Making Money Alert
Still a Bull Market Skeptic
07/29/2009
So, is this true? Is the recession over, and are we now in a new bull market? I remain skeptical.
If we look at the chart below of the S&P 500, we can see that stocks have breached both the short-term, 50-day moving average, as well as the long-term, 200-day moving average.
Yes, this is definitely a bullish sign going forward, and that's why I've been recommending specific equity allocations in my Successful Investing, High Monthly Income and ETF Trader advisory services for some time now.
But one thing you must keep in mind is that despite the buying we've seen of late, there are many unknowns going forward -- unknowns that could put a serious damper on a new bull market.
I discuss some of these unknowns in my special audio report: "The Obama Impact on Your Money" (see section below). However, it's not just the threats posed by government that have me worried.
I am also worried about a continued slowdown in the housing market, and I'm especially worried about the growing unemployment numbers. The nation's jobless rate will soon likely be in the double digits, and unfortunately, I think this increase in the unemployment rate will have a significant ripple effect on the entire economy -- and on the stock market.
So, while I remain allocated to equities, I also remain skeptical that a bull market is here to stay.
I love a good motivational read, and that's why today I have a special treat for you from my friend and freelance financial journalist, Jim Woods. Here he tells us about the lessons we all can learn by observing a most interesting character. Take it away, Jim.
Be Like Jesse James
By Jim WoodsFlipping pickup trucks, racing motorcycle sidecars, and going 200 mph on a jet-powered motorcycle is not for everyone. In fact, few men have a constitution that impels them to take on these death-defying activities.
One man who does possess this unusual constitution is Jesse James.
If you're not familiar with Jesse James, let me give you a little background. James is best known as owner of the hugely successful West Coast Choppers, a custom motorcycle and car building business. He also hosted the Discovery Channel's Monster Garage, a show that pitted Jesse's mechanical skills against the challenges of transforming everyday vehicles into "monster machines." James is also well known as the husband of film star Sandra Bullock. The two have been married since 2005.
In his new show on Spike TV, aptly titled Jesse James Is a Dead Man, the daredevil mechanic performs the aforementioned stunts, as well as many others, in this eminently entertaining new weekly series. Now, in the interest of full disclosure, James and Bullock live on the same block as I do, so I'm admittedly a little biased in favor of the high-profile couple. But my proximity to James is not what makes me a fan.
I'm an admirer of Jesse James because he's a man who does things.
He's a man who isn't afraid to meet a challenge head on, even if that challenge is life-threatening. He's a man who decided that becoming successful in life was what he was going to do, and so he just did it. He didn't sit around, hoping that life would smile upon him. He grabbed life by the lapels and shook it until success came pouring out of its pockets. It's because of his mindset, will to succeed and lack of fear that I admire Jesse James.
So, with this in mind, I offer you the following advice: Be like Jesse James!
No, I am not recommending that you go out and ride a motorcycle at 200 mph or flip a truck. What I am recommending that you do is shake off your apprehensions -- however seemingly mundane they may be -- and get on with the business of being successful.
There's a great line from the film The Shawshank Redemption that pretty much encapsulates the Jesse James zeitgeist: "Get busy living, or get busy dying." The key here is to get busy living, whatever your life's purpose may be.
If you want to start a business, change careers, buy that home, invest in that stock, or even if you just want to find that special person to share your life with, there's really nothing stopping you except for your failure to make a sincere decision to just do it.
Now I know that these issues aren't as simple as just making a decision, but nobody ever got anywhere without first making an honest and earnest choice that they were going to be successful.
The next time you're feeling wishy-washy about something, or the next time you feel afraid to take a chance in life, I recommend that you be like Jesse James and just go for it. I am pretty sure that the worst that can happen to you if you fail is far gentler than the worst that can happen to Jesse.
Jim Woods is a freelance journalist, specializing in the economy, the markets and politics. He is a frequent contributor to Doug Fabian's Alert, as well as many other publications. He celebrates the virtue of grabbing life by the lapels and shaking it until success comes out, from his home on the California coast. He welcomes your comments, and can be contacted by clicking here.
The Obama Impact on Your Money 3
The 44th president has been in office now for nearly six months, and so far, his rather ambitious agenda has me very concerned. Regardless of which side of the political aisle you sit, there's no denying that the president's goals are increased government involvement in the economy. This increased involvement includes more stimulus spending, more deficit financing, more environmental regulation, more involvement in the health care industry, more financial market regulation and, of course, higher taxes -- particularly on the so-called "rich."If you're a Democrat, you may think that the Obama agenda is a good thing. If you're a Republican, you likely think that the president is on the wrong track. But regardless of which side you come down on, there's no denying the fact that the president's plans will have a profound effect on the economy, the financial markets and your money. That's why it is up to you to manage your money accordingly.
Now, I must say up front that in my opinion, the policies and legislation being thrust upon us by the president and a sympathetic Congress are not conducive to the economy, and they will not fundamentally help right our economic ship.
In fact, it is my opinion that the unprecedented intrusion in economic affairs proposed by the president will likely do much more harm than good in the years ahead, and that is what you, the well-informed investor, must prepare for now.
Let me turn now to a few key statistics that should put a big fright into the fiscal centers of your gray matter.
- Our annual interest payment on the national debt is $26 billion per month, or $300 billion per year.
- Our deficit, so far through the first seven months of 2009, is nearly $1 trillion.
- Projections on the president's budget place annual interest payments at $800 billion by 2019.
- State budgets are $500 billion out of balance this year.
- Government statistics show a national unemployment rate of 9.5%, and the general consensus is that double-digit employment is right around the corner.
Now, each of these five prognostications is worrisome, but taken together, they add up to one ginormous problem for investors.
So, what now? What can you do to protect yourself from the Obama impact on your money?
The answers to these questions can be found in my FREE audio special report, appropriately titled, The Obama Impact on Your Money. This one-hour audio presentation includes a complimentary work sheet to help you follow the key points presented.
I strongly encourage you to check out this FREE audio special report today by clicking here.
NOTE: Fabian Wealth Strategies is an SEC registered investment adviser, and is not affiliated with Eagle Publishing.
ETF Talk: Seeking a Gusher in Oil
The price of oil and gas is on the rise again. But oil has exhibited wide price swings both up and down during the past year that make predicting its future moves a bit dicey. If you feel like you've got a pretty good idea where oil is headed next, you might like the exchange-traded funds (ETFs) that investment firm Direxion has introduced.Direxion launched both the Direxion Daily Energy Bull 3X Shares (ERX) and the Direxion Daily Energy Bear 3X Shares (ERY) last November, and they offer the proverbial two extremes. The ultra-bullish ERX is designed to replicate 300% of the daily performance of the Russell 1000 Energy Index, while the equally ultra-bearish ERY is designed to replicate 300% of the inverse daily performance of that same index.
You now can go bullish or bearish on the future price of oil, which means you can profit no matter which direction it heads next. But a word of caution is in order here, because when you invest in triple-leveraged funds, you have the potential for absorbing three times the losses if you're wrong.
When you take a look at the top sector weightings and holdings below for the Russell 1000 Energy Index, it shows that the oil industry and its various companies dominate. With much of the world still dependent on oil to keep industry moving, the lopsided weighting is not surprising.
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Naturally, when the value of oil and gas recently soared along with rising hope for an economic recovery, the price of ERX jumped, too. If you had been confident on July 1 that the price of oil was about to shoot up, you could have bought ERX in an attempt to triple your potential profits. Lately, oil has been trading between $65 and $70 a barrel, hitting its highest levels since President Obama won election on Nov. 4. That price is more than double the low of $30.28 a barrel for West Texas Intermediate Crude Oil on Dec. 23. Also encouraging is that Brent Crude Futures topped $70 a barrel last Friday, July 24, to reflect investor sentiment that the price of oil will keep climbing.
For a glance at how ERX has responded, you can see the fund's sharp spike in the following chart.
It also should not surprise anyone that the bearish oil fund, ERY, is on the opposite trajectory. As oil climbed, ERY fell. With triple the exposure, ERY plunged steeply. In the chart below, you see the sharp decline that began the week of July 6.
While this bet might have been wrong on July 6, ERY could prove to be a good choice if you think that oil and gas prices will plummet again, after the current upswing in oil prices ends.
So, if you're confident in the future price of oil and gas, and if you have enough conviction to accept triple exposure and high volatility, these leveraged oil funds may appeal to you. For those of you who want specific advice about which ETFs to buy and sell, check out my ETF Trader service by clicking here . As usual, I am happy to answer any of your questions about ETFs. To send me your questions, please click here. It may spark an idea for a future ETF Talk.
The Wisdom of Southbound Pachyderm
Watching the majesty blow past
Speculating which will be the last
Savoring my piece of pie
And there is no reprise
They're filling the sky
Southbound Pachyderm
--Primus, "Southbound Pachyderm"
These days, it seems like men who embrace the virtue of making money are rare. In fact, you could call them southbound pachyderm, like the ones so aptly described in this cautionary tale of vanishing species by the uniquely weird, yet eminently talented rock trio, Primus. If you want to know who really moves the world, look no further than the great capitalists, scientists, inventors and industrialists. They may be endangered species these days, but if we fight to protect them, we'll all be saved.
Wisdom about money, investing and life can be found anywhere. If you have a good quote you'd like me to share with your fellow Alert readers, send it to me, along with any comments, questions and suggestions you have about my radio show, newsletters, seminars or anything else. Click here to Ask Doug.