Which market timer are you?

Of course, if you are one for starters.

Non-sense if you ever invest money, you are explicitly or implicitly timing the market. Why? This is the key to the difference of fortune made and lost.

So don't kid yourself thinking you're not a market timer.

Which type are you exactly? Well, I know which type I was and perhaps still am and which I would like to be.

"My friends, I had not intended to discuss this controversial subject at this particular time. However, I want you to know that I do not shun controversy. On the contrary, I will take a stand on any issue at any time, regardless of how fraught with controversy it might be. You have asked me how I feel about market timing. All right, here is how I feel about market timing: If when you say market timing you mean the loser’s game, the fool’s errand, the speculator’s effort that separates savers from their capital, turns investors into gamblers, lines the greedy pockets of brokers, strategists, and newsletter writers, challenges the irrefutable logic of efficient markets, yea, literally plunders the wealth from widows and retirees; if you mean the evil action that disrupts the well counseled man and woman from the pinnacle of appropriate strategic asset allocation, balanced objectives, long-term orientation into the bottomless pit of fear, and greed, and meaningless noise, high expenses, and tax inefficiency, and short-termism, then certainly I am against it.

But, if when you say market timing, you mean assessing fundamental value compared to price, favoring undervalued assets while avoiding overvalued ones, always demanding a margin of safety and being in cash when none exists; if you mean being opportunistic and forward looking, buying low and selling high; if you mean the activity which saves investors from catastrophic and permanent losses of capital, achieving positive absolute returns, the endeavor that avoids following the herd up the mountain of excess and over the cliff of despair, favoring consistent compounding of modest returns, and the ability to sleep well at night; if you mean that undertaking which has provided capital as the gasoline for the engines of economic growth and prosperity, protected purchasing power and met future liabilities, funded robust retirements, sustainable wealth transfer, and philanthropic endowments, then certainly I am for it.

This is my stand. I will not retreat from it. I will not compromise.

JJ Abodeely, 2011



My friends, I had not intended to discuss this controversial subject at this particular time. However, I want you to know that I do not shun controversy. On the contrary, I will take a stand on any issue at any time, regardless of how fraught with controversy it might be. You have asked me how I feel about whiskey. All right, here is how I feel about whiskey: If when you say whiskey you mean the devil’s brew, the poison scourge, the bloody monster, that defiles innocence, dethrones reason, destroys the home, creates misery and poverty, yea, literally takes the bread from the mouths of little children; if you mean the evil drink that topples the Christian man and woman from the pinnacle of righteous, gracious living into the bottomless pit of degradation, and despair, and shame and helplessness, and hopelessness, then certainly I am against it.

But, if when you say whiskey you mean the oil of conversation, the philosophic wine, the ale that is consumed when good fellows get together, that puts a song in their hearts and laughter on their lips, and the warm glow of contentment in their eyes; if you mean Christmas cheer; if you mean the stimulating drink that puts the spring in the old gentleman’s step on a frosty, crispy morning; if you mean the drink which enables a man to magnify his joy, and his happiness, and to forget, if only for a little while, life’s great tragedies, and heartaches, and sorrows; if you mean that drink, the sale of which pours into our treasuries untold millions of dollars, which are used to provide tender care for our little crippled children, our blind, our deaf, our dumb, our pitiful aged and infirm; to build highways and hospitals and schools, then certainly I am for it.

This is my stand. I will not retreat from it. I will not compromise.

Noah S. “Soggy” Sweat, Jr., 1952″ difference between fortunes made and lost during the process."

What does evolving demographics say about the future?

Not good.. Why? Population aging as baby boomers phase into retirement. Not only the spending hence the economy will slow down but the transfer payment related to older population such as medicare, pension will put enormous pressure on budget deficit.

What's worse is that we don't start off in a good shape in government finances. It is only going to get worse. This can only mean a few things: a) more money print b) higher taxes c)reduced benefit.

None of the above is good for the economy in the long term.

So get ready before it foreces you to.

The following is what GS top advisor thinks.

http://www.businessinsider.com/baby-boomers-and-demographic-shifts-from-1981-to-2041-2011-10#-1

Gold - the safe heaven?

Everyone has been talking about the safe heaven status of gold and suggest how great this investment is to hedge against both a hyer-inflation scenarios from the money printing and economic uncertainty.

Does this sound too good to be true?

I think it is.

For starters, gold has no intrinsic value except for its use in high-end technology that requires superior conductivity. You cannot eat, drink, drive, sleep gold... you got what I mean.

Gold is not an investment to me because it does not generate cash flows that supports the fundamental value of an investment asset ought to have.


Gold is a inflationary hedge. If that is the case, the gold price has gone too far. The global economy is battling deflationary pressure from economic downturn (except for China serious inflation issue). It doesn't make sense for gold to continue to rise.

Some may say that the gold price goes up even in a economic downturn because it is also a hedge for uncertainty. My response is look what happened to gold in the recent 20% drop of the equity markets. There are numerous examples of gold price going down with the market when a crisis strikes.

The only asset that goes up in a true crisis is US dollar as it is the safe heaven by default not because of its fundamental but its reserve currency status. When everyone fears of return of their capital, they hold cold hard cash in US dollar bills.

I don't see this change any time soon. So when you become a little too complacent with short term stock price rise, check the US dollar index levels. It may give you a hint of what's upcoming.


Everyone has been talking about the safe heaven status of gold and suggest how great this investment is to hedge against both a hyer-inflation scenarios from the money printing and economic uncertainty.

Discipline

Feeling good to be back after qualifying as an actuary after years of studying.

For some reason, the air I breathe feels more refreshing...

Enough of this...

Markets have been through a lot of volatility in the past 3 months... However, there is nothing new. It is the same old problem of too much debt.

European countries such as Greece, Spain, Italy etc have spent more than they can afford for decades and now not only they have to live through the consequences but also us...

The recent bailout has temporarily relieve the market from further downward movement but this will not solve the problem but to delay the issue. Government around the world simply don't have the discipline to implement real solutions to the problem but to kick the can down the road once again. It is going to get a lot darker before we see the light at the end of the tunnel.

Having said that, recent market sentiment has been overly bearish. Therefore, in the short term we may even be "pleasantly" surprised by a year end rally.

While the stock prices may go up, I will look for signs of divergence such as weak volume response. So far the volume in the market up days does not look so promising.

In my opinion, this is just the beginning of the bear market / economic downturn.

Buckle up... It is going to be hell of a ride.