Your Money University

 The bottom for the U.S. Stock Market was in June. Look at the tremendous outperformance out of Emerging Markets, and more surprisingly it's the Developed Markets outside of North America that are leading the way. The way I see it, by the time those October lows came around, most stocks were already been  going up and to the right . When you look at the new lows list, whether on the NYSE or the Nasdaq, there were very few stocks left still making new lows by that point. The bottom for the U.S. Stock Market was in June.

  Take a look at how the leap in savings from stimulus quickly melted away throughout the last two years: All this money was "YOLOed" (You Only Live Once) away on crypto, meme stocks, and other frivolous stuff.  The free money turned the younger generation into gamblers who would risk it all at a shot of wealth without much care for losing it: So how do people make ends meet? They borrow more.  Take a look at how credit card debt is blowing through the roof as savings fizzle out: Meanwhile, in just a year, mortgage rates have increased to the highest in the last two decades.

 T he S&P 500 did in the next two decades after that   BusinessWeek  issue... I was at TheStreet.com working alongside Jim Cramer in 2000 when the dot-com bubble burst. I remember the panic well – from its peak in March 2000 to the bottom in October 2002, the tech-heavy Nasdaq Composite Index collapsed 78%. But over the next several years leading up to the next crash, take a look at the recovery... The point here isn't calling tops and bottoms... I'm saying that I've been there, I've seen it all, and now that I'm 70, I'm taking everything I learned and sharing that with anybody who will listen.

How low can you go?  There’s nothing the Fed can do to fix global supply chain disruptions … And there’s nothing the Fed can do to stop the stock market from falling further. How far could the market fall? Well, here’s the history: In the Crash of 1929 and the big decline that followed, the average stock in the Dow Jones Industrials fell 89%. In the early 2000s, the average stock in the Nasdaq Composite Index fell by 78%. And in the 2008 Debt Crisis, the average stock in the S&P 500 fell 53%. That’s bad enough. But notice I said “average” stock … and not all stocks are average.

Not very rosy  This is a measurement of cyclical spending against a nation’s gross domestic product (GDP).    What you have here is a deep, glaring look into the economy. The cyclical component of our economy is effectively just housing and durable goods.  It’s 10%-15% of GDP, but as this chart shows, there’s dramatic movement whether we experience growth or recession.  Here are the contributions to GDP in the fourth quarter. Everyone is high-fiving saying that we have great economic growth.    But look at three things…  First, inventory management surged. We produced a lot of goods, and we now have them in our inventory. If consumer demand slows and we experience a deflationary cycle, which is what’s happening, then this will hurt manufacturing even more.  Second, look at housing investment . That critical component has been blown out of the water. The Fed offered support to the housing market back in November when it stopped dumping mortga...

  Ignore the Noise World Economic Forum : The global elite gathered in Davos, Switzerland, last week for the annual debate about ESG investment policies and worldwide fossil fuel usage. The forum was particularly interesting this year, as the definition of ESG continues to be redefined with both the NASDAQ 100 and S&P 500 adding energy companies. The World Economic Forum also debated global trade, which was probably a heated discussion with many companies starting to return to more domestic suppliers due to global supply chain glitches. Now, local sources may be more expensive, but due to safety and security concerns, supply chains are now less global than a couple years ago. Beige Book Survey  : Ahead of next week’s Federal Open Market Committee (FOMC) meeting Wednesday, the Fed released its Beige Book survey last week. Six of the 12 Fed districts reported no change or a slight decline in economic activity. Five Fed districts revealed slight to modest growth, and one dist...

Successful Money management   If you want to boil it down.  You can simplify your trading by only focusing on 4 T’s : Timing Technicals Tools Trade Management And if you’re missing even one of these four key trading elements…

  What is the most dangerous threat to your wealth today? You have several choices: Inflation Taxation Bear markets Bad investment advice Investment fraud Three Rules of Successful Investing I suggest you follow these rules when it comes to investing: Be your own money manager as much as possible. Keep at least half your funds in a broad-based index like the S&P 500 Index Fund, and see if your own stock selection can beat the market over the long run. If you don’t feel comfortable investing, choose several money managers whose investments are secured in an independent brokerage account and whose investments are quoted every day online or in the newspaper. These would include mutual funds, exchange traded funds or closed-end funds that you can buy or sell through a brokerage firm such as Charles Schwab, T. D. Waterhouse or E-trade. Invest after consulting an independent rating system such as Morningstar. Don’t count on the government to bail you out of your mistakes. If you are ...

“golden cross,” which occurs when the 50-day SMA crosses above the 200-DMA As this first chart of SPY and its 20-day SMA shows, these lines often help traders understand where key supply (resistance) and demand (support) points should develop on a chart. The reason I’ve chosen the 20-day SMA for this example is because it is essentially a measure of the past month (20ish trading days) of trading, which is a VERY important period of time followed by the world’s biggest traders and Hedge Funds. But what is this line telling us really?  Mathematically, a simple moving average is telling us that the average price close over the past X amount of days equals the final point on that line. So, if I were to use a 5-day SMA as an example, the math would be: 5-Day SMA = (Day 1+Day 2+Day 3+Day 4+Day 5)/5 Easy, right? But the one thing that most traders fail to remember is that, since this is based on trailing inputs, it is a lagging indicator.  Keep that in mind as I show you this next ch...

 All six cylinders are working - Good Outlook And in 2022, trade between the U.S. and China reached record levels. Shipping rates, another measure of trade activity, have improved over the past couple of years. As the world emerged from the COVID-19 pandemic, shipping rates plummeted. Since its peak in September 2021, the WCI Composite Container Freight Benchmark rate has been down 80%. And global supply chains are nowhere near as strained as they were during the pandemic. Russia tensions will be less or gone in H2 China will replace Russia as the naughty Man of the world.

  This is a nine-point score that analyzes the health and strength of a company’s balance sheet. If the company meets the following criteria, it receives a point for each. A “9” is a perfect score. Positive Net Income Positive return on assets in the current year Positive operating cash flow in the current year Cash flow from operations being greater than net Income Lower ratio of long-term debt in the current period, compared to the previous year Higher current ratio this year compared to the previous year No new shares were issued in the last year A higher gross margin compared to the previous year A higher asset turnover ratio compared to the previous year A company with a 9 out of 9 has an executive board that is extremely shareholder friendly and interested in boosting shareholder value. 

 Oil is strong in 2023 When the RSI drops below 30 then rises, it gives a buy signal from an "oversold" level. It tells us a falling stock's sell-off is likely over. And we're seeing that right now in oil... The last time we saw this happen was in November 2021... right before oil went on a seven-month rally of more than 75%. We also saw a similar oversold signal in August 2021. Oil had fallen double digits in roughly two months. Then, it shot up 35% after the oversold signal and into October. We even tested this data going back 32 years. And a typical six-month return following similar oversold levels led to a 6.4% rally in oil. The return gets even better when you go out a year, with oil up 8.7%. Today, oil has already surpassed those returns. It's up 15% in almost a month and a half. But again, this rally isn't over. You see, oil's recent 15% run came during a hot streak. Oil rose eight days in a row at the beginning of January. Take a look... This kind...

 Look at the momentum of conviction The following chart summarizes the S&P 500 ETF (SPY) and its price movement since Wednesday, January 18, 2023. The market experienced a short-term topping event that fueled a very strong selloff in a 24 hour period. The selloff started on Wednesday at 10:30 am. Pay close attention now to the indicators under the chart.    Those are known as Momentum Oscillators. They are – in order – the Relative Strength Index, the Moving Average Convergence Divergence (MACD), the Money Flow Index, and the average directional index (ADX).  The Relative Strength Index measures stock movement on price. When stocks are overbought, the reading is above 70. When stocks are oversold, the reading is under 30.  The Money Flow Index is a reading of price and volume. It measures momentum, and stocks are overbought when the indicator is over 80. When it’s oversold, the number is under 30. The MACD measures stock movements on the exponential moving a...

  Personal finance is easy. 1. Salaries won't build wealth. And they are not very stable. 55 million people were laid off in the pandemic. 2. Don't invest for wealth (in the stock market) The best investors return about 10% per year. If you can do that consistently you can raise a hedge fund and make millions on the fees. That's how they all do it. 3. Come up with ten ideas a day. This doesn't seem like "personal finance" but it is. Ten ideas a day saved my life. 4. Don't try to save money by not buying expensive coffee or taking subways instead of cabs. That's a myth. The best way to save money is to make more. 5. Learn how to copywrite. The smartest people I know can copyright their way out of prison. 6. Come up with ten ideas for how two people can help each other. Introduce them and stay out of the way. This is real networking. Not fake networking where people hand business cards to strangers. 7. When you have wealth, never invest more than 2% of y...

  Still, there are two factors that could help the semiconductor sector and which explain my hold position on SMH. In this case, while the  layoffs  being effected by Microsoft and others hint at the pains that these companies are going through, getting rid of employees could be seen as incrementing profitability by the market, depending on the way the data is presented during the earnings calls. Another factor that could help tech is the U.S. dollar index has fallen by  9%  since its November 2 peak, implying some relief for revenues obtained from the rest of the world by big techs. I am holding Semi-conductors waiting for the explosion of costs cutting measures to get profits back and the use of data to target purchasers.