Strong sectors got hit also

Tyler Vanderbeek — Fri, 18 May 2012 21:27:44 +0000

Line in the Sand & Index Performance

Tyler Vanderbeek — Sun, 13 May 2012 04:40:36 +0000

This weeks video highlights where the “line in the sand” is drawn for the equity indexes and where the broad market indexes have been over the past 12 months.

Happy Mothers Day to all the wonderful Mom’s!!!

Some up…some down

Tyler Vanderbeek — Fri, 04 May 2012 22:59:45 +0000

Europe In Recession

Gordon Nelson — Thu, 03 May 2012 21:39:10 +0000

With 11 European countries officially in recession it leads one to wonder – is the U.S. next? I guess we’ll see, but for now the U.S. isn’t there.

The European Central Bank (ECB) is back in the spotlight this week to see if they can come up with an Anti-Austerity Antidote. Hmmm that mouthful kind of sounds like a double negative – maybe it’s supposed to be .

At any rate, the citizens of many of these countries are protesting the government cutbacks and tax increases that they are being subject to in an effort to get their debt back in control. However, the debate is raging over whether austerity measures are actually working or not.

More drama to come I’m sure! I wonder how long till the drama hits U.S. soil?

Overconfidence, Over Exuberance Back in Force?

Gordon Nelson — Thu, 03 May 2012 21:17:01 +0000

Looks like the stock markets have been good enough lately to bring out the usual return to overconfidence and greed that is human nature. Headlines hitting the news like “the best quarter for the stock market since 1998″ and active management results lagging the buy-and-hold approach are sparking some greed again.

Data shows a lot more people feeling like they can take on the stock market by themselves. My how quickly people forget about risk management. I’ve read a stack of books about two feet thick over the past two years on the tools and techniques of the world’s best traders/investment managers, including interview results with many of them.

Here’s some quotes from some of them:

Everything gets destroyed a hundred times faster than it is built up. – Paul Tudor Jones

The elements of good investing are: 1) cutting losses, 2) cutting losses, and 3) cutting losses. – Ed Seykota

The stock market is neither efficient nor random. Investment success requires three basic components: 1) an effective trade selection process, 2) risk control, and 3) discipline to adhere to the first two items. – William O’Neil

Don’t worry about what the markets are going to do, worry about what you are going to do in response to the markets. – Michael Carr

The greatest misconception is the idea that if you buy and hold stocks for long periods of time, you’ll always make money. People who have the notion that buying and holding for the long term is the way to go can easily go bankrupt. – Victor Sperandeo

The primary reason that the best active managers have underperformed the buy-and-hold approach over the last year is that the really good managers have not forgotten about risk control, the single most important element of really succesful investment management.

People sometimes get caught up on the idea that they have to beat the stock market every quarter to be successful. It’s much more about the whole process and the risk control. Even Warren Buffet and Berkshire Hathaway aren’t perfect -in the short term : See the article Buffet Trails the S&P 500 for Third Year

The Coming Reallocation Rally?

Gordon Nelson — Thu, 03 May 2012 20:47:01 +0000

I’m not going to agree or disagree with the ideas in this article by Mr. Doug Kass as we will continue to let the markets tell us where to go, but this recent article by him is interesting.

In it Mr. Kass says:

It remains my contention that it will take relatively large losses in bond funds to bring back the individual investor into equities. But this is likely coming — it almost always occurs coincident with higher stock prices — and when it does, one of the greatest reallocations out of bonds and into equities will commence.

For the full read click here: TheStreet.com Real Money: The Approaching Reallocation Rally

Apple propels market higher

Tyler Vanderbeek — Fri, 27 Apr 2012 20:53:12 +0000

This weeks video highlights how Apple’s stellar earnings propelled the market higher and how short term tactical moves can pay off.

Thinking, Fast and Slow

Gordon Nelson — Fri, 27 Apr 2012 19:50:16 +0000

When I was young I remember my older sisters would sometimes throw something at me at the same time as yelling “Think Fast”! I guess this was some kind of exercise they felt obligated to put me through in hopes that it would fine tune my reflexes so that someday the skills I had acquired might save my life through my ability to dodge strange flying objects.
It’s interesting to think about though as our brains do think in two different ways. My sisters helped me exercise the fast thinking section of my brain. Funny, but I don’t remember so well their exercises to help the slow thinking section of my brain.
Legendary Israeli-American psychologist Daniel Kahneman is one of the most influential thinkers of our time. A Nobel laureate and founding father of modern behavioral economics, his work has shaped how we think about human error, risk, judgment, decision-making, happiness, and more. Kahneman is the author of the recently released book, Thinking, Fast and Slow
In the book, Kahneman introduces what he calls the machinery of the mind — the dual processor of the brain, divided into two distinct systems that dictate how we think and make decisions. One is fast, intuitive, reactive, and emotional. The other is slow, deliberate, methodical, and rational.
There are benefits to letting the fast section do its thing, such as helping to avoid strange flying objects and other dangers to our lives that quick, reflexive thinking helps avoid. However, many, if not most, things in life are handled better with the slower and more rational part of the brain – and investing is one of those areas.
Human nature makes us think too short term in most situations. There is a long list of things Kahneman calls “short term statistics that should not be believed”.
Here’s a test: If you flip a coin 7 times and it comes up heads each time, what are the odds of it coming up heads the next flip? Answer: 50%
If a local hospital delivers 10 baby boys in a row, what are the odds the next baby delivered will be a boy?
If Apple stock has been going constantly up for the last 5 months it will continue to go up forever won’t it?
With the fast thinking section of our brain we look at the following chart and say to ourselves “wow my money should be invested in that blue line as it is out-performing the green one”.

Now we back up and look at the performance of those two investments over a longer period of time and use the slow part of our brain and what conclusion do we come to? “Wow that thing that has done better recently actually is really a dog. I want my money in that investment shown by the green line.”

Understanding ourselves better and how we think goes a long way to helping us be successful and happy in most areas of our life. If you have 20 minutes to learn more, watch this video by Mr. Kahneman at TED 2010:

Watching paint dry

Tyler Vanderbeek — Fri, 20 Apr 2012 20:45:29 +0000

Volatile week with no direction.

This weeks video:

Market Update Video

Tyler Vanderbeek — Fri, 13 Apr 2012 21:42:19 +0000