Timing When to Buy and Sell Stocks

                     

The financial media has a habit of commenting on timing the securities markets. It cannot stop for a good reason.

                                                   

Securities-timing articles fill space in blogs  and publications, over the air, and the internet.

                       

Yet, independent research constantly shows that market timing never works consistently. Mutual fund management companies know that in-and-out investors never do as well as their buy-and-hold, long-term statistics show.

                       

Reading also that a financial article telling how a rally trend in one security class may be finished, and it may be time to get into another type, should be a danger signal, not a buy opportunity. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Avoiding Financial Bubbles With Regulation?

                      

The purpose of the administration’s attempt to regulate the economy amounts to a foolhardy attempt to smooth out the effects of booms and financial jolts.

                                           

The U. S. has repeatedly been through recurring economic cycles over many years. Other economies around the world have experienced the same.

                       

Over-regulation or overly-strict regulation never works. The effort always has but a short term goal, but, nevertheless, is used because it’s always a political measure to temper public unrest.

                       

Dodd-Frank is excessive regulation that will not help. There is the usual political factor that overrides all supervision that the regulation affords. Easy money and the subprime crisis were what Congress and the administration used to create problems, not the lack of supervision.

                       

I have commentated on this repeatedly, mentioning how simple bank guarantees and not having “mark-to market” accounting for banks in an emergency, would have been the alternative corrective solutions.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Does Media Really Select Financial Advisers?

                   

The financial media depicts financial advisers with its imprimatur, as storehouses of all valuable knowledge. The media invariably deems to put forth commentaries on advisor suggestions as the best advice available.

                       

Somehow, the media manage to find these pundits from the the over 100,000 who ply the trade in the U.S. alone.(I don’t want to get into the subject of how these advisers manage to get selected for quotes in the media.)

                       

But there isn’t advice from these sources that cannot be often questioned, especially when it comes to bonds, The quoted financial expert invariably never fully discusses the principles of duration when it comes to these investments. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

TIPS Can Be Poor Choices

                         

The financial media often comments how TIPS funds can legitimately inflate yields, in accordance with Securities and Exchange Commission rules. It’s easy to be hoodwinked into believing you are getting more than you are, while enjoying benefits of inflation protection.

                       

I have never been a fan of TIPS. I have always explained its shortcomings on the return you get and tax detractions. And how you can avoid inflation’s effect, instead, on fixed income investments, with proper use of duration principles.

                                           

In fact, most investors and those in the financial media are in the dark about the use of duration principles. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Governmental Strict Payroll Regulations

                       

Have government payroll controls at companies which accepted bailout funds solved any problem, apart from drawing attention from Washington’s inability to do anything correctly to resolve recession and job problems?

                       

When you hire personnel, you should pay market labor prices. Or you get inefficiency, with the best employees leaving for other opportunities.

                       

Executive earnings were never a factor in past financial meltdown. They were insignificant numbers, relative to overall financial problems. Executives now are consistently scapegoats by ignorant and crowd-pleasing politicians.

                       

Only politicians can tell executives they are making too much money. How about actors and ball players? And reporters? Are they next?

                       

Many in the media are not conversant with how such controls are an integral part of state capitalism, such as the type fascists operated in Italy, Germany and Spain in the 1930s. They all started out meddling with business the same way left-leaning politicos in the U. S. are today. The media is not concerned about the slippery slope. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Market Direction Signals

                  

I have found many market-direction signals in my investigation of strategies. However, many described in the media from time to time are not as sensitive as others.

                       

The short term treasury bill rate has always been  important, until the Federal Reserve decided, in recent years, to keep money at basically zero cost. When they do decide to raise the rate, there will be an indication of actionable policy change.

                       

There is always that question of sensitivity. For instance, look at the Misery Index, That is the addition of inflation and unemployment rates. Great for psychology but not overly sensitive for quick market action decisions.

                                       

I have seen the “Crack Spread” or refinery profitability range index. But that’s seasonal and hard to gauge for investment strategy.

                       

An even less sensitive investment strategy indicator is the Baltic Dry Index or BDI. This calculates the cost of moving bulk raw materials across oceans and involves mainly those companies involved and ship rentals.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Regulation of Hedge Funds

                    

More hedge funds are now subject to SEC regulations. However, regulate them too severely, and they will no longer be considered hedge funds in the true sense. Not by the definition of what an investment hedge fund tries to do.

                       

Their managers need secrecy in order to trade. If they divulge their intentions in advance, as stricter regulations promote, their efforts and objectives will be neutralized. Other investors will be able to counter strategy, to make any proposed hedging worthless or even dangerous.

                       

Moreover, hedge fund activity had little to do with the financial downturn of 2008. Over-regulation is another instance of the administration’s jousting at windmills for no real purpose, other than catering to its anti-business,  constituency.

                       

Moreover, “family” funds have managed to escape government tentacles with obvious political ability.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Derivatives are Valid Investments

               

Politicians love to point fingers at derivatives as bad, and a major cause of our past financial distress. But derivatives perform an important function as a financial instrument.

                   

Timothy Geithner, the former Secretary of the Treasury, overlooked meetings, monitoring trading of derivatives, when he headed the New York Federal Reserve. So, the mysterious workings of derivatives should not have been so foreboding, dangerous, and deadly, supposedly causing the 2008 financial meltdown. And they didn’t warrant them the notoriety they received.

                       

Derivatives trading now have tougher regulations. I can see having more transparency, but derivatives make financing cheaper in the long run.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Be Careful About Insurance “Estate Planners”

                                 

Be careful about buying life insurance from estate planners. It is the job of most of them  to sell life policies. They sell other financial products as well; various types of annuities and mutual funds. But their options are limited and your’s become restricted.

                   

They know their products, but they have a conflict of interest, particularly should they be tied to one life insurance company.

                   

When they are selling mutual funds, you are probably not getting the lowest cost selections. The latter have to be higher cost to warrant compensation for salesmen. Lower cost mutual funds are essential to your benefit, no matter what the sales pitch may be on past or future “performance.”

                   

If you need substantial estate advice, see a non-salesman accountant or lawyer, specializing in the field. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Our States’ Poor Finances

                      

Most of this country’s states are having financial trouble. Pension and other poorly undertaken contracts are making it impossible for most to balance their budgets. Any spending cuts have not kept up with demand for state services and outlays.

                       

Yet,  legislators keep handing out promises and largess. School costs keep growing. Public service and government-worker union pressures are destructive for officials seeking budget solutions.

                       

Unionized employees often get 70% or more of their income for retirement each year, after only thirty years or less of work.

                       

Chicanery, legal or not, is also at work. Many government pensions are permitted to be ‘spiked’ upward with overtime pay and raises, before retirement.

                       

Fact: It takes $1 million in capital funds at 5% to get one retiree $50,000 annual pension each year. And that 5% is not being easily achieved these days.

                       

Bankruptcy to break pension contracts is not an option for states, without federal law changes, but maybe for cities and towns.

                       

There will have to be some freeze in obligations or change in contracts for individual solutions.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

   

Gold Investing?

                      

The market for gold as coins and bullion has been going well on average, over the years, thanks to the weakening purchasing power of the dollar over the decades. I have frequently commented on this because I feel gold can be speculative for most folks who have no idea about its downside.

                       

It can fall sharply, with any attempts to balance the U. S. budget, which will have to be done. And gold does not earn income or revenues upon which to establish intrinsic value.

                       

In bad times, it’s a psychological defensive weapon in

many ways and psychology changes.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Securities Analysts’ Business Experience

                     

Securities analysts give you investment advice. They suggest what securities to buy and sell. Analysts constantly critique management of publicly owned companies. They claim to know what products and services companies ought to produce and what they should charge. Analysts propose when to hire and fire top executives.

                       

Yet very few analysts have hands-on ability to understand how any business operates from the inside. They are not even that proficient concerning Wall Street inner activity.

                       

As I have often said, they usually haven’t the business experience to successfully run a pushcart. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)