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Gold and Silver Mining ETFs Allocation Increased
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iShares Silver Mining ETF Allocation Increased
The price of silver has been declining due to...
- March 30, 2021
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Rich Bernstein Negative on Tech as Rates Rise
Rich Bernstein, CEO and CIO of Richard Bernstein Advisors,...
- March 18, 2021
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Is the Retirement Crisis Really a Crisis?
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Alarming Chart of the Stock Markets of 1987 and 2012-2013
Several days ago I posted a chart showing the...
- May 22, 2013
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Bill Ackman Thinks Diversification is for the Lazy
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T.T.S. Fear Index
Based on a scale of 1 (major complacency) to 10 (extreme fear):
Current and Selected Past Readings:
Date | Index | SMA Comment |
1/20/2021 | 2.3 | Massive stimulus and Fed support have nearly eliminated fear |
3/23/2020 | 7.0 | Coronavirus and oil price war panic investors to the highest level of fear since October 2011 |
12/26/2019 | 2.3 | Lowest level of fear in nearly two years (January 2018) |
12/21/2018 | 6.7 | Raised fears likely setting up a buying opportunity |
1/11/2018 | 1.8 | Unusually low fear could mean we're near the top in valuations |
1/13/16 | 6.3 | Terrible start to 2016 raised fears |
10/3/11 | 8.5 | A good tradable bottom (S&P 500 @ 1,085) based on lots of nonsense |
3/9/09 | 7.0 | Market bottom (S&P 500 @ 666); end of the world was nigh |
10/27/08 | 8.8 | Market had dropped 28% in 5 weeks, Paulson pulled out all stops to save Wall Street bankers |
10/12/07 | 3.2 | Market top (S&P 500 @ 1,562); worldwide housing bubble pricked |
Year-to-Date Performance as of February 24, 2021
Stock Market Advantage (SMA) Porfolio Versus Major Indices
Index/Portfolio | YTD % |
SMA Portfolio | 18.7% |
S&P 500 | 4.8% |
U. S. Small Caps | 12.2% |
Total U. S. Stock Market | 6.0% |
Total Int'l Stock Market | 6.0% |
Total U. S. Bond Market | -2.4% |
The Business Cycle and Sector Rotation
Studies of stock market history have shown a strong tendency for the market to follow a four year pattern of expansion and contraction. This phenomenon has been linked to a strong correlation with the presidential election cycle. Typically about two thirds of the time (2.5 years or so) the economy is expanding, followed by a year and a half of contraction (or bear market phase).
We appear to be approaching the peak of this cycle (within 6 months or so of) as energy has been strong over the past few months. Defensive stocks such as Unilever PLC (UL), Kraft (KFT) and Conagra (CAG) demonstrated unmistakable relative strength last week. This shift in leadership has typically presaged a fall in the equity market.
However, the four year cycle is not etched in stone. It can be off by many months. The previous bull market lasted around 5 years; much longer than usual. This was likely due to the extraordinarily low interest rates engineered by Alan Greenspan and the massive bubble in housing and home equity withdrawal unnaturally juicing the economy.
Interest rates are currently the wild card. Employment is still extremely weak. This could throw this cycle off somewhat as wage inflation pressures remain anemic. It is difficult to determine how this will play out. The average presidential cycle calls for strong gains this year with a still positive, but somewhat more subdued market next year.
The stock market, as always, remains an unpredictable mistress.
Click on image for larger version:
The Standard Business Cycle
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