9/30/11

Understanding the markets

  • Equities are declining.
  • Commodities - including gold, oil, agriculturals - are sagging.
  • Bonds are strong.
  • The economy is weak and weakening.
What is going on? Forget about Europe and the government deficit for a second. These markets are responding to basic cause-and-effect forces.

1. Our proprietary financial risk indicators are rising. They are important “leading” indicators of the economy. Their rising trend leads to a weaker economy. The economy will strengthen after several months of decline in our leading indicators.
2. The rise in financial risk and the prospect of lower earnings due to a weaker economy cause equity markets to decline. Stocks will rise when our financial risk indicators show a visible decline.
3. Commodities are declining because the economy is weakening. They will strengthen when the economy strengthens.
4. Bond yields are declining because the economy is weak. They will rise when the economy starts rowing at healthy and sustainable pace. This is the time when investors start worrying about inflation.

Our financial risk indicators are regularly featured in each issue of The Peter Dag Portfolio and in our weekly Market Update.

More details in my The Peter Dag Portfolio and my educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/29/11

For your info

US President Obama has given the Europeans a harsh lecture on the dangers of their ongoing debt crisis. Offended by the unsolicited advice, Europeans have suggested the US get its own house in order first. Obama's remarks were "arrogant" and "absurd," German commentators say on Wednesday. (Source:Der Spiegel).

Europe has a few bad, bankrupt states, so does America. We've got Illinois which is bigger than Greece, we've got California, we've got New York, you know those are pretty big states that have serious economic problems. We have pension plans in America that are terribly under water. - in CNBC. (Source: Jim Rogers)

More details in my The Peter Dag Portfolio and my educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/28/11

Finally. I have been saying this for years.

"The reason this [European]crisis keeps grinding ever deeper is because the euro itself is a machine for perpetual destruction. The currency is fundamentally warped and misaligned.

It spans a 30pc gap in competitiveness between North and South. Intra-EMU current account deficits have become vast, chronic, and corrosive. Monetary Union is inherently poisonous.” (Source: The Telegraph)


I have bee saying this for years since the union was formed. I am glad to see someone agreeing with me (and Milton Friedman).

The main issue is productivity differential between the countries. We have the same thing here in the USA, but to a much lesser degree.

More details in my The Peter Dag Portfolio and my educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

It is just ridiculous

U.S. stocks declined, halting a three-day rally for the Standard & Poor’s 500 Index, amid growing concern that European leaders are divided over how to handle Greece’s debt crisis. (Source: Bloomberg)

Yesterday the market soared because of allegedly good news about the European crisis.

Today everything slumped because of concerns about the European crisis.

My advice? Look at the big picture and keep in mind my financial risk indicators.

More details in my The Peter Dag Portfolio and my educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

Technical patterns

My guess is that if the S&P 500 does not move decisively above 1180, the trend has changed to down. 1220 also remains a major hurdle.

Meanwhile, as of this writing, commodities of all types - including gold - are tumbling. Is deflation again on the plate?

Very interesting times. In all this mess, our financial risk indicators remain our most important guide.

More details in my The Peter Dag Portfolio and my educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

The problem facing us

The problem is quite simple. Please click on the chart to enlarge it. You see two lines. One represents government expenditures and the other is government receipts.

The two lines keep diverging. How long will we be able to stand this divergence? We are definitely in uncharted waters.

More details in my The Peter Dag Portfolio and my educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/27/11

Be careful

These markets are crazy. Absolutely crazy.

They started strong. Very strong, up more than 2%. They began sliding after 3:00pm et. Still up 1%.

How can you trust them. I am very careful. High volatility is a sign of risk.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

About diversification

All asset classes are moving in the same direction - up or down.

Today equities are soaring. So are commodities.

What to do? Investment strategy using the business cycle.

More details in my The Peter Dag Portfolio and my educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/26/11

Late night thought about the black swan

There is no doubt we are living in exceptional times.

Risk is high and rising.

Yet, gold and silver and GDX are sinking.

Does this mean the crisis is so unique that no asset class will survive the final crash? A really scary thought. A black swan.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

The problem with Europe

Two main problems.

1. Totally different cultures put together. You have to be a European to appreciate this one. Greeks or Italians or Spaniards and German together? Forget it!

2. Europe has been made by politicians. They created the complex bureaucracy with non-elected people. They achieved power without being voted to the position. The concept is simply embarrassing. And the Europeans accept it. Why? Because they do not care!


George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

The force of the markets

Commodities are sinking because the global economy is weakening - rapidly (click on the chart to enlarge it).

Gold is not a safe haven, as they would like you to believe. Gold is sinking because is a metal -- and metals and all other commodities are declining because of lack of demand due to the recession gripping the world.

For more details subscribe to The Peter Dag Portfolio and review the free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/25/11

To my subscribers

“German and French authorities have begun work on a three-pronged strategy behind the scenes amid escalating fears that the eurozone’s sovereign debt crisis is spiralling out of control.

As quid pro quo for an enhanced bail-out, the Germans are understood to be demanding a managed default by Greece but for the country to remain within the eurozone. Under the plan, private sector creditors would bear a loss of as much as 50pc – more than double the 21pc proposal currently on the table. A new bail-out programme would then be devised for Greece.” (Source: the Telegraph)


This is the reason my financial risk indicators are rising. Europe is planning for an orderly default of Greece and making sure it is not contagious.

Good luck! You know what I have been suggesting you should do for the past several months.

For more details subscribe to The Peter Dag Portfolio and review the free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

About international investing.

Global stocks officially entered a bear market this week as the benchmark MSCI World Index fell more than 20 percent from its most recent high in May.

A survey of Chinese purchasing managers, just completed by HSBC and Markit Economics, shows a third consecutive month of contraction in the manufacturing sector. The release of the survey results on Thursday contributed to a global slide in stock markets that day. Source: CNBC)


This proves - one more time - that global economies and global markets move in perfect synchronization.

It is not a good idea to think that making investment in overseas markets reduces risk. You only buy volatility.

All markets and economies move in the same direction. And all markets are sinking right now because financial risk has been rising - relentlessly.

For more details subscribe to The Peter Dag Portfolio and review the free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

About industrial policy

Several issues cry out for investigation: Did government officials rush to approve a $535 million loan guarantee to the company two years ago? Did company officers paint an overly rosy picture of Solyndra’s finances after trouble set in? Why, earlier this year, did the Energy Department agree to let private investors get their money back from Solyndra before taxpayers did? (Source: Bloomberg)

This is another case proving the point that indutrial policy causes corruption. Let the markets decide what is best for us. Apple did not have government subsidies to deliver its products.

We like to think that governemnts create jobs. We forget about the consequences of having a large government run by bureaucrats who do not have any idea of how business is run.

Large governments nurture corruption and waste. We need governments that set fair rules of the game and enforce the rules. Not a government that subsidizes most aspects of our lives and in some cases sets regulations to protect targeted sectors of the economy.

The outcome is deteriorating productivity of the country, slower growth, and high unemployment.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/23/11

The power of the markets

“There is a monstrously large amount of uncertainty and a massive range of possibilities,” said David Mackie, chief European economist at JPMorgan Chase & Co. in London. “A macroeconomic disaster could be averted but only by aggressive policy action” by central banks and governments, he said. (Source: Bloomberg)

My view? The markets will eventually win. The markets will force us to do the right things, the things we should do right now. That we should have been doing in the past several years.

We will be forced to improve our fiscal situation. We will be forced to fix Medicare. We will be forced to fix Social Security. The outlandish pension programs.

There is going to be a point when the markets tell the US and European politicians that there is no more money to be borrowed. That the only way is to pay for the programs we need only if we can afford them.

When the USSR was at Italy's doors, we knew that the way to survive if the Russian came was to take difficult, hard, and complex university programs. To become specialists. Very skilled technical people. And those who did it were always in demand and lived well.

There will be a point when our youth will recognize this truth.

The markets will force us to do the right things. Not the politicians.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

Do you believe it is possible?

Group of 20 finance chiefs pledged to address rising risks to the global economy and pushed Europe to contain its sovereign debt crisis after concern the world is on the brink of another recession sent stocks tumbling.

Policy makers are “committed to a strong and coordinated international response to address the renewed challenges facing the global economy,” G-20 finance ministers and central bank governors said in a statement late yesterday in Washington. Many urged Europe to implement a July promise to expand the powers of a rescue fund, Japanese Finance Minister Jun Azumi said. (Source: Bloomberg)


They do not have a clue of what is going on, what the problems are, and the solutions needed.

They are a bunch of incompetent bureaucrats who were at the helm when the global financial crisis initiated.

They did not see it coming. Let alone solve it. But they are experts in setting up meetings in nice cities and publishing communiqués.

The markets will win and will force the solution in spite of their efforts. What we have to do is to find out how to survive and benefit from the mess we are in.

More on The Peter Dag Portfolio.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/22/11

The lesson of the day

The business cycle works.

If you check my videos you will learn that when the economy slows down commodities decline. It is this simple.

It does not matter if these commodities are metals, agriculturals, or even gold. Above all, beware of those commodities that seem to go their own way -- like gold.

Gold is sinking, catching up with the rest of the commodity complex.

For more details check our educational videos on our website www.peterdag.com

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/21/11

To my subscribers

I just updated my proprietary financial risk indicator with the latest data.

It moved even higher. You know the implications.

More details in the next issue of The Peter Dag Portfolio. Should you too become a subcriber?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

Observations

About trade tariffs. The US has increased tariffs up to 30% on most imported steel. Europe, Japan, and Korea will bear the largest part of the brunt of these restrictions. The decision is designed to help the country’s ailing steel industry (shareholders and workers).

International public opinion has been reacting quite loudly. The EU is protesting because it is an obvious move to erect trade barriers against world producers. This act of protectionism happens at a time when public opinion shows concerns about the benefits of globalization.

A trade war with the EU could become an issue. Will the Europeans slap punitive sanctions against the US? Probably not or they will be minimal because US tariffs will be phased out in 3 years.

What is really obvious is the lack of understanding of the damage protective tariffs cause to local producers and consumers.

Several years ago I was at a meeting of industrialists in Washington where I spoke on the business cycle and its impact on business decisions. The keynote speaker was a well-known senator with presidential aspirations. His message was that the time had come to narrow the trade deficit to protect the future of our children, our workers, and our industries. It was time to impose stiff tariffs, he concluded, hoping to get a rousing applause.

To my surprise, the audience was vehemently opposed to the senator’s ideas. Some said: “If you impose tariffs on machines from Germany, I cannot manufacture parts with the strict tolerances required by my customers.” Others voiced: “If you increase the cost of steel, I have to raise prices to absorb higher costs. Consumers will suffer and my profits will shrink.” Some added: “If you increase the cost and content of local materials, projects that were profitable at lower prices may not be profitable anymore. You are forcing me to cut my investments.” Finally, one said: “If you increase my costs, I have to cut workers.”

The senator was surprised and baffled by the lack of support for his proposal. He realized, by listening to these remarks, that protectionism does not work and does more harm than good.

It may be true that over the near term it protects workers and some industries. The higher productivity sector of the economy, however, will have to carry the brunt of the inefficiencies of the protected industries. Meanwhile higher prices and shoddier products will penalize consumers.

Protectionism does not work, as clearly voiced by the businessmen at the meeting in Washington.

(This Observations appeared in the 3/22/02 issue of The Peter Dag Portfolio).

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/20/11

Did you notice....?

The market started rising again the week of 9/19. What was happening then?

Yes, you guessed it - there was a full moon.

I know, it sounds crazy. I was anchored in the bay of St. Michaels, MD. I was watching the moon rising - a full moon. Then I thought, as I was drinking my evening scotch, it was going to be good news for the market the next day. And it was.

Crazy! But more often than not it is true.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

It is time to pay the piper

Two Italian consumer groups said they will sue Standard & Poor’s after it lowered the nation’s creditworthiness, the latest challenge to the rating companies amid a mounting public backlash.

S&P cut Italy’s credit rating last night to A from A+, with a negative outlook, on concern that weakening economic growth and a “fragile” government mean that the nation won’t be able to reduce the euro-region’s second-largest debt burden. S&P last downgraded Italy in 2006. (Source: Bloomberg)


Carissimi amici italiani, non si puo' mangiare la torta e allo stesso tempo conservarla per il futuro - come si dice qui in America. Non si puo' spendere se non si produce la ricchezza per ripagare i debiti.

My dear Italian friends, you cannot have your cake and eat it too. You have to produce the wealth to repay the loans.

I know how you think. Like the unions at GM in the past decades. Who cares. Someone will pay the bill. Well, the time has come to pay the bill. And guess what? We do not have the money.

It is time to pay the piper. Everybody.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/19/11

INTERESTING DEBATE

Tough times in China

China’s stocks fell to a 14-month low after Premier Wen Jiabao said the government will take measures to control inflation and investors speculated pending initial public offerings will sap demand for existing equities. (Source: Bloomberg)

It is difficult to become an industrialized country. China is facing a sharp slowdown, according to their equity market. Wealth will be achieved slowly and painfully -- not as rapidly as most analysts expect.

The business cycle has laws that cannot be repealed -- even for China.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/18/11

The business cycle and your investment strategy

Yes, the business cycle works as a tool to develop informed investment strategies.

The most important idea is that the business cycle helps investors to manage investment risk.

How? I have been writing for months the US and global economies were slowing down. If you review my videos on www.peterdag.com (they are absolutely free) you will learn that an economic slowdown is invariably followed by weak commodity prices. Exactly as it has been happening since the beginning of the year. (Click on the chart to enlarge it).

It makes sense to think that if commodity prices are weak so are commodity-sensitive stocks.

What to do with your money then? If you review my videos on www.peterdag.com you will also learn that when the economy is weak income producing assets -- such as bonds -- are attractive.

In other words, you manage risk by investing in assets with the highest probability of safe returns by using the business cycle as a guide.

More in each issue of The Peter Dag Portfolio. Why not subscribe now?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/17/11

We lost our credibility with our allies on how to run an economy.

European finance ministers ruled out efforts to spur the faltering economy and showed no signs of taking up a proposal by U.S. Treasury Secretary Timothy Geithnerto increase the firepower of the debt crisis rescue fund.

Austrian Finance Minister Maria Fekter found it “peculiar” to be lectured by the U.S., a country with higher aggregate debt than the euro area. (Source: Bloomberg)


George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/11/11

Latest news

After almost two years of fighting to contain the region’s debt crisis and providing the biggest share of three European bailouts, German Chancellor Angela Merkel is laying the groundwork for what markets say is almost a sure thing: a Greek default. (Source: Bloomberg)

Our financial risk indicators were warning us that credit risk was rising. Shouldn't you too subscribe to The Peter Dag Portfolio?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

About government investments

The political scandal over the failure of Solyndra, the politically connected solar-panel maker, just got a lot more interesting. The FBI raided the company's Fremont, California offices yesterday and executed a search warrant.

Congress has been investigating the company, which received a $535 million government loan guarantee in March 2009 and announced August 31 that it is filing for bankruptcy. Yesterday's FBI raid is the first hint of a larger government probe, which is being conducted in cooperation with the Department of Energy's Inspector General. The FBI declined to comment. A Solyndra spokesman said it was surprised by the raid ... (Source: WSJ)


From "Calafia Beach Pundit":

Industrial policy (of all kinds) is about the only sure way to ensure that taxpayer's money is wasted....... I believe strongly that any good idea worth its salt will have no trouble locating funding. As the late Jude Wanniski often argued, the supply of capital in the world is virtually unlimited if you have a good and profitable idea. Governments should never play the role of venture capitalist.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

They know it

(Reuters) - French Foreign Minister Alain Juppe said on Sunday he believed the Chinese currency was undervalued and would raise the issue when he visits Beijing shortly.

Yes, they know it. We know it. But we all need a cheap RMB so we can buy all that cheap stuff from China.

And they use all the money they get to industrialize and catch up with the rest of the world.

As long as the cheap RMB does not create excessive inflation, Chinese leaders will continue the keep the RMB down. They have too much poverty and too much unused labor to change.

It is up to us to become more efficient and beat them at their own game.

The markets always win.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/9/11

This is what the world thinks of us.

The events of Sept. 11, 2001 led to a wave of solidarity with the US. But the superpower has lost that goodwill over the course of the wars it subsequently waged. Now America is mainly seen not as the victim of terrorism, but as a perpetrator of violence itself. (Source: Der Spiegel)

Wow!

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

Interesting day

The markets have spoken. The reaction to the Obama's plan has been quite clear.

Stocks plunged across the board - down 2.7%.
All asset classes declined. Including GDX - gold miners - down 1.25%.
Gold slightly up.
Big winner - corporate bonds (LQD - up 0.11%.
Commodities weak - down 1.58%.
Even the much touted DBA (agriculturals) - down 0.84%.

The message? High credit risk. Recession probability increasing. Possible deflation.

Let's hope the markets turn around soon.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

Thought of the day

Concentration of power (government, energy, educational institutions, farmers,....) is the main reason for lack of growth in any country at any time in history.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/8/11

To our subscribers

Our site is down. They are trying to fix the problem.

However, I wanted to let you know that our financial risk indicator keeps rising.

You know what it means and the implications for the equity market.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/7/11

Technical patterns

1225-1250 could be a major resistance range. Something to look at very carefully and see what happens when the S&P 500 moves close to these levels.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

From someone who lived in an olive country for many years

Northern Europeans go to Greece, Italy, Spain, Portugal to have fun. To relax. To unwind. To enjoy the warmth and nonchalance of the people. To forget about business. To regain perspective of what is the real meaning of life. The beaches. The sun. The tanned bodies. (Click on the picture to enlarge it).

It is much more likely that the northern European countries adapt to the work ethics of the Mediterranean countries than the other way around.

For this reason if the Euro survives it will have to devalue. And devalue. And devalue.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/6/11

Economic strength in Europe

Click onthe chart to enlarge it.

Thought of the day

Do not try to pick the bottom.

Wait. Look. Think. Be patient. Watch carefully. Let the dust settle. Wait for the uptrend to become visible. A few weeks. Not a few minutes.

Volatile markets are telling us to be prudent. What is happening is setting the stage for a great buy oppportunity when our proprietary financial risk indicators start declining.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/5/11

The collapse of Europe

Berlin Lays Groundwork for a Two-Speed Europe

Chancellor Angela Merkel has always rejected a two-track Europe. But with the euro crisis persisting, Berlin is now considering far-reaching new powers for the Euro Group -- to the detriment of the European Commission. (Source: Der Spiegel)

I knew it. I have been writing about it.

Europe cannot work the way it is. They cannot put together the Italians and the Greeks with the Germans and the Dutch. Two different cultures. Two different work ethics. The system has to crumble. And it is crumbling!

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/4/11

Markets update

Euro very weak.
Commodities weak.
Asian stocks tanking.

Is Europe in the process of unravelling the big and unrealistic nonsense called Euro?

Is it going to be a positive development for the global economy?

The answer might be yes because the markets find always the optimum answer.

Let's see what happens.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

Observations

About rich and poor.

What is going on around the world bothers me. Deeply. Especially our role as a super-power.

It reminds me of what happened in Italy in the 20 years after WWII. Europe was in the process of rebuilding the industries and infrastructures totally shattered by the war.

As the people were waiting for better times ahead, optimistically promised by the class in power, jobs were hard to find. Wealth was concentrated (so, what’s new, you might say) close to the top of the political body.

The idea that communism was the answer, and the Soviet Union was the workers’ paradise was sold to the Italians and most Europeans. Even on this side of the pond there were people believing in the Russian miracle.

Why did communism gain so much success in Western Europe? Because people did not see any light at the end of the tunnel. They were frustrated by the corruption and wealth in the hands of the very few. I remember asking people why they were voting for the communist party. Their answer was an unequivocal: “What do we have to lose!”

Poverty is a desperate state for any human being. And desperation drives individuals to desperate acts. Those of us who have never seen poverty call those acts “insane” manifestations.

In the issue of 10-15-01 I gave you the sad documentation of how poor the Islamic world is. What is happening there reminds me of why people voted for the communist party in Italy. They do not have anything to lose. The sheiks, kings, dictators, and their acolytes are wealthy. The populace, however, is poor and is easily convinced to do insane acts. They are being brainwashed that we are guilty for their miseries.

As discussed by the Financial Times, however, a report sponsored by the Council on Foreign Relations shows that the Arab economies lack freedom and have an overwhelming public sector. (This confirms my beliefs about political systems. Please see my report Political Systems on our website www.peterdag.com under Understanding the Markets.)

Corruption, public sector monopolies, red tape, contract enforcement and equity foreign ownership limitations, taxes that reach 175% of sales, lack of skilled labor, governments that want to deal only with nationals, and very weak or non-existent capital markets are just some of the issues faced by the area.

I condemn terrorism. If we want, however, to deal with it we must understand what drives these desperate people. They do not have a better option than blowing themselves up against human targets. Their families and friends see them as patriots and freedom fighters, not as criminals.

Mr. Sharon’s proposal of establishing “security buffer zones” is being questioned by the Israeli press, as the economy sinks in a deep recession. Industrial production is down 9.7% in Israel, one of the worst declines in the world. Building another iron curtain is not the answer. This is the reason why Mr. Sharon’s speech did not generate the enthusiasm he expected.

These issues are not going to be resolved by force. The “Axis of evil” image triggers emotions. Frankly, however, I cannot see the US roaming around the Islamic world and toppling one government after another. The world opinion will not stand still.

These issues can only be solved through diplomacy, economic initiatives, incentives based on economic performance, and a deep understanding that we are dealing with desperate people, highly centralized economic and political systems, and that desperate people do not have anything to lose.

(This Observations appeared in the 3/8/02 issue of The Peter Dag Portfolio)

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/3/11

About creating jobs

I went to Barnes & Noble today to get a cup of coffee and meet my friends. I was glad to hear that Richard's heart surgery went well. His son kept us up to date on his health.

Mrs X was also there with her husband. This time her daughter came along. A nice and pretty young lady of 25. She is a chemical engineer.

I asked her about the job market. She had a job one year before graduation. This is what we need, people like you - I told her.

Mr. Obama, this is the kind of people that make our country grow. This is the way to cut unemployment. Mr. Obama we need to incentivize young men and women to study and acquire the skills the country needs.

Extending unemployment claims benefits does not do the job. You have to combine help with sacrifice. Make people study. Make them understand that if they do not acquire hard-to-learn skills they will reman derelicts on food stamps for the rest of their life.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/2/11

Where are we going? Does anyone in Washington know?

No jobs created in August.

This is the real reason consumer confidence is tanking.

I get the feeling no one in Washington knows what to do. Hopefully someone will emerge with good ideas and a credible strategy accepted by the country on how to get out of the mess we are in.

This latest development has major implications for the investment strategy we should follow. More details in The Peter Dag Portfolio.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.

9/1/11

Larn how interest rates are related to the business cycle



This video is the first basic step to learn how to profit from investing in bonds.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year 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.