The market appears to have entered a period of consolidation following a strong uptrend that peaked Oct. 15th. This correction does not look any different from the others that have occurred since the market bottomed in March. Moreover, our more conservative investors are invested in Bond/Income funds, most of which remain in a very low volatility uptrend.
More aggressive clients have a relatively small exposure to stock funds at this point and should not be overly concerned with what appears to be a garden variety correction. If it turns out to be worse than expected, we are protected by our trailing stop strategy. Sector fund trailing stops set at 12% and diversified stock fund trailing stops set at 8%.
Monday, October 26, 2009
Wednesday, October 21, 2009
10 21 09 Market Comment
The stock market is bouncing back after a bit of sideways action the last few days. There is not much threat of the party coming to an end until the Fed begins withdrawing the excess liquidity they injected earlier this year. Of course a correction could develop for whatever reason, but it would probably be short lived.
Our High Yield funds continue their low volatility uptrend. We continue to deploy our 50 day moving average stop loss risk management strategy.
For some more aggressive accounts I have added a small position in an Australian and Brazilian ETF; each of these amount to just 5% of account net worth. Moving average stops do not work well with stock funds or more volatile sectors like these. For diversified stock funds we use a trailing stop of 8% and for sector specific ETFs we use a 12% trailing stop. We do not want to have the position sold just to see it bounce right back.
* A trailing stop continuously moves the sell stop price up as the price of the security goes up. If the price moves down from its high by the predetermined percentage, it triggers the sale of the position. This allows the position to run on the upside while limiting the downside.
Our High Yield funds continue their low volatility uptrend. We continue to deploy our 50 day moving average stop loss risk management strategy.
For some more aggressive accounts I have added a small position in an Australian and Brazilian ETF; each of these amount to just 5% of account net worth. Moving average stops do not work well with stock funds or more volatile sectors like these. For diversified stock funds we use a trailing stop of 8% and for sector specific ETFs we use a 12% trailing stop. We do not want to have the position sold just to see it bounce right back.
* A trailing stop continuously moves the sell stop price up as the price of the security goes up. If the price moves down from its high by the predetermined percentage, it triggers the sale of the position. This allows the position to run on the upside while limiting the downside.
Thursday, October 15, 2009
10 15 09 Market Comment
The bull market resumed yesterday as the averages blew through short term resistance. Google reported better than expected earning after the bell today. For now the uptrend is intact. Muni bonds and junk bonds are moving in opposite directions. Junk up and muni's down. We will have to see which sector will lead the other.
Tomorrow Chris and I fly to Vegas. I might make my first attempt to tweet on twitter.
Tomorrow Chris and I fly to Vegas. I might make my first attempt to tweet on twitter.
Wednesday, October 14, 2009
10 14 09 Market Comment
The Dow Jones Industrial Average closes above 10,000 for the first time since Oct 3, 2008.
My son, Christopher Gerritz, has passed his Series 65 Securities Exam and is now officially a Registered Investment Advisor Salesperson. Congratulations Chris!
Christopher and I will be going to the Venetian in Las Vegas to meet with Michael Price and a group of about 70 investors and advisors. This will be an all day meeting with some of the best minds in the business. In next month's newsletter I will definitely be discussing what transpires. What happens in Vegas doesn’t necessarily have to stay in Vegas.
My son, Christopher Gerritz, has passed his Series 65 Securities Exam and is now officially a Registered Investment Advisor Salesperson. Congratulations Chris!
Christopher and I will be going to the Venetian in Las Vegas to meet with Michael Price and a group of about 70 investors and advisors. This will be an all day meeting with some of the best minds in the business. In next month's newsletter I will definitely be discussing what transpires. What happens in Vegas doesn’t necessarily have to stay in Vegas.
Tuesday, October 13, 2009
10 13 09 Market Comment
While we are still off the mid-September highs, the market has been moving back up for last 6 straight days. Futures indicate a slightly higher open today. Also, Intel and Johnson and Johnson report earnings today; we will have to see what the impact will be.
Junk bonds continue their low volatility uptrend. Muni bonds have been giving back a little of their previous months gain; I am looking for a possible buying opportunity.
We continue to use 50 day moving average stops to protect our positions.
Junk bonds continue their low volatility uptrend. Muni bonds have been giving back a little of their previous months gain; I am looking for a possible buying opportunity.
We continue to use 50 day moving average stops to protect our positions.
Thursday, October 8, 2009
10 08 09 Market Comment
Stock suffered a relatively minor correction in mid-September. The market is now once again in an uptrend. If this trend persists, the high yield bond funds we own should move up along with the stock market. Bond funds remain in a low volatility uptrend.
The All Ordinaries Index (Austrailia's equivalent of the Dow Jones Industrial Average) is surging. I may make a small allocation in an Austrailian fund or etf shortly.
The All Ordinaries Index (Austrailia's equivalent of the Dow Jones Industrial Average) is surging. I may make a small allocation in an Austrailian fund or etf shortly.
Tuesday, October 6, 2009
10 06 09 Market Comment
The Reserve Bank of Australia raised its benchmark interest rate to 3.25 percent, Tuesday, up from three percent. The Reserve Governors say "with Australia's economic growth on track and the risk of a serious contraction past, it is time to gradually raise rates from their lowest level in 49 years."
Australia's economy weakened, but did not fall into recession in the past year, because of strong demand from China and other countries for its commodities, such as iron and coal.
Australia is the first developed country to raise interest rates. The news is boosting equity markets and depressing high quality corporate bonds.
Australia's economy weakened, but did not fall into recession in the past year, because of strong demand from China and other countries for its commodities, such as iron and coal.
Australia is the first developed country to raise interest rates. The news is boosting equity markets and depressing high quality corporate bonds.
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