{"id":28221,"date":"2014-10-14T09:34:54","date_gmt":"2014-10-14T13:34:54","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=28221"},"modified":"2014-10-14T09:34:54","modified_gmt":"2014-10-14T13:34:54","slug":"this-time-it-really-looks-real","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=28221","title":{"rendered":"This time it really looks real"},"content":{"rendered":"

When stocks fall they trigger a search for “Predictors,” like the 200-day moving average, which the S&P has now crossed.<\/p>\n

\"200DayMA\"<\/p>\n

MarketWatch says<\/p>\n

Dating back to 1933, the S&P has traded above the 200-day moving average 68% of the time. During those periods, it has risen by an annual rate of 11.3%, according to Eddy Elfenbein of the Crossing Wall Street blog<\/a> . The 32% of the time spent below that number has resulted in a yearly loss of 1.1%. <\/span><\/p>\n

Yesterday some observers noted that the VIX spiked. When it spikes, the theory is the market goes down big-time.\u00a0 I put two charts together:<\/p>\n

\"VISversusSPX\"<\/a><\/p>\n

There definitely is a relationship. Does the VIX spike before, or during a sell-off? That’s hard to figure. The good news is that the VIX hasn’t spiked as much as it did in late October 2008.<\/p>\n

There remain the usual concerns:<\/p>\n

\u00a0+ Slowing Europe, especially Germany. France got downgraded last week.<\/p>\n

+ Slowing Asia, including Japan and maybe China, though the latest news out of China seems positive.<\/p>\n

+ Irrational Russia, willing to shoot itself in the foot.<\/p>\n

+ The middle east — Syria, Iraq, and ISIS.<\/p>\n

+ Lower oil prices, and whatever that means for slowing industries that use oil and the industries that make it.<\/p>\n

+ Ebola and the increasing panic — largely because we don’t seem to be able to deal with it.<\/p>\n

+ Slowing US business, especially the big part that does business with Europe.<\/p>\n

So what should you do?<\/p>\n

Several noted people have sold everything and gone to cash. Dennis Gartman told CNBC yesterday he’s now over 80% in cash and short-term securities. That seems extreme, since trying to time the market has never worked.<\/p>\n

Another theory is there are three places to “invest” — stocks, bonds and cash.<\/p>\n

Bonds are paying increasingly less (nice expression?). Thirty year treasury bonds are now paying less than 3%. Presently 2.95%. Lowest in over five years. Ten year treasures are paying 2.21%, also very low.<\/p>\n

One theory I heard today: when bonds pay so little, investors have to pile into stocks.<\/p>\n

The best strategy seems to be to sell stocks that are not working — have fallen more than 10% — because they’re likely to fall even further. And be ready to buy stocks that appear that might get suddenly cheap. Good idea: Place some low limit buy orders.<\/p>\n

The averages are of course averages. They mask all ills. I found this list on CNBC’s web site of stocks that have recently fallen more than 40%. Note the list includes many “hot” stocks that the network (especially Cramer) has pushed in recent months:<\/p>\n

\"ListOneDown\"<\/p>\n

\u00a0\"ListTwoDown\"<\/a><\/p>\n

The moral of this chart is simple: Take your profits quickly and play with the bank’s money. Hot stocks get hot and cold very quickly, especially in squirrelly markets like what we have. An example, which I recently sold:<\/p>\n

\"GPRO2\"<\/a><\/p>\n

Last night I played tennis with Matt Wood, a brilliant 26 year-old tennis player. He doesn’t care about the market’s gyrations. He does dollar cost averaging. Every month he takes a fix amount of money (his savings) and buys more of several favorite index funds. As he explains, “If the market is down, I get more. If the market is up, I get less.” On average it works nicely.<\/p>\n

And it’s a great discipline — if you’re 26.<\/p>\n

Not if you’re 72, you don’t have a job and your liquid investments are in stocks, bonds and cash. And every day it does down, you feel poorer. Unlike Matt, who relishes the bargains.<\/p>\n

So my wealth declines. But my tennis improves. It helps to hit with great players like Matt.<\/p>\n

And there are wonderful things to be happy for.\u00a0 The\u00a0 family is healthy and Sophie can still pull funny faces. This is her with her gorgeous mother, my daughter, Claire:<\/p>\n

\"sophiefunny\"<\/a><\/p>\n

Amazing deals on SSDs.<\/strong><\/span> A solid state hard drive is the fastest way to speed up your computer.\u00a0 SSDs have come down dramatically in price. Example:<\/p>\n

\"cheapssd\"<\/a><\/p>\n

This one is from Rakuten.com. Click here.<\/strong><\/a> But every online retailer, including Amazon has cheap ones, including much bigger sizes.<\/p>\n

When to say NO to your doctor.<\/strong> <\/span>When it’s time to stop takng pre-condition pills and hurting yourself with the side affects. Excellent, long article from Men’s Journal. <\/em>Click
\nhere.<\/strong><\/a><\/p>\n

\"HarryNewton\"<\/a>
\nHarry Newton who notes recent market have tended to be up in the morning and collapse in the afternoon. If you’re selling something, do it in the morning.<\/p>\n