion of the population to rent until they save enough money to buy a house.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/23/10

Watch the financials

I have shown this chart before (click on the chart to enlarge it).

The bank index broke on the upside an important resistance level. And then moved up strongly.

The main idea is that the financials are an important sector. A rise in bank stocks suggests risk is decreasing. This is good news for the economy and earnings.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/22/10

An interesting day

Interesting patterns.

Market: up.
Commodities: weak (CRB: no change since October).
Crude: no change since October.
Utilities: down.
Transportation: weak.
Financials: strong.
Private equity: weak.
Metals and mining: weak.
Retail: strong.
High-yield bonds: firm.
Insurance: trendless to down.

It look like the market is struggling and is trying to regain some strength.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Let's hope we can afford it

News. President Obama’s historic victory on health reform carries enormous consequences for American business, the economy, social policy and politics.

The legislation would substantially expand the role and size of government, adding an estimated 16-million beneficiaries to the costly Medicaid program.

The burdens of financing the new health system will fall, by design, on a narrow swath of taxpayers: high income Americans, in the form of higher Medicare taxes; health insurers offering high cost plans; medical device manufacturers; employers who decline to provide health coverage to their workers.

One major provision designed to control costs – the so-called “Cadillac tax” on high-value insurance plans – was delayed in its implementation until 2018 because of political resistance; that largely came from labor unions which have negotiated high-value plans in collective bargaining.

New taxes would be imposed on interest, dividends, capital gains and other investment income for wealthy individuals. Increase the Medicare payroll tax. The president wants to increase the top tax rate on capital gains and dividends from 15 percent to 20 percent. If Congress goes along, the new top rate would be 23.8 percent in 2013, when the health care taxes kick in.


My point. There is no free lunch. Let's hope we can afford it. Large entitlement programs have never cut the deficit (see Medicare and Social Security).

If we cannot afford it, new taxes will have to be raised. What will be the impact on an already weak economy (see previous post)?

You can rest assured that the markets always win.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/20/10

This chart proves my point. Our purchasing power is sagging.

Large deficits reduce our purchasing power. Why? Taxes will have to go up to pay the interest on the bonds the government sold to pay for the social programs we like but we cannot afford.

This is a below average expansion. It is not a big surprise. Income is growing slowly because business is afraid of hiring due to higher costs/taxes.

The healthcare program will reduce the deficit because taxes will rise. Our purchasing power, however, will sag. It is no coincidence real income is growing well below the average of previous expansions (see chart -- click on the chart to enlarge it).

This scenario has major implications on our investment strategy.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/19/10

Deficits and economic prosperity

Politicians are always ready to give us what they think we want (health care, social security, medicare, housing, unemployment benefits,....).

They are all great social programs. But we have to produce the wealth to pay for them.

If we do not produce the wealth to pay for them, the government will have to sell bonds. They will use the proceeds to pay for these great ideas.

The outcome is taxes will have to be raised (in the amount of the wealth we have not produced to pay for these great social programs).

Why? Because the interest on the bonds have to be paid to the bond holders.

What is the outcome? A gigantic transfer of wealth from us to the bond holders resulting in a substantial reduction of our income.

It looks like this is the time to pay the piper. Taxes are slowly and steadily being raised. Our income is in the process of being cut.

The reason is not "democrats" or "republicans". It is "us". We want more without producing the wealth to pay for it. The outcome is lower standard of living.

Make no mistake about it. The markets always win!

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

An important "if"

The data show the global and US economies are strong. The leading indicators point to even more strength according to many official sources.

If the global economies were so strong, how come commodities have been going nowhere since last August (click on the chart to enlarge it)?

The reason I ask this question is that commodities are strong when the global economies are strong.

What is going to be the impact on your investment strategy? Food for thought.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/18/10

End of the decline?

The Euro has collapsed in the past 4 months. The trendline on the chart tells the whole story (click on the chart to enlarge it).

I find interesting the volume pattern. Volume has been soaring in the last month. Above average volume following a protracted decline suggests a near-term bottom and accumulation is possible. The Euro could consolidate around current levels.

The Euro will reverse its ugly trend if it breaks on the upside the trendline shown on the chart.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Poor Europe!

News. March 18 (Bloomberg) -- Greek Prime Minister George Papandreou set a one-week deadline for the European Union to craft a financial aid mechanism for Greece, challenging Germany to give up its doubts about a rescue package.

Papandreou said he may turn to the International Monetary Fund to overcome its debt crisis unless leaders agree to set up a lending facility at a summit March 25-26.


Poor Europe. Asking the IMF to solve Greece problems is like the USA asking the IMF to handle California's budget issues.

Europe does not work under current settings. Weak and unproductive countries cannot coexist with more productive and efficient countries like Germany and the northern European ones.

For years I have maintained that a major economic area with a single currency rewards the most productive regions and punishes the weak ones because does not allow them to devalue.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/16/10

An important question

Fed Stands Pat … But for How Much Longer? asks Liz Ann Sonders,Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc.

My answer. Until people feel good again about their retirement accounts. Meanwhile, most investors will remain confused about the future of the market.

It is just a thought, of course.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/15/10

Is the global economy slowing down?

The enclosed chart shows the trend of the main commodity indexes (click on the chart to enlarge it). Commodities are very sensitive to economic growth.

Some indexes are at the levels reached last August. Does this mean the global economy is slowing down? Does this mean all the concerns about rising inflation and higher interest rates are unfounded? Is this then the right time to buy gold?

It looks like commodities are giving us important signals. It is not a coincidence that sectors usually strong in a weak economy are reaching new highs, while those sectors typically strong in a robust economy are going nowhere.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Does it mean anything?

The S&P 500 finished above the moving average shown in this chart (click on the chart to enlarge it).

In the past this has been a bullish development. Will history repeat itself?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

The outcome of government intervention

News. The gap between what Americans and the rest of the world pay for sugar has reached its widest level in at least a decade, breathing new life into the battle over import quotas that prop up the price of the sweet stuff in the U.S.

For years, U.S. prices have been artificially inflated by import restrictions designed to protect American farmers. That has kept the price well above the global market. (WSJ)


My point. This is what happens to prices when the government intervenes to protect specific industries. Economic engineering such as special tariffs to help favourite industries "competing" produces price distortions.

And who is going to pay the final bill? You guessed it. The US consumer (including the workers the tariffs are supposed to protect). Why?

Because the markets always win.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/14/10

Observations

Sales of most goods rise at a faster pace when the number of people in the 40-50 age bracket becomes predominant and rises rapidly. They are the big spenders.
Spending, however, decreases when this important age group declines. The overall budget, and this is important, is reduced because of reduced needs.

We are interested in the 40-50 year old group because it determines the trend of the economy with its increasing needs. The faster this group grows, the more rapid is the economic expansion. These are important generational patterns setting the character of the economic times for decades.

How can we tell if this group is going to grow faster or slower? And if so, for how long? The Census provides us with the answers. If the birth rate was rising 40 years ago, we should expect the 40-year old population to grow faster from this point on.

The 1980s were a great decade because the birth rate increased dramatically from 1930 to 1950, thus delivering in the 1980s (40-50 years later) the group who boosted the economy and the stock market for 20 years.

In 1955, the birth rate started declining. The 40-50 year old group began decreasing in 1995-2000. Why do we care? Because since 2000, we have fewer big spenders, being the major cause of a general economic slowdown with a negative impact on profits and equity markets.

Until when? The birth rate increased again in 1975. The implication is that the 40-50 year old group will become the dominant player after 2015. This will be the time when the economy starts growing faster, profits rise more rapidly, and equities will appreciate faster than the 7% average pace. The then President will take the credit.

The point is that the current economic malaise is the outcome of profound demographic changes, which will last at least 5 more years. The economy will grow slowly because of deleveraging. This trend, however, is reinforced by the gradual increase in the 40-50+ year old. This is the group with lower propensity of spending because of its reduced needs.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

The force behind the bull market does not defeat logic

News. The Associated Press. Americans regained more of their shrunken wealth last quarter, mainly because the healing economy boosted stock portfolios.

My point. This is the reason the market is rising. Washington wants the consumers to feel better about their finances before the elections.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/11/10

Is the market going to move to new highs?

Is the S&P 500 going to go through 1150? If so, it is likely to go much higher (click on the chart to enlarge it).

This is the great debate among strategists. Too much optimism as at the 2007 market top. The market is at a major top (this happens when there are too many optimists), according to Hulbert.

Pimco's amazing thinkers say the market cannot go anywhere (I am paraphrasing). Hussman is convincingly bearish. And then there is the CNBC crowd.

Fine. They make excellent points. Will the market rise above 1150? The advance decline line, the transport index, the bank index, and retail stocks already moved higher leaving the S&P 500 behind.

The point? Some very smart people say the market has no chances of rising. The markets are saying ..well.. that they are already soaring to new highs.

There is another concept I learned long time ago. Let the market tell you when the trend has changed.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Another informative chart by Birinyi Associates, Inc.

The chart is self explanatory (click on the chart to enlarge it).

This is how I read it. The market has appreciated at one of the fastest paces on record (for the first 250 days).

The most rampant bull markets (in the first 250 days) did close to nothing in the next 250 days. Caveat -- on average. And averages are made to be broken. Still, you know what the odds are.

This is one of the reasons we include in each issue of our The Peter Dag Portfolio our proprietary timing indicators. We believe market timing is going to be a crucial issue for investors in the coming year. We also emphasize asset classes providing generous dividends to increase the total return of the portfolio.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

The struggle between power groups continues

News. March 11 (Bloomberg) -- Greece’s hospitals, airports and schools were shut today as unions stage the second general strike this year to protest Prime Minister George Papandreou’s latest budget cuts to curb the European Union’s biggest deficit.

My point. These are the painful consequences of large budget deficits and budget cuts. Public discontent.

But it has to be done. The bondholders have to be payed. The transfer of wealth is enormous. And the Greek people are now realizing it.

The Greek problem may be solved from a financial standpoint, Not from a human one.

The economic impact is very slow business growth in the countries trying to control their huge deficits. There is no way to escape.

What is going on in Greece reminds me of what happened to GM.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/10/10

Follow the banks

Some time ago I suggested to pay attention to the banking sector. The trend of bank stocks would tell us what is really going on in the financial markets and the economy.

You can rest assured that Washington is making every possible effort to help banks regain their financial health. The trend of the banking index gives us an idea if Washington is succeeding.

The enclosed chart (click on the chart to enlarge it) shows a superb trend of the banking index. Things are moving in the right direction. This is good news for the economy and for the overall market. It is no surprise the economic news is also improving.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

You must be kidding, Mr. Prodi.

News. March 10 (Bloomberg) -- The worst of Greece’s financial crisis is over and other European nations won’t follow in its path, said former European Commission President Romano Prodi.

My point. Tell the Greeks they have no problems. Their taxes are going to soar and benefits slashed. You may have solved the financial problems, Mr. Prodi. But the human tragedy is alive and well because of outrageously wrong government policies.

What we have in our hand, Mr. Prodi, is not a financial issue. It is a human tragedy. And it is far from over.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/9/10

About moving averages

I never believed in moving averages. They lag prices. So, why use them?

Until lately. This is my conclusion. They tell you about the trend. They identify the trend for you.

Find the moving average that works for you and focus on it. It will help you see the trend. And any change in trend.

My conclusion is that the longest moving averages work better. They identify for you the long-term trend. And this trend lasts for years. You learn to trade with the trend. Not against it. Even if the moving average may be late a few weeks.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/8/10

More good news

News. March 8 (Bloomberg) -- The cost to protect against corporate defaults fell to the lowest in more than six weeks and U.S. investment-grade bond sales rose fivefold as optimism builds that Greece’s budget crisis will be contained.

My point. This is very good news. It looks like the system is slowly mending. The markets seem to like it. It is the main reason central bankers keep interest rates close to 0% -- to lower systemic risk.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/7/10

An interesting chart from Birinyi Associates, Inc.

This is an interesting chart from Birinyi (click on the chart to enlarge it).

The bottom line is that the market peaks only after a protracted period of rising short-term interest rates.

My rule of thumb is to start being cautious after 2-3 months of rising short-term interest rates. The peak of the market depends of many other factors. For more details see The Peter Dag Portfolio and my book Profiting in Bull or Bear Markets.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/6/10

Watch this moving average

This moving average gives you a good idea of the momentum of the market (click on the chart to enlarge it).

The S&P 500 remains above the moving average -- and this is good news for the bulls.

The time to worry is when ...
a. The moving average stops rising;
b. The S&P 500 falls below the moving average.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Worried about double dip?

Zero chances of double dip according to this graph showing the probability of recession (click on the chart to enlarge it) (Source: Federal Reserve Bank of Dallas).

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

What an exciting piece!



This is great music executed in a brilliant way by a great artist.

Enjoy it!

George

A bullish development?

An interesting chart (click on the chart to enlarge it).

An important resistance level of the bank index has been broken on the upside. Furthermore, the trend is strongly up since last November.

Banks are an important sector of the market. Their strength may bode well for the economy, for earnings, and for the overall tape.

If market continues to rise will continue to confound all the sceptics your see on TV.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/5/10

Bullish chart?

Financial stocks are very important. If they reach new highs, they signal a healing system.

They have been consolidating since last August. A break above the resistance level shown on the chart will be a bullish development (click on the chart to enlarge it).

XLF may go above it. Why? Look at the volume. It soared lately -- well above its average of the past few months. The last time volume surged was in March 2009 and XLF soared.

Will XLF move above the resistance level? Will it signal the beginning of the next leg of the bull market? Stay tuned.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/4/10

A fascinating chart

Quite often I play with graphs by adding indicators and see what happens. What kind of patterns are going to appear? Are they trying to tell me something?

This chart is fascinating (click on the chart to enlarge it). It has been drawn using Google Finance with a moving average under the graph of the S&P 500.

Note how this moving average has been a great support for the index since 1985. Then, in 2000, the index broke below the moving average until 2003. Then it moved above until 2007. Now is trying to move above the average, but the market is having some problems. A decisive move of the S&P 500 above 1225 could be very bullish for stocks.

Of course, using moving averages is not the most profitable way to invest. Sometimes, however, they help giving some perspective on where we are and where we are going.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Commodities

I just checked the price of all the main commodities on Bloomberg.

I did not like what I saw. The page is all red. Of course, the excuse is China, India, you name it.

The fact that commodities are down across the board does not bode well for the market opening today.

Let's hope the trend is going to reverse.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Discontent is a dangerous outcome

News. March 4 (Bloomberg) -- Greece’s pledge to deepen planned budget-deficit cuts failed to yield an offer of assistance from Germany, Europe’s biggest economy, as protesters in Athens seized the finance ministry building and blocked roads in the city center.

My point. It is an old movie. I have seen it before many times. People ask. Politicians give. Politicians gain power because they manage more money. Money is printed. Wealth is not created. Money ends because the markets have a way of catching with bad policies. People think they have been cheated.

Revolution and discontent.

It is not a pretty picture in Europe. The main themes of history, however, have a way of repeating themselves very closely. But we do not learn because the search for power and wealth blinds us.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/3/10

Greece keeps teaching us valuable lessons

News. March 3 (Bloomberg) -- Greek Prime Minister George Papandreou announced an additional 4.8 billion euros ($6.6 billion) of deficit cuts as he tries to convince European allies and investors that he can tame the region’s biggest budget gap.

My point.The cuts include deep salary reductions for public employees, increased taxes across the board, and reduction of benefits.

This is an important lesson for all countries giving disproportionate financial advantage to special groups without considering the other side of the coin. Who is going to produce the wealth needed to finance the generosity?

It should be a lesson for all governments. Including ours. Printing money and giving it away to politically favored groups is not the way to run a country. Favoritism to unions, housing, and now extending benefits to the unemployed are all political moves that eventually damage the country.

In my humble opinion, a country should concentrate in creating wealth and contain public costs. Then, redistribute the wealth. Greece continues to teach us valuable lessons. But we are not learning, unfortunately.

Government leadership is about understanding the needs of the country and what it can afford. Set the rules of the games and be a good empire. Not an owner of the resources.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Sign of optimism?

Trading volume is a crucial piece of information that I like to follow closely. The enclosed chart of the S&P 500 SPDR (click on the chart to enlarge it) may prove my point.

Above average volume, following a market correction, seems to be a bullish development. The jump in volume we experienced in February may have bullish implications.

Time will tell, of course.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

3/2/10

Up, up, and away

News. March 2 (Bloomberg) -- European stocks rose for a third day, led by automakers and airlines, after the European Union said it expects Greece to announce new deficit-cutting measures in coming days. Asian stocks and U.S. index futures gained.

My point. The stock market loves crises because the politicians are forced to add liquidity to the system to solve the problems they engineered. And equities strive on liquidity.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

They know. But nothing is done about it.

Comments by Jeffrey Lacker, president of the Federal Reserve Bank of Richmond

I have said elsewhere that it would be a mistake to try to build this expansion on another housing boom and that over time we should wean our economy off dependence on housing subsidies. Too many houses were built over the last decade, and what we’ve been through the last three years should teach us that subsidising housing mortgage debt was a dangerous policy that was carried too far. But whatever society decides about the bias toward housing, real regulatory reform would be incomplete without addressing the fate of the government-sponsored housing finance enterprises.

My point. Some people in governemnt know what the problem is. The lesson (wisdom?), however, gets lost in the game of politics.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

We ask. They give. We pay.

News. March 1 (Bloomberg) -- While the eyes of the world focus on Greece’s debt crisis, investors in Edinburgh are busy preparing for the U.K. to be next.

Sterling slid to a nine-month nadir against the dollar last week, trading at $1.52. Zurich-based UBS, the world’s second- biggest currency trader, predicted it could fall “quickly back” to $1.05 or below.


My Point. Slowly and steadily we are all paying for the excesses created in the past 50 years. It is not their fault. It is not the politicians who created this global multi-dimensional mess. It is not special interests. It is all of us. We want. We want more. Because it is our right.

Or so we think. Meanwhile, large corporations (GM, Chrysler,major financial institutions) collapse. It is the workers' right. We do not seem to know when to stop.

Then, the system cannot deliver, cannot meet all our demands. We look back, we see what we did wrong. The same people in charge struggle to find new solutions that will not work. Why? Because only the markets can clear the excesses.

The USSR, Greece, the UK, Spain, and Italy promised and gave. Centralized power controls the money. They control the purse. The little people will pay. Not those in power.

The markets eventually win. People will suffer and will continue to think it is them not all of us who created our current predicament. They will protest in the streets. They will break windows and fight the police. But they do not realize this is the time to pay the piper. Make no mistake about it. It is not if. It is when.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

To find out more about my in depth views 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.

Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.