Peter Dag & Friends: January 2012

1/31/12

Thoughts about investing

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

Markets seasonality

The lesson from Greece

(Bloomberg) - Euro leaders left a Brussels summit late yesterday with no accord over how to plug Greece’s widening budget hole and German Chancellor Angela Merkel voicing frustration with the Athens government’s failure to carry out an economic makeover.

The main lesson is that it is very difficult to take away from the people what the government gave in the past.

It is a lesson for us as well. Countries rather sink than be saved with "austerity" programs.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/30/12

It happens to people too.

(The Guardian) - Greece has reacted furiously to a German proposal that budget commissioner is installed to ensure the Hellenic Republic spends it €130 billion bailout wisely.

Greek finance minister Evangelo Venizelos vehemently rejected the plan, revealed by the Financial Times, saying it left the country with the choice of ‘financial assistance’ and ‘national dignity’.

The Greeks are upset that Germany is so demanding. They remember, perhaps, WWII.

But what happens between Germany and Greece happens also to all of us.

Those people who study, apply themselves, work hard, and try to constantly improve achieve more wealth. They are likely to buy the assets of those of us that forgot that hard work is a major ingredients to achieve wealth.

The "wealthy" are now buying the foreclosed assets of those who did not think ahead. Like Greece. Productivity differential drives wealth differential among countries and among people.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/29/12

We keep kicking the can

(Der Spiegel) - It's German Chancellor Angela Merkel's pet project -- a new European Union fiscal pact to ensure members' budgetary discipline through stricter controls. But European legal experts have doubts about its viability, while critics say there are more important issues at hand.

Behind financial crises there are budget deficits. Behind budget deficits there are trade deficits. Behind trade deficits there is poor productivity growth. Behind poor productivity growth there are large and intrusive governments. Behind large governments there are powerful power groups and weak leaders.

It is a tragedy! A serious one.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/28/12

Food for thought

(Source: Hoisington Quarterly Review and Outlook). Studies suggest the government expenditure multiplier is zero to slightly negative. Increased deficit spending does appear to provide a modest lift to GDP for three to five quarters, depending upon the initial conditions of the economy. However, following this small, transitory gain, deficit spending actually retards GDP growth and the economy returns to its starting point at the end of about twelve quarters.

....the Trustees of Social Security and Medicare have calculated that the present value of unfunded liabilities of these two programs totals $59.1 trillion. Additionally, there have been tabulations that all federal government liabilities, including those of Medicaid, veterans and other defense obligations, pension liabilities of government employees, and additional federal programs total $200 trillion at present cost.

...Gerald P. O'Driscoll Jr. of the Cato Institute and a former Dallas Fed Vice President said the Federal Reserve is engaged in a bailout of European banks under the guise of what the Fed terms "a temporary U.S. dollar liquidity swap arrangement." Dr. O'Driscoll indicates the Fed and ECB are engaged in this roundabout transaction since each needs a "fig leaf" because the Fed does not want it known that the Fed's balance sheet is being made available to foreign banks.

All this is conducive to very slow growth in the coming years. It is essential to have these type of input in your investment plans and strategies.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/27/12

More about big governments

(Bloomberg) - Fitch Ratings cut the credit ratings of Italy, Spain and three other euro-area countries, saying they lack financing flexibility in the face of the regional debt crisis.

Italy, the euro area’s third-largest economy, was cut two levels to A- from A+. The rating on Spain was also lowered two notches, to A from AA-. Ratings on Belgium, Slovenian and Cyprus were also lowered, while Ireland’s rating was maintained.

This is what happens to countries that believe government should protect special industries/interests and think they have all the solutions.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

The real European issue

I have been writing at least since 2003 that the difference in productivity among the European countries is the main reason for the failure of their union.

This chart (click on the chart to enlarge it) shows the difference in unit labor costs (labor costs adjusted for the productivity of each country) of several European countries (Source: Macronomics). The countries in trouble have high unit labor costs.

High unit labor costs reflect low productivity. Which translates into trade deficits. Which translates into financial problems for the country. The same analysis, by the way, applies to the states in the US and the US as a country in the world economy. The size of the problems of any country/state depends on its level of productivity.

Again, the European problems derive from the huge productivity differentials between countries. No central bank in this world can fix this problem.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/26/12

Thought of the day

The only way to replenish depleted pension funds, to solve the problems of failing banks and the intellectual corruption of political policies is to print money.

Print, print, print.

Stocks are soaring. Volatility is declining, confirming the decline in financial risk.

And the small savers are being punished with zero percent return on their savings.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/25/12

I am not convinced.

By keeping interest rates at zero percent the Fed is trying to revive the economy by helping the profitability of the banking system (carry trade).

But what happened to the class of people Mr. Obama wants to help? All of us need income. Do interest rates close to zero really help the "working class".

If people do not have a job, they really do not care that interest rates are zero percent. They need income.

What is the trade off? It looks like the priority is to help the banks. Is this the right policy?

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

Technical patterns

From 1125 in October the S&P 500 rose to 1314 yesterday.

What caught my attention has been the trading range from early 2011 to August 2011. The market traded for many months between 1275 and 1350. This range may represent major resistance. In other words, stocks will have to do a lot of "work" before moving above it.

No one really knows. But it is an interesting pattern to keep in mind in the next few months.

Our technical and financial risk indicators will tell us which way stocks will break.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/24/12

Interesting pattern

It is a wild thought, but...

It looks like the bond vigilantes have been going after the bonds of countries with deteriorating debt situation. Even Germany has not been immune.

Could it be -- could it be -- that they are going to come to the USA? If so yields may be going up quite a bit. They already seem to have bottomed. Could it be due to seasonality (see previous post) or something more fundamental?

Of course, TBF will benefit from this.

This is not a recommendation, of course. But my subscribers know what I think about this.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/23/12

Seasonality

Long stocks.
Short bonds.
Long commodities.
Long gold.

See my videos on seasonality on YouYube and here.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/21/12

Observations

I spend my day analyzing markets. Looking at hundreds of graphs. Trying to identify relationships between financial and economic variables. It is a lot of fun. However, it is exhausting.

Several years ago, as an escape from my world, I began to look at how the mind controls the body. I discovered Qigong. The next step was to read about Zen. Then Taoism, Confucianism, and Buddhism. I found myself deep into the world of philosophy.

Such books as “God” by A. Waugh and “A History of God” by K. Armstrong gave me a sense of history on how the idea of God evolved through time. They explain the role of philosophers in shaping our understanding of the world and our thought process.

“Sophie’s World” by J. Gaarder is the history of philosophy in a novel form. It is easy to read. It gives a review of the main philosophers since the Greek thinkers.

The bibliography of these books is a good source of new readings and new areas of investigation. It took thousands of years for us to think about the world the way we do now. Thinking has evolved.

When I go to Rome I buy several philosophy books (in Italian, of course) that are known to be controversial because they provide a different perspective on what we believe. Bertrand Russell is clearly one of them.

Now I am reading Nietzsche. The book is “The Anti-Christ”. It is written in a violent style. Nietzsche strongly disapproves how the church is giving hope to the poor by convincing them they will enter God’s Kingdom. This is a lie, according to him, because no one has ever seen this so-called kingdom. The church should give them the tools to fight reality and improve their status instead of subjugating them using the concept of sin, according to Nietzsche.

I like to talk about all these ideas with my friend SNS. He listens. He smiles. “It’s all mythology,” he concludes, sipping a cup of tea.

(This Observations appeared in the 3/10/2003 issue of The Peyer Dag Portfolio)

George Dagnino, PhD

1/20/12

A step in the right direction

Jan. 20 (Bloomberg) -- Prime Minister Mario Monti's Cabinet will pass a plan today designed to boost competition and spur economic growth by targeting Italian professional guilds, many of which date to the Fascist era.

I have always said in my talks that the main problem in Italy is the guilds. The concept that you cannot start a pharmacy within a 10 mile radius from another. That you have to pass a government test to have the permit to start one, which eventually is given to "special families".

Newspapers can only be sold by approved newsstands. Lawyers, notaries, journalists, ....have all their turf. Taxis have their own restricted club. I could not have never started The Peter Dag Portfolio in Italy because of the incredible requirements. People cannot do anything without paying taxes, permits, long bureaucratic processes.

What is interesting is that, as for GM, problems are tackled only when the crisis is so dire that something has to be done.

The lesson is that the politicians will do something about our problems here in the US only when they recognize the eye of the storm. Nothing will be done until then.

The other important lesson is that socialism, protectionism and class warfare lead to disaster. The western world is failing not because capitalism is failing. The western world is failing because it has embraced too many socialist ideas that only Karl Marx would have approved.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/19/12

Germany is crushing Europe

(Der Spiegel) - "If this strong movement towards discipline and stability is not recognized as taking place, and a certain approach to financial aspects does not gradually evolve, then there will be a powerful backlash in the countries which are being submitted to a huge effort of discipline," Monti told the paper.

The politicians are beginning to be scared by their own actions. They understand they made major mistakes and people are likely to revolt.

It is so tragic to see what is happening to Europe. In the name of what? When will the Europeans realize that the socialist dreams of a group of bureaucrats is destroying their future?

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

Thoughts for intelligent investing

1/18/12

Print, print, print

(Bloomberg) - European stocks rose, erasing their earlier losses, as the International Monetary Fund was said to propose a $1 trillion expansion of its lending resources. Asian shares and U.S. index futures advanced.

This is the real reason the global markets are rising. Central banks are determined to save the Euro. They will keep printing money to create "wealth" through equity appreciation and increased inflation. But declining bond yields in the "safe" countries and weak commodities are saying they are not succeeding.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/16/12

Profit from markets' seasonality

1/14/12

The markets this week

1/13/12

So?

(Bloomberg)U.S. stocks fell, snapping a four- day rally for the Standard & Poor’s 500 Index, on a report that several euro-region countries may face credit downgrades by S&P.

Why should we be surprised? What's new? Actually, financial stress is visibly improving in Europe according to our indicators.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/12/12

Momentum, moving averages, and sector rotation

1/11/12

Observation

. Since Mr. Bush has been elected president we have had unprecedented turbulence in world affairs.
• Russia and China feel strongly that the issues between US and N. Korea should not be dealt with in the UN. They should be resolved diplomatically.
• Germany, France, Russia, and China (among the major countries) object to our going to war against Iraq.
• War protests around the world are mushrooming.
• NATO has finally agreed to protect Turkey in case of war. France did not agree. Germany is reluctant.
• Bin Laden is still at large and is broadcasting hate messages against us.
• We supported Saddam Hussein and bin Laden on previous occasions.
• We are clearly against the Iranian regime.
• We are clearly not liked by the Arab world.
• We continue to ignore the massacre, on both sides, that is going on between Israel and Palestinians.
• We need to answer why the Arab countries hate us so much. Only then will we be able to establish friendly and sound relations with them.
• Europe, China, Russia, and the Arab countries are a fairly large part of the world. We succeeded in alienating them. Why?
• Outcome No 1: The world economy is slowing down as the ECB lowers the forecast for Europe in 2003.
• Outcome No 2.: The US economy, after a brief awakening in 2002, is falling in a Japanese type of coma.
• We were playing the war against terrorism so well. What happened to it?
• We are succeeding in isolating ourselves.

(This Observations appeared in the issue of 2/24/2003 of The Peter Dag Portfolio)

1/9/12

About Europe

1/8/12

Classic pattern

Tonight the stock futures are weak.
Commodities are weak.
Bonds (Treasuries) are strong.

This is a classic pattern - near term and long term.

If tomorrow the market is strong we are likley to see weak bonds and strong commodities.

Did you notice the full moon?

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/7/12

Povera Italia! Poveri Italiani!

(ZeroHedge) - Events in Italy must be watched closely. The country that gifted Fascism to the world in the 1930s was widely admired even by FDR, who held Mussolini in high regard and was no doubt inspired in many of his own policy choices. Will Italy lead the way once more, as politicians in Europe and the US watch to see what oppressive policies they may get away with? And while Russell Napier (correctly) foresees capital controls being imposed and suggested that one parks his cash in Singapore dollars, Italians may want to get themselves out as well before the current group of Professors slams the gates shut. Things are moving even faster than one of the world’s leading financial historians could foresee.

Throughout the centuries, after the end of the Renaissance, the Italians had to endure occupations of all types – Austrians, French, Spanish, the Church, Germans, English and Americans. Everybody sucked the blood of Italy. Everybody.

The Italians have become numb to these historical events. There is nothing they can do. Someone invented the Euro. And they went along. Now they are being raped again. They are accepting a situation which seems to come out of the middle ages and wartime. When people escaped and tried to save their money. (I did something similar in the early 1960s).

They will survive. They will go underground. The government will nationalize everything. They already own a big chunk of the country. Remnant of the fascist era. The rest is owned by the big Northern Italian capital.

In the 1960s the government nationalized an ice-cream maker so they did not have to fire anyone. The workers became government employees. Italy will become a command economy. In the name of what? Why? And the Italians are accepting all this.

They are tired of the weight of history. They will survive again.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/6/12

A strange day

Strength in technology, consumer cyclicals, health care, commodities. Everything else down.

Bonds firm in spite of commodities going up.

Volatility sharply lower. It suggests confidence. As I said, a strange day.

The really good news is that next week we will have full moon. Will the market start rallying again?

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

Early morning trends

(Reuters) - Stock index futures pointed to a higher open for equities on Wall Street on Friday, with futures for the S&P 500, for the Dow Jones and for the Nasdaq 100 rising 0.2-0.4 percent.

The financial markets seem to be stabilizing. The good news is also the downtrend of volatility. It is usually a good sign.

Commodities are firm and gold is up.

Yields on Italian bonds moved higher to 7.147% this morning. European markets are firm. Did they give up on Italy?

German bond yields are also moving higher. I find this interesting. Does it mean that more stable conditions will bring higher yields? Can we make money out of it?

Or, is this due to seasonality? Did you know that the seasonality of bond yields is up from December to May? In other words, it is very unlikely yields decline during such times. I found this out when many many years ago I was managing a portfolio of $4 billion of interest rates derivatives.

Interesting trends. Markets are really exciting!

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/5/12

Thought of the day

Picking stocks or investments is not the important feature in investing your money.

The most important and crucial feature is the process you use in managing your money. How you manage the performance of your portfolio.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

Technical patterns

1275 seems a formidable resistance level.

The S&P 500 tried to move above it in November and December. But it failed.

This is also the level the market broke sharply on the downside in July-August.

My sense is that it will take high volume and much stronger commodities to move stocks up from the current position.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/4/12

Off-the-cuff

Where will the money to save Europe come from?

The ECB, of course.

What if the ECB forces private investors to pay some of the bill? Where will they find the money?

What if they start selling the Treasuries they accumulated during the 2008-2009 crisis?

Will yields on Treasuries rise? How can you profit from this scenario?

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

Enjoy the elegance of this sailboat

George

About bonds

As I look at the financial channel, one theme comes screaming at me.

There is a huge debt to be refinanced by nations - Europe and USA. They are trying to rebuild their finances, to pay the bills, to pay all the promises they made to the people and to themselves.

It is a continuous barrage of issuance of bonds -- billions and billions.

Now, why do I say this? Because it is unfathomable not to think that all this issuance does not have any impact on yields. Yields may be kept under control by the central banks, but at some point yields have to go up. They have to. The supply of bonds is too huge.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/3/12

Thought of the day

The global markets are soaring. It is tempting to buy high beta stocks to make more money. But high beta stocks add volatility to the performance of your portfolio. Is this what you really want?

Focusing on steady returns is my way of looking at managing money. Morningstar has a great charting feature giving you the total return of your stocks. It is helpful to assess the strongest/weakest and more volatile/less volatile positions of your portfolio.

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/2/12

The game goes on

The European equity markets are soaring. This is what the art of central banking is all about.

Just print money. Let the people playing the game profit from it. Forget about those poor among us in dire need of a job. Let the special interests deal with it.

Let Greece and everything else go down the drain in the name of a socialist utopia - the Euro. The damage has been done.

Now - let's make money!

Interestingly enough - and not surprisingly - German bond yields are rising. That's the way it should be. Commodities are also bound to rise to confirm the excitement.

And so the game keeps going. Happy New Year!

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

Observations

I was in southern Florida recently to talk at a money management conference. A participant from Cincinnati, Ohio was having a drink with me and he pointed out how inexpensive real estate was in the area.

“ For $250,000 you can buy a nice house with swimming pool in this area. It is impossible to find such a deal in Cincinnati”, he noted.

What he was really saying was that a dollar earned in Ohio could buy more in Florida. This is exactly what happens when one travels from a strong dollar area to a weaker dollar area – everything is cheaper. Although the US has one currency, there are in fact many “regional currencies” within the US.

When I travel from Akron to, say, Florida I find goods and services to be cheaper. But when I go to Connecticut or New York City, prices are considerably higher. The reason is that Connecticut and NYC are strong dollar regions relative to Ohio.

The problem with a unique currency in a large economic area is that if productivity differentials between the various regions are not small (as in the US), distortions will appear (as in Europe).

Capital goes in the high productivity areas, where added value is the greatest. This problem is particularly pronounced in the European Union where the low productivity countries of Eastern Europe have to compete for capital with the high productivity countries of Western Europe.

If low productivity countries or states had a separate currency, their currency would devalue enough to attract new investments. The problem is that for the same amount of euros why invest in Romania, for example, when one can invest in Germany where the workforce is more efficient?

(This Observation appeared in the 1/27/2003 issue of The Peter Dag Portfolio).

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.

1/1/12

The European problems - another perspective

(DW-World) - We wouldn't be worried about Greece if the European banks had not overpurchased Greek debt. If the banks had been more prudent in buying all this sovereign debt the problem could have been solved a long time ago by just giving the bond holders a haircut. The whole trouble is that the bond holders are the banks or at least were until they were trying to divest themselves of bonds in recent weeks. To give a haircut to the banks might bring down the banking system.

I think the political story here is there has been an alliance for mutual gain between the governments and the banks. In this alliance for mutual gain the banks would buy up immense quantities of sovereign debt instead of lending to small businesses for innovation. They were not required to hold any capital against such assets and pressure was no doubt put on the ratings agencies to give all this sovereign debt a triple AAA rating. And this was also great for the governments and lots of governments took advantage that they didn't have to pay as high interest rates as they would otherwise have to pay. And they began borrowing a great deal. I think this alliance between the banks and the governments lies at the heart of the eurozone crisis. (Edmund S. Phelps is the 2006 winner of the Nobel Prize for Economics. Phelps is McVickar Professor of Political Economy at Columbia University in New York and Director of Columbia's Center on Capitalism and Society.)

More details in my The Peter Dag Portfolio , in Dag's Exclusive Market Alert, and my free educational videos on http://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.