Friday, September 28, 2012

Weekly Wrap

The S&P 500 fell 1.3% this week to close at 1441, it's biggest weekly slump since June. Perhaps my intuitive decision to abandon the stock markets came at the right time. But, only time will really tell.

Although I could be wrong, I can't help but have the gut feeling that the stock markets have reached their limits, and that something wicked this way comes. Everything about this zombie economy is telling me that there's a tightening slipknot around it neck, and the Fed-induced record market heights are screaming psycho-social gains to me.

So, in order to seek some type of validation for my decision, I thought I would ask some former Wall Street insiders, who've recently switched sides to join the Occupy Wall Street movement, about their opinions of current economic and market conditions. Here's what they had to say -

Wednesday, September 26, 2012

The Markets Speak

You can do all the praying you want, but when the markets speak, it's wise to listen.

Thursday, September 13, 2012

Joining Club Zero

As has been my investment thesis for four years now, the powers that be will do whatever it takes to ensure that failure is not an option (for now). Last week is was the ECB and this week it's the Federal Reserve Bank. According to an excerpt from the FOMC Statement released today -
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month.

The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.

These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
And the stock markets continued their bullish response to further central bank easing. The S&P 500 closed today at 1460, up 1.6% from yesterday. But on the other hand, gold prices also continued to climb even further, up almost 2% to close at 1768. That's troubling to me.

So, while many investors whose jobs depend upon generating alpha are jumping into equities after this Fed announcement, I'm doing just the opposite. I only answer to myself, and I'm content at my achievements so far. The risk of seeking alpha in equities seems too great for me at this time.

I've moved my last remaining equity position into cash today, and am fully invested in money-market funds. I've made a great return on my investments over the past four years, and now I'm happy to sit back, see what transpires in the near term, and have my portfolio saved by near-zero returns.

Friday, September 7, 2012

Weekly Wrap | Follow Your Intuition

For the week ended September 7th, the S&P 500 Index rose 2.2% to 1,438 (for a year-to-date total return—including price change plus dividends—of about 16.1%), and also reached within 10% of its pre-recessionary record high of 1565 set in late 2007.

Both the Dow (13,307) and the Nasdaq (3136) have also closed at pre-recessionary levels this week. So, do you know what that means? It's time to get out of the stock markets for the rest of this year.

I've always been one who follows my intuitions in both my career and investments, and it's almost never steered me wrong. While I've been bullish since I moved 100% of my investments from cash into stocks near the bottom of the 2008 crash, I feel that the markets have become over-exuberant again and have reached these levels based mainly upon herd mentality behavior.

The contrarian in me says it's time to bail again. So, being the fickle and beautiful woman that she is, I pulled this Jewell of a stock market to the side to explain my feelings to her. To my amazement, she understood my intuitive reasoning and thanked me for the appreciation that I've given her over the past four years, and agreed it was a good idea to part ways. Maybe we'll hook up again in the near future.

So, today I moved my entire IRA, Roth IRA and 529-plan investments into money-market funds. Next week I'll also move my donor-advised fund into cash.