Thursday, December 30, 2010

GWM Model Porfolio Non-Mutual Fund Holdings

The following chart shows a list of GWM Model Porfolio Non-Mutual Fund Holdings. The chart shows the symbol and the company or ETF name in blue colored lettering. The "Latest Close" is the share price.

The GWM investment style can best be described as "Trend Following". We scan the market to identify company stocks and ETFs that are in uptrends. We use Brian Shannon's AlphaScanner to screen over 6,000 stocks. The AlphaScanner provides us with three different ways or time frames with which we can evaulate the trend of the market, a stock or an individual ETF. I will discuss the Weekly Timeframe in this post.

Weekly Time frame  -  The longer-term and dominant trend -

The weekly trend is useful because it filters out the daily noise of the market. Additionally, we use moving averages to further smooths out price fluxuations, making trend verification easier.

Stocks do not go up in a straight line. Fluxuation is normal and should be expected.

Stock price movement or market structure can be categorized into 4 stages:

  1. Accumulation Stage
  2. Markup Stage
  3. Distribution Stage
  4. Decline Stage
On a weekly time frame, we want to invest in stocks or ETFs that are in a
Stage 2 or Markup phase. Our current holdings (minus mutual funds) are listed below along with their current weekly, daily and intraday stages.


Click on the text link below to view a graphic explaining the above concepts.






Sunday, December 19, 2010

Sector Analysis for Week Ending 12 17 10

Most GWM Model Portfolios include an allocation to equities. The equities allocation is subdivided into sub-sections that utilize different management strategies. One of these sub-sections or categories is titled "Equity Sector Rotation". Sector Rotation strategies can be a very effective long term.

The S&P 500 is comprised of companies involved in different industries; these various industries can be differentiated by sector, i.e., Energy, Healthcare, Materials, etc.  We monitor the market to identify the best performing sectors at the moment. Our strategy is to rotate into the top performing sectors.

As illustrated in the chart below we can clearly see that the materials sector, energy sector and consumer discretionary sector were among the best performers last quarter. The second chart examines last week's performance alone. It shows that investors have been rotating into the consumer staples and healthcare sectors. This gives us an indication that investors may be getting more defensive as the year comes to an end.

(Click on chart to enlarge it for easier viewing)


Last Quarter S&P 500 Sector Performance -


Last Week's Sector Performance -






Saturday, December 18, 2010

Interest Rates Rise - Bonds Fall

Fed Chairman Ben Bernanke's efforts to lower interest rates through quantitative easing have not delivered the expected results in 4th quarter 2010. Interest rates have, in fact, risen dramatically. This has caused a sell-off in various bond markets. Long term US Treasuries have been hurt the most, while high yield bond have fared the best.

As the bond market began to wane, our trend tracking strategic model gave us sell signals. Adhering to our sell discipline, bond fund positions were systematically liquidated.

Junk bonds and convertible bonds are really a proxy for the stock market. They are less affected by interest rate changes. Since we are bullish longer term on the stock market we recently added new long positions in one of our old junk bond fund favorites and a convertible bond ETF.

The chart below clearly illustrates the decline in high quality bonds.

(Click on chart to enlarge it for easier viewing)
 



Thursday, December 9, 2010

Market Comment 12 09 10

Interest rates suddenly rose this week causing a decline in government bonds.  While many bond funds are being affected, junk bond funds are holding up very well. Convertible bond funds are also doing quite well.

Due to unresolved issues concerning the Bush tax cut extention, the  market environment is uncertain. Until the tax issues are settled, choppy market action will likely be the norm. Once the tax issues are settled we'll see what trends develop then.

Tuesday, November 23, 2010

Monday, November 22, 2010

Steve Requests your Response - FOLIOfn -

Our new preferred brokerage firm and asset custodian, FOLIOfn, offers many benefits over Pershing LLC. At Folio, there are no per transaction commissions or transaction fees. All online accounts are paperless; account trade confirmations, account statements, tax statements, voter proxies and prospectuses are delivered to and stored on your own online secure file cabinet at Folio. All brokerage related paper will stop flooding your mail box at home.

Call or Click the FolioClient logo below to let me know if you are interested in learning more about switching to Folio.

Steve Gerritz
800-877-1967

Sunday, November 21, 2010

Pay Zero Commissions and Gain the Benefit of Better Diversification

Click on the pie chart to the right to see an example of the better diversification attainable at FOLIOfn. Due to the fact that our clients pay no per transaction fees at Folio, we can enhance the return potential and safety of client accounts.

After viewing the diversification flow chart for GWM Golden Years (our example), return to this blog post and click on the Folio link below to indicate your interest in switching from Pershing to Folio.


Thank you inadvance for taking the time to respond. You will definitely be glad you did.

Thursday, November 18, 2010

Junk Bonds vs S&P 500

Below is a performance comparison between JNK (junk bond fund ETF) and SPY (S&P 500 ETF) over the last 12 months. These charts show that junk bonds outperformed stocks by more than 60%. Moreover, they did so with almost 1/2 the volatility.

(Click on chart to enlarge it for easier viewing)







Wednesday, November 17, 2010

Video Spotlight - QE Made Easy

Quantitative Easy Made Easy


Click Here to View Video.

Low Volatility Bond Fund Chart

I locked in profits on most positions yesterday. I will reaccess the outlook as we get more clarity concerning recent market activity.

(Click on chart to enlarge it for easier viewing)




Tuesday, November 16, 2010

Market Comment 11 16 10

The market had another tough day.


The US dollar has been rising. Stocks and commodities are suffering due to their current strong inverse relationship to the dollar. See the chart below.


Every asset class, with the exception of the dollar, is falling. There is no place to hide. Concerns about China slowing down and European sovereign debt problems are appearently the source the problem.

Our low volatility bond/income funds have also been trending down. I did lock in profits in a couple of our positions on Tuesday. I will look to redeploy the money as the situation becomes a bit clearer.

Markets never go straight up. I anticipated a correction and it is now at hand. It will more than likely be contained and provide us with a buying opportunity shortly.





Saturday, November 13, 2010

Video Spotlight

David Teppen and Jeremy Grantham, two billionaire investment advisors, share their insights on where the market is going, both short-term and longer-term. These are must see videos.

Click here to view the videos.

Friday, November 12, 2010

Midday Market Report 11 12 10


(Click on chart to enlarge it for easier viewing)



Addition of FOLIO Institution has garnered a Great Response

The response to our addition of FOLIOfn (brokerage firm) to our list of custodian firms has been terrific. Click the FOLIO icon below to see why clients are switching over now. In the first day of the offer, we already have 4 clients transferring accounts.



Let us know if you want to learn more about the advanatages of Folio Client

Wednesday, November 10, 2010

Super New Custodial Account - FOLIO INSTITUTIONAL added to GWM Services Offered

GWM has added a new outstanding Asset Custodian. FOLIOfn offers unparalleled features and services for financial advisors and their clients. One of the biggest advantages is a very cost effective flat rate service fee as opposed to per transaction commission charges. This allows us take the cost of individual transactions out of the equation. As you are well aware commissions can and do add up. The flat rate is just 1/4 of one percent annually. The fee is deducted directly from your individual accounts, so there is no need to write a check or pay with a credit card. Without having to worry about the constraints of commission based transactions I can better diversify client accounts, enhancing both safety and opportunity.


Additionally, all account statements, confirms, tax reports, etc. are securely stored in your own FOLIOfn website electronic file cabinet. This effectively stops all that paper from being delivered to your mail box at home where you would have to sort and file it. Furthermore, with proper authorization, GWM can vote your proxies for you, relieving you of this burden as well.

Click the FolioClient icon below to see what their website looks like.





The minimum fee is $250, so FOLIOfn in not appropriate for accounts under $50,000.

Pershing's NetExchange Client

Click on the icon below:


Tuesday, November 9, 2010

Market Comment 11 09 10

I have been patiently waiting for the market to pull back before investing in equities. The market has declined for two straight days. Today's decline was different in that all asset classes pulled back in unison, stocks, bonds, commodities. Due this fact, I believe we will see selling continue tomorrow. The market has been very overbought and due for break.



The market is still in an intermediate uptrend and countertrend pullbacks are normal. Until proven otherwise, I will view a pullback as a buying opportunity. If it proves to be more than a short and orderly decline I will have to reaccess the situation.


Thursday, November 4, 2010

The Bulls are Running

The Bulls are Running.



The buy the rumor, sell the news reaction to the election and QE2 never came true. As I write, the market is in rally mode. Tomorrow's employment numbers report could be the icing on the cake if they come out better than expected.

There are many positives at the moment for investors. I will be adding to equity positions.

Please, Please complete and submit your Model Portfolio selection and Risk Tolerance Questionnaire right away if you have not already done so. I need to know your limitations on your portfolio mix between equity and fixed income positions.

Wednesday, November 3, 2010

Bernanke's Fed - $600 Billion QE2

Bernanke announced QE2 of $600 Billion or about 75 billion per month through June 2011. This is a little lower than the $800 billion to $1 trillion the market was expecting. Click link below to view Forbes article
.
http://www.forbes.com/2010/11/03/briefing-markets-federal-reserve-statement-bernanke-quantitative-easing.html?boxes=marketschannelnews

Market Comment 11 03 10

In yesterday's election, the Republicans gained control of the House, but not the Senate. The market response seems to be muted so far. As I write, the stock market is up slightly. I think investors are now waiting for Ben Bernanke's announcement later this afternoon on the amount of QE he is planning. 500 billion is the expected amount. If it is less the market reaction will probably be negative.

Saturday, October 30, 2010

Announcing the new GWM website

We have revamped the Gerritz Wealth Management website. It will go live shortly. I will highlight the features in the November issue of The Gerritz Letter.





Wednesday, October 20, 2010

Market Comment 10 20 10

With earnings season I was expecting increased volatility, and we certainly got it on Tuesday. Fortunately, volatility in the bond/debt/income funds in which we are primarily invested tends to be a fraction of what it is in the stock market.


Our relatively small equity positions are subject to this volatility. At this point the market is still in an uptrend. I will be watching closely for a character change in the market, especially if  the dollar continues to rally. If a down trend develops we will exit the positions.

Friday, October 15, 2010

Long Term Treasury Prices Have Peaked

Long-term US Treasury bond prices as represented by the ETF TLT have peaked. TLT has broken both its trendline and support. Long term treasuries are one of the victims of the expected rising inflation that will come with quantitative easing.  Investing in the inverse ETF TBT is a way to profit from the coming potential decline in Long Treasury bonds.

Thursday, October 14, 2010

The Dollar - Gold Correlation

The US dollar and gold has a negative correlation. As the dollar declines - gold goes up.
The Federal will be forcing the decline in the dollar as a consequence of "Quatitative Easy".
Commodities and stock can be expected to also rise. Volatility should be expected as well.




Wednesday, October 13, 2010

Market Comment 10 13 10

The minutes of the last Federal Open Market Committee (FMOC) have been released. The minutes reveal that growth is lower than previously expected and deflation is an increasing concern.  Accordingly, the liquidity added to the economy by QE-2 beginning in November should be significant. This gives both the bond market and the stock market a positive bias short term.

Wednesday, October 6, 2010

Equity Positions Added to Model Portfolios

The chart below clearly illustrates the volatility of the stock market this year. Most of the year we have enjoyed the low volatility uptrend in our bond/income fund positions.  I added a couple small equity positions to our model portfolios on Wednesday. While I have turned bullish on stocks near-term, we need to realize that these equity positions are going to be subject to larger day to day swings. It is the beginning of earnings season; Alcoa will be the first to report on Thursday.  As each major company reports either better than or worse than expected earning we will see the overall market react. I will have protective stops in place, but I need to give these investments enough room to breath.



Monday, October 4, 2010

QE-2 Quantitative Easing and the Market

Helicopter Ben Bernanke is adopting a new round of economic backstopping called "Quantitative Easing". He will sprinkle money around via Treasury bond open market purchases. This activity is the equivalent of printing money out of thin air.

While this is inflationary long-term, intermediate-term it bodes well for the stock market.

I have highlighted QE's effect on the market in the chart below.


(Click on chart to enlarge it for easier viewing)

The Gerritz Letter

The October 1, 2010 issue of The Gerritz Letter has been published. It should be in your email inbox now. If you do not see it, check your junk or spam mail folder and mark it as not junk mail.


If you want to have a copy of The Gerritz Letter delivered to your email inbox monthly click on the link below. It is provided at no charge.

http://www.gerritz.com/newsletter_signup.html

Wednesday, September 29, 2010

Doubleline Total Return Bond Fund vs S&P 500 Index

Doubleline Total Return Bond Fund beat the S&P 500 the last two months. It did so with a lot less drama, I might add.

(Click on chart to enlarge it for easier viewing)



 
 
 

Wednesday, September 22, 2010

Here’s a brief description of Emerging Markets ETF (EEM) holdings.

Here’s a brief description of EEM holdings.


The largest sector that it owned, as of Aug. 31, was financials, consisting of 25.1% of the portfolio, followed by materials, 13.72%; energy, 13.65%; information technology, 12.94%; telecommunication services, 8.57%; and industrials, 7.05%.

The countries where EEM invests the bulk of its money were: China, 18.36%; Brazil, 15.91%; South Korea, 13.09%; and Taiwan, 10.46%.

As of the same date, the largest company holdings were: Samsung Electric-GDR, 2.39%; China Mobile Ltd., 1.87%; OAO Gazprom-REG S ADS, 1.65%; Petroleo Brasileiro S.A.-ADR, 1.59%; and Banco Itau Holding Financeira SA-ADR, 1.54%.

Thursday, September 16, 2010

Interesting Observation

Last month, the stock market suffered its worst August decline in 9 years. September abruptly changed course and delivered a lightning fast sharp rally. What’s up with that? Just who or what is driving this volatility? I was very surprised to learn that it is the individual investor.


The retail investor, who is commonly referred to as “dumb money,” and the institutional investors, referred to as “smart money”, trade during different hours of the day. The dumb/retail money trades at the open while the smart/institutional money trades at the end of the day.

The dumb/retail money drove the market down in August with their bearish sentiment reaching an extreme not seen since March of 2009. The dumb/retail money then made a complete bi-polar turn-around and has driven the market up by about 7% so far in September, on extremely light volume I might add. The charts below provide the evidence.

August 2010


September 2010

Below are the results of the sentiment survey offered by the American Association of Individual Investors? It measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market short term; individuals are polled from the AAII Web site on a weekly basis. Only one vote per member is accepted in each weekly voting period. Notice that on August 29th only 20.74% were bullish. As of September 16th, the number has risen to 50.89% bullish. It has gone from one extreme to the other in the blink of eye.

Survey Results


These drive-by asssaults on both the downside and upside in the current range bound US market appears to be driven by daily news events and weekly economic reports rather than fundimentals or historical perspectives.


As mentioned in the August issue of The Gerritz Letter, bearish and bullish sentiment extremes can lead to market reversals. Extreme market sentiment is a contrarian indicator. Based on the current bullish sentiment readings, I would not be surprised to see the market correct fairly soon.

The GWM trend tracking style strives to invest with the wind at our backs and avoid turbulent trendless markets. We have identified some trending markets and have repositioned client portfolios to take advantage of these trends.

Wednesday, September 15, 2010

Market Comment 09 15 10

The recent stock market advance off the late August lows has started to show signs of stalling right at the top of the trading range that has contained market action for the past several months. The advance has been on declining volume and the major U.S. indexes are short-term overbought, so a correction or a reversal to the downside at this point could be expected.

(Click on chart to enlarge it for easier viewing)


Notice how the short, intermediate, and longer term moving averages are crisscrossing in the chart below. This represents uncertainty on the part of investors in the market.




We need to have the market decisively break above the trading range to remove some of the uncertainties and give longer term investors more confidence in the market. Until then it will remain a traders market.

Monday, September 13, 2010

Blog Blackout Period

Blog Blackout Period

We are in the process of adding and changing client portfolio positions. All GWM clients will be notified of portfolio position changes by email.

The Gerritz InSights blog will be reopened to the general public in a few days.

Friday, September 10, 2010

Christopher Gerritz, a GWM Employee, Presented with Auspicious Award

Billy Mitchell Award Recipient Recognized at the GAC


Author: Stephanie Miller

Published: August 23, 2010


During the 75th Grand Arch Council, Christopher Gerritz, was presented the Phi Kappa Psi Foundation’s William L. “Billy” Mitchell Award, recognizing a Phi Psi undergraduate who has courageously served our country. Brother Gerritz joined the Air Force immediately after high school and was stationed in Germany as a Cryptographic Communication-Electronics Technician for two and a half years. During his tenure at Ramstein Air Base, he was named the 435 Communication's Squadron's Airmen of the Year.


In July 2004, he was deployed as part of Operation Iraqi Freedom to Ali Al Salem Air Base, in Kuwait. After his service and upon being accepted to the Airman Scholarship and Commissioning Program he moved to Corvallis, OR to attend Oregon State University and while there joined Phi Psi’s OR Beta Chapter. Throughout his time at Oregon State he served as Chapter Treasurer and President, Vice President of Public Relations for the Inter-fraternity Council and was honored with several University wide awards.

This summer he will be commissioned into the United States Air Force as a Second Lieutenant and will be attending Pilot Training in Del Rio, Texas.

When asked why he chose to serve our country he responded, “I initially chose to serve for complicated, perhaps selfish reasons - for one, I needed it. The discipline and character I have developed through my military training is what made me who I am today. Additionally, I love my country, the principles it stands for, and the promise for the future as we work to usher in a new era of responsibility and peace for the human race.”

Thursday, September 9, 2010

Bond Yields Rising

Below is a chart that illustrates the decline in Treasury bond yields since April. We are now seeing the beginnings of a possible change in trend with yields braking through the top channel line. Bond prices run inversely to bond yields; therefore, higher yield means lower bond prices.

Investments in the low yielding US Treasury market represent a risk aversion trade. When the stock market is in rally mode investors will often times sell treasuries and buy stocks. I believe this is happening now.

Bonds have been the investor preference since April. We should know shortly if investor preference is shifting in favor of stocks longer term.

(Click on chart to enlarge it for easier viewing)

Monday, September 6, 2010

Market Comment 09 06 10

The market got a huge boost last week when the jobs report came in better than expected. Jobs are what the market wants to see. The market advance however was made on extremely light volume.

We will have to see if there is any follow-through next week when Wall Street traders return from their summer vacations.

Relative Strength of Stocks Versus Bonds



Relative Strength of Stocks Versus Bonds

The chart above displays the relative strength of the S&P 500 versus the long bond (30 year US Treasury Bond). When the line is rising, it indicates that stocks are outperforming 30 year treasury bonds, while a falling line indicates that bonds are outperforming stocks.

The relative strength chart above clearly shows that bonds have been outperforming stocks the last few months. The type of bonds we hold in our model portfolios are comprised of a diverse group of holdings, i.e., government agency bonds, corporate bonds, high yield corporate bonds, etc.


When the financial news networks, such as CNBC, refer to bonds they are generally referring to either the 10 or 30 year US treasury bonds. The long maturity bonds will fluctuate based on both interest rate changes and changes in the bullishness or bearishness of the stock market. Money will move out of safe haven treasuries and into the market as stock market rallies take hold and vice versa when stocks fall.

Unlike treasuries, high yield bonds act more like a proxy for the stock market. If the stock market rises high yield bonds tend to rise.

If the stock market rally that began late last week proves to have staying power, I will be adding to our high yield bond positions.

Thursday, September 2, 2010

The Gerritz Letter - Corrected Performance Chart

Below is a corrected performance chart for the Sept 1st 2010 issue of The Gerritz Letter. I inadvertently posted the one month rate of return figures rather than the full quarter rates of return. I will update the chart in The Gerritz Letter posted on our website as soon as possible.

The corrected quarterly rates of return should read as follow:

DBLTX =  6.41%

PTTAX = 4.66%

PDVYX = 3.94%

MWHYX = 4.19%

SPY = -3.25% (Spy is our benchmark - We do not current have a position in SPY)


(Click on chart to enlarge it for easier viewing)



I will also send out an email notification and update of the chart correction.

I think you will agree that the quarterly performance of our Low Volatility portfolio is very good, especially when compared to the S&P 500 results.




Friday, August 27, 2010

Market Comment 08 27 10



After three consecutive weeks of stock market declines, the bulls finally surfaced today and, supported by Fed chief Bernanke's encouraging words, pulled the markets off their lows. Despite Friday’s strong up move, the effort was not enough to propel the major indexes into positive territory for the week.


The Dow lost 0.6%, while the S&P 500 and Nasdaq gave back 0.7% and 1.2% respectively.

The economy is clearing slowing down and the markets have been adjusting to this reality. Individual investors are very bearish at the moment. Bearish extremes often times however lead to a short term turn in the markets. We may see the market go into rally mode for a few days.

Tuesday, August 24, 2010

Market in Oversold Territory

The market has closed lower 10 of the last 12 days.

As shown below, today's declines have put the S&P 500 back into oversold territory. The index is back down more than 5% year-to-date, down 6.66% since August 9th, and up just 2.9% off the July 2nd lows.



The market should bounce soon, but I remain skeptical of a rebound that has any legs. The technical condition of the market has deteriorated a great deal and risk remains high.

For now we will remain safely in our low volatility income / bond funds.

Chart source: Bespoke Financial

Thursday, August 19, 2010

Lipstick on the Dow

I borrowed this chart and comment from Chris Kimble. It gave me a chuckle, so I thought I would share it. Since we are out of the stock market at the moment we have the luxury of poking fun at it.


(Click on chart to enlarge it for easier viewing)




Chris comments: Does lipstick change the looks of this pattern? It could take just one day to make the potential Head & Shoulders pattern one for the record books! "Catch up" isn't something that you dip your French fries in. It's, among other things, the fact that equities can "catch up" with the fundamentals in a blink of an eye!


Definitions:




















Head and Shoulders Pattern
  
This pattern suggests that lower prices may be ahead. This chart pattern does not guarantee a decline, but none-the-less it is worth paying attention to.