Peter Dag & Friends: August 2010

8/29/10

Thought of the day

I hear many smart and well known pundits making the point the market is overvalued or undervalued.

Famous professors writing books on stocks for the log run.

Yet, the market is at the same level as in 1998 -- 12 years with no gains, absolutely flat!

Are we still thinking as if the economy and the markets were pre-1998? What has changed? Did anything change?

I will explore these issues in the next The Peter Dag Portfolio. Click here to subscribe.

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 investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as 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.

8/28/10

Market seasonality

And now let's look for protection. September is here and according to the data provided by chartoftheday.com it spells trouble.

The reason is September is the worst month for market performance (click on the chart to enlarge it).

Do I believe it? My subscribers know exactly what my indicators are saying. You are invited to subscriber now and find out. Just click here.

Have a nice weekend.

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

8/27/10

A great journey

When there is too much focus on any activity, we are bound to feel something is missing. This is the reason Ed and I started reading philosophy, one page at a time. Why do we think the way we do?

The first philosophers in early Greece hypothesized about the structure of matter, algebra, and geometry. They asked the first systematic questions about the world. As Greek city-states became dominant, Plato, Socrates, and Aristotle told us how to organize a country. They also told us how our mind works, reflecting the increased complexity of the world.

In the middle ages, the powerful (economic, intellectual, and religious) ascent of the Church of Rome was accompanied by one of the darkest periods for humanity. When one power group becomes the dominant player, people suffer. Philosophers were captive of the environment and dealt only with religious issues. Creativity was stymied.

In 1500, the Reformation finally unleashed man’s creativity, giving him his freedom and responsibilities. Descartes focused on how we think and who we are. Man and his mind became the center of study. It took 2000 years to reach this point.
In 1700, British philosophers and Hume told us we think based on sensations. They asked: “How do you know?” A devastating question difficult to answer. Not surprisingly, the existence of God was questioned.

Kant synthesized the main currents (empiricism and rationalism) on how we think and gave a complete view of the process. Hegel told us the state is the ultimate power, anticipating Karl Marx by more than 50 years.

The French Revolution (1789) tried to give new dignity to man. Man has the power to solve the problems of life. However, in 1800 the Industrial Revolution unleashed new wealth and social issues. Adam Smith tried to explain how the economic system works.
Marx disagreed. Give power to the workers to eliminate the sad state of labor in the midst of enormous wealth. Communism and GM’s fate come to mind.

Philosophers realized the need to express concepts logically. Kant, Bertrand Russell, Wittgenstein, and Chomsky contributed to logic and linguistics thus allowing the birth of computers and artificial intelligence.

What a journey!

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

The Chairman speaks

Bernanke speaks. "Fiscal impetus and the inventory cycle can drive recovery only temporarily. For a sustained expansion to take hold, growth in private final demand–notably, consumer spending and business fixed investment–must ultimately take the lead… The prospects for household spending depend to a significant extent on how the jobs situation evolves… Incoming data on the labor market have remained disappointing."

Bottom line. Studies show that printing money alone does not generate jobs. Something else has to happen. It looks like, however, that current policies are not getting the job done. They may. Eventually. Let's hope so.

The readers of my The Peter Dag Portfolio know what I am talking about.

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

8/25/10

Can the economy improve?

The housing market is in shambles (click on the chart to enlarge it).

The inventory of unsold homes increased again. Can the economy improve without the stimulus created by a firm housing sector?

Note how the end of every recession was accompanied by rising home sales. Not this time.

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

Perspective

In 2009 the business cycle was in phase 1.

The stock market was strong. Commodities moved higher. Yields stopped declining. Inflation eventually rose.

These trends were even more pronounced in phase 2, as the economy gained strong momentum.

Then we moved to phase 3. Some of the trends have reversed themselves. Commodities are going nowhere. Yields have declined. Inflation has peaked.

Even in these exceptional times, the forces created by the business cycle have a profound impact on prices of all asset classes.

Why does the business cycle has such an impact on prices? Because the business cycle is the outcome of business decisions concerning financing, purchasing, selling, investing. They are all driven by perceived opportunities created by the current position of the business cycle. Eventually, reversion to the mean takes over creating new opportunities.

My book Profiting in Bull or Bear Market explains in detail these relationships. This book is the outcome of an MBA class I taught for many years. My publication The Peter Dag Portfolio discusses current developments and translates them in an investment strategy and specific recommendations/investments.

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

8/24/10

For you info -- I am No. 1 again

I did it again.

It really feels good. Probably because I work many hours in trying to improve my forecasting tools.

I realize the market teaches a lot of humility, but being ranked again as the best market timer over the past 12 and 6 months by Timer Digest gives me a deep sense of satisfaction.

I am glad that the subscribers to my The Peter Dag Portfolio are the main beneficiaries.

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

A leading indicator of the market?

The bank index is sinking (click on the chart to enlarge it).

This important sector broke through the July lows. Is it trying to tell us the direction of the market?

You will find the answer in the next issue 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

8/23/10

A bond bubble?

News No. 1. Aug. 23 (Bloomberg) -- Housing led the U.S. out of seven of the last eight recessions. This time, it may kill the recovery.

Home sales collapsed after a federal tax credit for buyers expired in April. Since then, the manufacturing-led expansion, which began in the second half of 2009, has been waning, with jobless claims rising and factory orders falling.

News No. 2. Treasury prices have risen too high, perhaps even to bubble proportions. The thinking goes that investors could dump Treasuries as quickly as they bought them on even a whiff of inflation. Inflation is bad for bonds because it eats into principal.

My point. The two sets of news above are closely related, in my humble opinion. Probably there is a reason why yields are declining. I follow trends, not levels. And the trends are obvious for those who read my book, (Chapter 9 in particular) 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

8/22/10

Observations

I believe the history of humankind is a random event. People push and shove until they have a system they think can resolve their problems. Only to become disappointed and slowly change again toward a different system. I am dedicating a large part of my time to thinking about this issue.

Are Chinese, Venezuelan, Iranian, or Russian autocracies better than the democratic ones? We think we are the model. But we are also changing as we seem to be moving away from a liberal system.

No system is stable – capitalistic/liberal or autocratic. China, under communist dictatorship, is using capitalistic ideas with the command performance rather than the cumbersome and lengthy democratic process. Some observers say autocracies represent an improved version of capitalism.

Can an autocratic system survive? My answer is no. No system can survive as is. Power groups within a nation will always try to gain control of the wealth of the nation. See for instance trends in Iran.

Power groups will fight until they control other power groups or absorb them. The fewer power groups, the slower the growth of the economy. It is an unquestionable fact. Look at what happens in Iran, Russia, and Europe.

When people become dissatisfied, they force the group in power to change its policies to solve their problems. Italy and Germany accepted dictators in the late 1920s.

In Italy the power groups have consolidated their reach and this is the reason the country has been in shambles for decades. Once a power group is in power, it is not going to relinquish it without a revolution. This is what triggered the French revolution or the USSR debacle.

There is no democratic, liberal, or autocratic system. All the systems are constantly changing. Like birds, we fly trying to find the ideal resting place. What we find is new problems. There is no ideal system. We are randomly searching for a system that does not exist.

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

8/21/10

Wow!

Macroeconomic Advisers estimates a monthly GDP figure, and according to their calculations nominal GDP declined in May and June. (Click on the chart to enlarge it),

It looks like things are changing. If this is the case, it may have profound implications on your investment strategy.

Our view? Please read the next issue 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

8/20/10

Technical patterns

The bank index is sagging and below an important support level (click on the chart to enlarge it).

Question: will the market follow the pattern of the bank index? We will answer this question in the next issue 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

8/19/10

Why was the market down today?

What spooked the market today? Among others things, unemployment claims jumped. This is a sign unemployment is not likely to decline any time soon. Read also the post "Interesting comments by the Fed" shown below.

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

Technical patterns.

Financial stocks are down to a major support area (click on the chart to enlarge it).

Lt's hope they will not break below. It could signal a major market decline.

Time will tell, of course. For more information about our views on the markets, please go to http://www.peterdag.com/.

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

8/18/10

Who pays for all this?

It is becoming obvious...If you want a steady well paid job with generous benefits we have to work for the government or be in the armed forces.

My question. Who is going to work to generate the wealth to pay for all this?

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

More about bonds

“U.S. bonds may be just as vulnerable to a plunge as stocks were a decade ago, when the Internet bubble burst, according to Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist.

My view. People make it sound so complicated. Just read Chapter 9 of my book Profiting in Bull or Bear Markets.

A slowdown in economic activity is followed by lower inflation and lower bond yields.

A stronger economy is followed by higher inflation and higher bonds yields.

PS. I took off the comments feature of this blog because we were spammed by annoying advertising.

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

Interesting comments by the Fed

David Altig, Atlanta Fed economist, made these comments: How much of the current unemployment rate is really due to mismatch, as opposed to conditions that the Fed can readily ameliorate? The answer seems to be a lot. I mentioned that the relationship between unemployment and job openings was stable from December 2000 through June 2008. Were that stable relationship still in place today, and given the current job opening rate of 2.2 percent, we would have an unemployment rate of closer to 6.5 percent, not 9.5 percent. Most of the existing unemployment represents mismatch that is not readily amenable to monetary policy.

These ideas originated using the Beveridge curve, which charts the connection between job openings and unemployment.

My view. This is one reason why the Fed may not be easing further. If true, the main issue facing the country is education.

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

8/16/10

Technical patterns

It looks like the 1060 level for the S&P 500 is an important major crucial support level (click on the chart to enlarge it).

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

8/15/10

I work hard and....

The portfolios shown in The Peter Dag Portfolio have outperformed the S&P 500 over the past 6 months and 10 years according to The Hulbert Financial Digest, a service devoted to measuring the performance of investment publications.

Also, George Dagnino was ranked 2nd best market timer for the 12 and 6 month periods ending 07/30/10. (Source: Timer Digest, issue of 8/2/10).

We understand these difficult financial times and we have the recommendations that may help you. Just subscribe to The Peter Dag Portfolio to find out.

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

More on bonds

There is a lot of interest in bonds as yields decline and prices rise.

I found this article on bonds well written and informative. Bonds are a misunderstood asset class, but they can be very profitable during specific times of the business cycle.

I am proud of my discussion on bonds in Chapter 9 of my book Profiting in Bull or Bear Markets. It is the result of many years in managing large bond portfolios and derivatives.

Please click here to read the article.

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

8/14/10

Big Government? Read this.

Interesting and informative article. Is this legislation good for financial stability?

Let's hope so. Click here to read the article.

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

Bonds and business cycles

As you know, I am a big believer the business cycle drives the price of all assets -- even the price of money.

As I discuss in detail in my The Peter Dag Portfolio, bond yields decline following a slowdown of the economy.

This time is no different.

I know what you are thinking. And the US deficit? All the analysts who believed that the deficit would be bearish for bonds were painfully wrong.

Watch the business cycle. Bond yields decline and prices rise following a slowdown in the economy. Yields rise and prices decline following stronger growth in the business cycle.

It is that simple.

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

Interesting

Intriguing. Thought provoking. Disturbing. Mind boggling. Provocative. Fascinating. Worrisome.

Is this the direction the country is going to "redistribute income"? (Click on the chart to enlarge it).

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

8/13/10

Technical patterns

The banks index has broken on the downside an important support level (click on the chart to enlarge it).

Is this a harbinger of things to follow for the overall market?

Time will tell.

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

8/12/10

Thought of the day

Yes, things are going badly for the country. But should they? We will never know, unfortunately.

My sense, however, is that we have an administration --with a capable president and superb staff -- that had the idea since the beginning to change the social landscape of the country. Their assumption was that the economy would take care of itself.

In fact, this was not the case. Quite the opposite. The main focus, in my humble opinion, should have been to strengthen the economy first. Then, as we were creating wealth, redistribute it with equanimity among all of us.

A great country, a great power, a great army, great social programs are justified only if the economy is strong. I learned this simple concept in a marvellous book -- The Rise and Fall of Great Powers. The alternative is the fall of the great power submerged by corruption and by financial problems.

Have a good day.

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

8/11/10

Binary decisions are 50% right over the long-term

Double dip? Yes or no?

This is a binary decision which makes no sense. Has little or no value from an investment viewpoint. What is important is the trend of the economy.

Even the Fed is recognizing the economy is slowing down. This is an important input to your investment strategy if you believe that the business cycle drives the price of all asset classes.

This is also the kind of issues we discuss in
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

8/10/10

The decision of the Fed

News. The decision to reinvest proceeds from the more than $1.3 trillion in mortgage-related debt the Fed holds, an effort to keep market-set borrowing costs down, represents a significant policy shift for the Fed.

Just a few months ago, the central bank had been avidly debating an exit strategy from the extraordinary stimulus delivered during the financial crisis.

My point. The Fed eases when the economic times are the worst. This is usually a good time to buy stocks. Let's see if this time is different.

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

Technical patterns

Chart patterns can provide some useful insights on the action of the market.

The chart of the S&P 500 is showing that the 1120 level is a formidable resistance level (click on the chart to enlarge it).

The decisive break above 1120 may suggest stocks are headed much higher. Let's hope so.

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

8/9/10

This is crazy! But to be expected.

News from Business Insider. Some workers agree that unemployment benefits make them less likely to take whatever job comes along, particularly when those jobs don't pay much. Michael Hatchell, a 52-year-old mechanic in Lumberton, N.C., says he turned down more than a dozen offers during the 59 weeks he was unemployed, because they didn't pay more than the $450 a week he was collecting in benefits. One auto-parts store, he says, offered him $7.75 an hour, which amounts to only $310 a week for 40 hours.

"I was not going to put myself in a situation where I was making that small of a wage," says Mr. Hatchell. He has since found a better-paying job at a different auto-parts dealer.

My view. Excessive government intervention leads to market distortions. This is a classic case.

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

8/8/10

You do not have it? We will give it to you. Money of course.

News. By a 61-to-39 vote, the Senate passed a bill that would send the states $16.1 billion for Medicaid, the healthcare program for the poor, and $10 billion to prevent teacher layoffs. States could face total budget gaps this year of $120 billion.

My view. First they gave more than we could afford. Now we print money to cover past mistakes. Or, are they simply buying votes?

What happened to responsible government? I guess it is a sign I am getting too old. I finally see things that have always been in front of me. This is what happens in a democracy. It always did.

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

8/7/10

Observations

The dollar index lost 35.8% from 2002 to 2008. Some observers cherish this development because it helps our exports. One way to look at it, however, is that it makes everything we buy from other countries 35.8% more expensive, hurting businesses needing foreign technology.

A more complete way to look at the implications of changes in a currency is the following.

Any economy is the aggregate result of many industries. Make a list of all the industries and stack them from most productive to least competitive in the world markets. Draw a line dividing the two classes of industries. The trend of a currency tells you how many industries are above this line.

A declining currency suggests that most of the industries are below the line dividing competitive and noncompetitive industries. A country with a strong currency has the most important industries above this imaginary line.

A currency is weak because the trading partners of the weak currency country are buying the currency of the countries with competitive industries and selling the currency of the countries with noncompetitive ones. Reason? The products of the countries with the competitive industries offer more value.

Greece is like the “weak industry” of Europe. Companies would rather do business with Germany than Greece. Germany offers the products and services needed to remain competitive. Greece does not. Money flows away from Greece into Germany or France. Greek politicians focused on developing social programs that appealed to the population. They forgot however to encourage investments in the infrastructure needed to create the wealth to pay for the social programs.

The outcome is that Greece now does not have the money to pay for the debt. Is the problem going to be solved by bailing out the country? Certainly not, because Greece, like Italy, will find it very difficult to dismantle their social infrastructure. Some states in the USA have the same problems. It looks like the time has come to pay the piper.

(This Observations appeared in The Peter Dag Portfolio on 2/21/10)

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

8/6/10

The social issue

FT news and El-Erian. There is a real worrisome human dimension to all these indicators. More Americans are struggling to earn enough to maintain their standard of living. A significant portion of people who are unemployed have been for so long as to materially reduce the chance of getting a job any time soon. And the “crisis of middle class America,” as detailed by Edward Luce in last Saturday’s FT, will get worse.

My point. High unemployment may lead to social unrest. It may not happen in America. But it is happening in other countries.

These are issues far beyond healthcare, energy independence, Fannie and Freddie, and financial regulations.

Buying GM does not help. The rest of the country is in real trouble. We are facing something much more serious than "double dip". An unprecedented loss of purchasing power and income. For all of us.

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

Crazy! Really crazy!

"The US government is using taxpayer money to subsidize no-money-down mortgage loans in the aftermath of a recession that was preceded by a sharp increase in defaults on exactly this kind of loan, and that has led to this precipitous rise in negative equity."

Really crazy! We keep repeating the same mistakes. How can you trust what is going on in Washington.

Read this amazing article here.

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

8/5/10

What about the rest of us?

News. President Barack Obama will announce a $250 million loan guarantee today to finance Ford Motor Co. exports, as he defends his administration’s bailout of the U.S. auto industry, according to a White House statement.

Obama will tour an automobile factory in Chicago, where Dearborn, Michigan-based Ford, the only Big 3 U.S. automaker that didn’t take bailout money, will begin assembling the new 2011 Explorer later this year.

My reaction? This is good news for the unions (re: November elections) and Ford, and Michigan.

What about the rest of us? I get the feeling I am being left out. Just throwing around money to favor specific industries is the kind of industrial engineering has never worked (remember the 1970?). Could it work this time?

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

8/4/10

Technical patterns

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

The trend is up, as discussed in a previous blog.

There is a head and shoulder formation (inverse), which is very bullish.

The S&P 500 seems to be braking the resistance line on the upside.

Very interesting patterns. All bullish.

Of course, everything could unravel tomorrow. Investing, however, is a matter of odds.

A reminder. My market signals are published every Sunday in The Peter Dag Portfolio. New subscribers can access all previous issues -- absolutely free for the first month.

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

Thought of the day

I have been reporting how commodities have been closely correlated to stocks since 2002.

Even recently. They peaked in January and April. Bottomed in February and June. Exactly as the S&P500.

The good news is that commodities remain strong.

Let's hope these trends continue. More details in 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

8/3/10

Possible outcome

The economy is slowing down.
Inflation is steadily becoming deflation.
Unemployment is high.
Pension funds are deeply under-funded.
Business is becoming restless with Obama's policies.

What is the Fed to do? Simple...easing.

It might be good news for stocks.

Yes, time will tell.

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

Thank you Timer Digest

Following the debacle of 2007-2008 I decided to develop new indicators.

My new research seems to be bearing good results.

I was ranked 2nd best timer over the past 12 and 6 months, and third best timer over the past 3 months. Thank you Timer Digest.

My market signals are published every Sunday in The Peter Dag Portfolio. Just click here.

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

8/2/10

Dialogue in Annapolis. This is real. It's hurting.

GD (walking on the dock). Hi, Captain.
Captain. Hi.
GD. How's business.
Captain. Not good.
GD. There are no boats in the harbor. I remember when I had to come in at 2:00 pm to find a mooring.
Captain. Now is empty. Even up the creek. Only two boats. This is real. Obama ...

(PS. The Captain's job is to take tourists around the harbor on his boat.)

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

Interesting patterns

Trendlines are a useful tool. They help visualizing the important trends (click on the chart to enlarge it).

I like trendlines spanning about 3 months. They are the most useful in identifying the trend from a trading viewpoint. They can be misleading at times. So be careful.

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

8/1/10

Is bad news good news?

THE FLAT PERFORMANCE IS IMPRESSIVE -- So says Mike Santoli of Barrons. Despite persistent bad news the market seems to defy gravity. Santoli says that might be the most bullish sign of all.

My view. Bad news is good news for the market because the Fed will be forced to print even more money to save the economy and the under-funded state pension funds.

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

They cannot brag about it

A picture is worth a thousand words.

The bottom line is that the economy is expanding at below the historical average pace (click on the chart to enlarge it).

Can profits be strong over the long term if the economy is growing slowly?

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