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Going positive

That’s it for me. I’m going positive. I now believe equity markets will do well in 2010 and that I should have more money in equities. There are five signs:

1. There is huge money on the sidelines. It will go into the stockmarket, especially U.S. markets. There is no other choice.

2. Companies are reporting better earnings — much from the savings of all the people they fired.

3. The Fed is tightening.

4. I feel positive. We’re over the worst — though the banks got lots of awful real estate loan problems.

5. This chart:

It popped into my inbox yesterday. The headline was Here’s The ‘V’ That Impaled The Shorts, And It’s Growing. And the words were:

This was today’s most important data point to pay attention to — the Conference Board’s Leading Economic Index (LEI).

It rose 0.3% in January, after rising 1.2% and 1.1% in December and November respectively. This is shown by the red line below.

The LEI has been rising for ten straight months, and had a critical inflection point right before the gigantic market rally of 2009. It also correctly began to dip before the U.S. entered recession in December 2007. Simply put, you made a lot of money listening to it recently, and historically it’s one of the few reliable forward indicators that exist.

While today’s January release was slightly weaker than the 0.5% rise expected by many analysts, it nonetheless continued the LEI’s important uptrend. We also shouldn’t forget that the LEI is currently higher than at any time in many years — which means that we can count on growth to hold up at least through the first half of 2010 just based on where the economy is now.

Economist Ken Goldstein @ The Conference Board: “The cumulative change in the U.S. LEI over the past six months has been a strong 9.8 percent, annualized. This signals continued economic recovery at least through the spring.”

It’s even so high right now that the index could drop a bit in the future, which seems inevitable given the spike, but still augur future economic growth. Anyone short ignores this ‘V’ at their peril.

You can receive their daily chart. Click here.

What will I buy? I’m eyeing some tech stocks that are out of favor, like Google, Research in Motion and Qualcomm.  I’m eyeing some of the mainstream miners, like BHP and Rio Tinto. And I’m eyeing some of the ETFs that mirror the market — like IJJ, IJK and IWF. And I’m looking at strong overseas countries — like Canada, Australia (EWA), Brazil (EWZ) and Chile (ECH). Today might be a good day to buy. Futures look awful.

Spec of the month — Virnetx (VHC). The company makes patents in software security.  While I’ve been trying to figure out Virnetx’s technology in the last couple of days, the stock has been on a tear.

One newsletter wrote, “. I feel that VHC’s licensing program can be described as having a potential of many billions of dollars.”

The company itself  says VirnetX Holding Corporation is engaged in commercializing its patent portfolio by developing a licensing program, as well as developing software products designed to create a secure environment for real-time communications such as instant messaging and Voice over Internet Protocol. The Company’s patent portfolio includes over 48 U.S. and international patents and pending applications that pertain to LTE/4G security specifications and provide the foundation for the Company’s unique GABRIEL Connection Technology.

There’s plenty on Yahoo finance, though most of its seems to be press releases from the company.

About this web site. Your web site is about investing. Why do you include French  shoes, and other irrelevancies? Why do you keep quoting other people? ” I got these questions several times this week. I’ll explain:

1. It’s not possible to find great investments every day. It takes eons to do the research. Cash is a good place to be in volatile markets. The richest young real estate entrepreneur I know didn’t buy anything for three years. He stayed in cash. He waited. He just bought the most incredible commercial property bargain I’ve ever seen.

2. I quote other people because I dig what they said. They taught me something. Sometimes they do make stock recommendations — like the Hickey ones from yesterday. Sometimes, they’re just straight out commentary on the insane world of finance (or of the last few years). It’s useful to understand what went on, so you don’t repeat the same dumb mistakes. Like assuming asset values will keep rising at 30% a year ad infinitum or borrowing and borrowing and more borrowing.

3. Life is not only about investing. It’s also about happiness. Like this family. From National Geographic:

Update: January 11, 2016. I removed this image at the request of the photographer, Stephanie Sinclair.

You can find the photo on National Geographic’s web site  here.

The man at the center of the photo is an American. He’s a polygamist. He’s 88. He has five wives, 46 children, and 239 grandchildren. “I’ve had a blessed life,” he says. “I wouldn’t trade places with anyone.”

Life is also about finding  fun things. Like this ugly shirt I found in the Hermes store in Paris.

It costs 1480 euros — about $2,001.26 at today’s Euro price (courtesy Bloomberg).

It also about going to great Paris museums and discovering these bat teeth in the musée du quai Branly.

 

A hundred years ago, the natives of Papua and New Guinea used these bat teeth as money. Now they use the worthless fiat money we all use. Isn’t “progress” fun?

Life is also about great jokes.

A Jewish congregation in suburban Boston honors its Rabbi for 25 years of service by sending him to Hawaii for a week, all expenses paid.

When he walks into his hotel room, he finds a beautiful nude woman lying on the bed.

She greets the Rabbi with, “Hi, Rabbi, I’m a little something extra that the President of the Temple arranged for you.

The Rabbi is incensed. He picks up the phone, calls the President of the Temple and shouts, “Greenblatt, what were you thinking?

Where is your respect? I am the moral leader of our religious community! I am very angry with you and you have not heard the end of this.”

Hearing this, the naked woman gets up and starts to get dressed.

The Rabbi turns to her and asks, “Where are you going? I’m not angry with you.”

Seniors in love. I suspect we’ll be here soon.

An elderly couple were invited to an old friends home for dinner one evening.She was impressed by the way her lady friend preceded every request to her husband with endearing terms such as: Honey, My Love, Darling, Sweetheart, Pumpkin, etc. The couple had been married for nearly seventy years and, clearly, they were still very much in love.

While the husband was in the living room, her lady friend leaned over to her host to say, ‘I think it’s wonderful that, after all these years, you still call your husband all those loving pet names’.

The elderly lady hung her head. ‘I have to tell you the truth,’ she said, ‘His name slipped my mind about 10 years ago, and I’m scared to death to ask the cranky old asshole what his name is.’

Harry Newton, who’s going bullish on markets for 2010 — reversing his previous bearish position.

13 Comments

  1. Tom Thompson says:

    Harry:
    Great columns and links!!!
    Is it possible to search past columns by keywords?
    Some times I will discuss your columns with friends, associates, etc. and they will ask about something? Is there an easy way to look it up and forward it to them via email?
    Best regards, Tom

  2. RichL says:

    Harry, you should by all means comment on things other than investing. You are and will be much less than perfect in your investment insights- (as most people are) but you certainly know what an ugly shirt looks like! The jokes are good too.

  3. Bob in Jax Bch FL says:

    Harry, I like the variety. I particularly like the critiques you give on the products you use.
    They are honest and fair.

  4. Phil from Kentucky says:

    Harry
    Keep up the good work. I think your column is great. Some of the comments from readers smack of frustration with the way things are going in the world right now.
    Philip

  5. Buckfutter says:

    Harry- Be very careful about going bullish on this market.The stock market is a shadow of economic fundamentals. And fundamentals stink.

    *Business profits are climbing because they are laying people off. This is not sustainable. Whose going to buy their products and services in the future if no one has a job?

    *The dollar is stable only because the Euro is weak. Europe's gov't. debt levels are worse than ours.

    *DON'T FIGHT THE FED! Although I can't imagine why they would raise rates in the midst of a continuing global recession/depression (it ain't over).

    *Your “going positive” appears ominously as a contra-indicator to me.

  6. Putwo says:

    I love your comments on stocks, the world, ugly and beautiful things and people – please keep it up

  7. Scott says:

    I'm using IE7, and since you have switched to the new format it has always cut about 1/4 off the right of every graph and picture you embed:(

    • Craneguy says:

      Get IE8 (or better yet Firefox) and use your CTRL key and the mouse wheel (or +/- keys)

      IE7 is a virus and spam magnet…

      Enjoy!

      Harry, You might want to put this advice on your page….

  8. Jim says:

    Dude
    I respect your opinion and even understand how you might get there; plus you could have also listed the potential growth stimulus building from India and China. It is an emotionally frustrating investment time, but I disagree with your premise. I could only start to agree if I assume the global financial markets are not interconnected. Too much global commercial and domestic mortgages and credit debt still left to unwind. You may get lucky on timing for a year, but it is still going to get much worse at some point. I also enjoy your other commentary very much. We are humans afterall and life is rich and to be celebrated in all of its complexity! Keep up the good work.

  9. capt.bill says:

    GOOD MORNING: Like Fred – I'm not sold – will not go into a tizzy here – will only say I'm at an age where good solid, guaranteed yields are perfect… I may never return to the markets… I will second Fred's comments and only add that unemployment is still rising and the extended unemployment benefits will run out the end of this month if not extended. That will add a lot more pressure to housing and other retail… I don't see any positive signs yet in either Ohio or Florida – and look at the large announced lay-offs from the likes of American Airlines, Cisco etc
    capt.bill

  10. fred says:

    Harry…that's it? You just woke up today and decided “I'm positive. I now believe equity markets will do well in 2010…I feel psoitive. We're over the worst..” What happened to your mantras – cash is king – when in doubt stay out? Other than the Fed tightening which is having no reaction in the market this morning because this move is understood to be “policy normalization” and NOT “policy tightening” there is nothing new in the reasons you sight for your new bulllishness. Money on the sidelines is nothing new. Better corporate earnings derived from firing people is not top line growth. And if the Fed were to tighten – which it will eventually- that will spook matrkets as money becomes more expensive. As you correctly point out- real estate loan problems will hurt banks and ripple through the economy. So now it's time to take the money out of safe CD's and buy stocks? I think we need a better reason than you woke up in a good mood today!

  11. Roderic says:

    Harry, One of the reasons I've been following your site for so long is precisely because you write about life, and not just investments. It is that unique combination of serious investing discussion and light hearted family news, life observations and then the jokes at the end. This personal touch to your blog is what has kept me a daily reader for the last 8 years.
    Keep it up!

    • Carlos says:

      Harry-I much prefer the mix you present of the markets, finance, travels and jokes. People have a choice to surf where they want so let them go somewherelse for strictly technical analysis and market outlooks.