Verizon
“over-nighted” a router that we got yesterday so I am back in business. The news wasn’t all good when I started going
thru the data, because some of the data was bad.
I
know a lot of people just read my blog and don’t buy and sell following the
daily guidance; however, it is a huge irritant to get bad data from Yahoo and
act on it, only to find out later that the data was bad. Yahoo reported very high volume on 27 July at
the close. I commented at the time it
seemed high, but I checked it vs. the NYSE and it seemed possible that it was
correct, given the big down day.
Now
Yahoo is reporting only 3.5 billion shares traded on the 27th…a lower than
average day. When I input the historical
Yahoo data (or a higher value adjusted for NYSE volume) for the 27th, the analysis
did not result in a sell signal last week.
So
I sold unnecessarily (at least as far as the Navigate the Stock Market system
goes).
My
portfolio is structured so that all I have to do is sell my 401k and I am 30%
invested. The reason I leave 30% in
stocks, rather than going to zero, recognizes that I may be wrong and hedges
the bet somewhat.
An
easy way to structure a portfolio to buy and sell without too much work is to
put about ½ of your stock portfolio in SPDRs (SPY), the S&P ETF. Then if you want to cut back in stock
holdings, just sell the SPDRs.
NTMS
remains HOLD.
At
this point I am 30% invested and will watch market action before I move back in
next week. NTMS could easily drop to a Sell next week and
we might look smart in spite of the bad data.
I think we will have a big rebound if the Politicians take effective
action.
BUT…the
market could judge that the agreement (if they make one) will not be effective
or may actually hurt the economy. There
is no certainty that an agreement will result in upward movement of the market
for more than a day or two if that.
Some
issues follow:
DEBT
CRISIS.
If
you had asked me a few weeks ago, I would have said that Obama seemed to have
the right mix. Reversing some of the
Bush tax cuts seemed reasonable, but a look at some data shows a dangerous
trend. The Federal Budget is now 25% of
GDP. That is a new record for
peace-time. It was around 50% in WWII. While we call Afghanistan and Iraq wars, the
expenditures aren’t anywhere near WWII. So
it would seem that the Tea Party has a legitimate point. When Government crowds out private industry,
then you no longer have free enterprise – you have Government as the economy
and I have no confidence in the ability of Government to manage any part of the
economy. Where should you draw the
line? 25% seems like a reasonable place
to me.
Libertarian
Congressman Ron Paul said he would not vote to extend the Debt limit
again. He pointed out that it was
intended to set a limit on the debt (duh) and the Government was already bankrupt. What did he mean?
I
did some math a year or two ago and found that if we paid off the Debt in 30
years at 2% interest it would take additional taxes from every taxpayer
(100-million of us) of about $1,000…every month! Sounds crazy, but the debt was $140,000 per
tax payer 2-years ago, so basically, we each owe another mortgage. Ron Paul is simply stating the truth – we won’t
pay the debt back. That is why the
Federal Reserve and treasury want inflation.
If we have inflation of 4% per year, the Debt will be cut in half in 18-years
(vs. GDP), because we are paying back the debt with inflated dollars. Those dollars will be worth half as much.
Another
“benefit” of inflation is that your house will be worth twice as much in 18
years (assuming 4% annual inflation) and you feel richer. But in fact, since all money will have ½-of
today’s buying power, we will all be much poorer unless we get 4% pay increases
each year.
Enough
said.
IMPACT
TO THE STOCK MARKET.
The
bottom line of all this is that we are entering a period of austerity immediately
after one of the largest spending sprees in history brought to us by Bush and
Obama. (Pick your poison, Republican or
Democrat makes little difference.)
The
economy will experience very slow growth…no growth…or recession.
The stock market is likely to advance slowly, at best, and be downright negative at worst. The Bear market is far from over.
