Peter Dag & Friends

3/5/11

Thought of the day

Countries get in trouble when some power groups become dominant. Recent examples in the US: housing sector and banking.

Dominant power groups should be broken up. By becoming big players their failure creates huge problems for any economy by forcing the country to grow slowly.

The power of the Church in the Middle Ages, Iran, and countries dominated by dictators have always suffered.

The point is that any concentration of power (religious, financial, economic, political, military) is damaging to any country.

But it looks like there is nothing we can do about it. It is just in the genes of humanoids to search for power, wealth, and control of other humanoids. My way is always better than your way.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer 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.

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How nations become wealthy

In the wonderful book The Birth of Plenty, WJ Bernstein spells out quite convincingly how prosperity is created. This is what the wealthy countries have in common.

Property rights.
Education and research.
Capital markets.
Communication and transportation.

The Arab world, in its search for "democracy", should carefully think how to implement this short list of ideas.

I would like to add a fifth one: a large number of power groups. Concentration of power in the hands of few power groups leads to stagnation because it does not give an incentive to grow the national economic pie.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer 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.

3/4/11

Do not trust my gut feeling

I just looked at the chart of the S&P 500 since October and then I looked at the chart of most sectors (XLI, XLB, XLF,....).

What if all these charts are trying to tell me that we are in correction mode? Or a pause at best? Would it be wrong to be careful right now?

Technical patterns

This is what is happening today as the market slides.

It looks like JNK declines when the market goes sharply lower. LQD instead is rising.

Does this mean that if one expects the market to correct sharply he/she should buy LQD in spite of what Bill Gross says?

3/3/11

Business cycle in action

For those of you who read Profiting in Bull or Bear Market, the enclosed chart of the ISM indices shows the business cycle in action. Click on the chart to enlarge it.

If you follow my writings you should figure out in which phase of the cycle we are in. Not surprisingly the strong sectors are those which typically thrive in this phase.

Next question. What should an investor look for to change strategy?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer 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.

Meaningless factoid

New Zealand is a great country. Wonderful people and climate. Population: 4.3 million. GDP: $119 billion.

Belgium is a great European country speaking a non-English language. Population 10 million. GDP: $394 billion.

It is intriguing that we hear almost daily about NZ, but rarely about Belgium.

Anyway, as a foreign born, I find it interesting, even if it is a totally meaningless factoid.

Up, up, and away

A scary trend. How can the economy survive with the price of gasoline soaring and 9.0% unemployment? Click on the chart to enlarge it.

The markets always win. The Fed tries to keep one bubble under control (bad banking) and another one pops up (commodities).

There is no doubt in my mind that this is not what we need to have protracted strong growth. Something has to give. The market? Bonds? Commodities?

It could very well happen that in spite of all the concerns, bonds might rally as commodities and stocks decline. I know Bill Gross does not agree. Which is one more reason I might like this scenario. Time will tell.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer 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.

3/2/11

Good point

This crisis might take a little while to come to a complete boil, but I actually am much more fearful of the potential outcomes today than I was when the Euro was tanking. You can always print more Euro’s, but I do not know how you settle down millions of rioting middle eastern citizens who effectively control the global economy’s life blood. (Source: Surly Trader).

Enough said!

It is a long and dangerous journey

The first of Ukraine’s lessons for Egyptian and Tunisian democrats is that elections do not a democracy make. After all, what if the enemies of freedom use elections to entrench their anti-democratic agendas? What if elements of the old regime, or the cadres of militant minorities, only pretend to embrace democratic norms in order to hijack the new democracy?

The politicians have a way of surviving, changing color, and achieve power really unique. Some Eastern European countries found this out.

Revolutions only change the power group(s) in control of the country. But the problems of the country more often than not are difficult to solve. The cultural make up is difficult to change.

My sense of history is that the dynamics of each country is to drive power in the hands of fewer and fewer power groups until the situation become intolerable. Then things happen. And the process starts all over again. Like quick sand, however, the populace finds itself at the bottom of the ladder. Was it worth?

3/1/11

Thought of the day

Stocks with high dividend yields are outperforming the averages. Example: MLPs, JNK, and LQD.