November 30, 2016 SPY Signal = HOLD

November 30th, 2016

November 30, 2016

Your $1,000,000 investment in SPY ( 4905 shares )as from January 1, 2016 is now worth $1,080,964.

That is a gain of $80,964 for watching grass grow. ( excluding dividends ).

No commission, no risk associated with owning a specific equity, and no share going to a third party investment advisor.

You can also take comfort in knowing that SPY is the standard against which all professional portfolio managers are measured and in knowing that more than 80% don’t outperform SPY.

What is ahead ? Just market risk for the 500 big cap USA companies in your SPY portfolio. And, that risk will be addressed by the fact that, as a trend follower, I will not sit still for a protracted ride down. At any month end where the price of SPY is below SPYs 200 day trailing average of price, I will exit the market.

As of November 30, 2016 the price of SPY was $220.34 while its 200 day moving average was $209.47 and that is why I am staying in the market and holding SPY.

Richard Maurice Gore

Huma Mahmood Abedin….etc

November 4th, 2016

November 4, 2016

I believe in the adage ” Birds of a feather, flock together “, so I thought that knowing more about Huma Mahmood Abedin of Kalamazoo, Michigan, and Jiddah, Saudi Arabia would give me a better handle on “Crooked Hillary “.  Abedin is a Moslem of Indian-Pakistani descent and Vice Chair of Hillary’s campaign as well as being her number three aide when Hillary served as Secretary of State.  She started her work for Hillary as a White House intern during the Clinton administration.  She also works for the Clinton Foundation. She speaks fluent Urdu and Arabic and is an acknowledged expert on the Middle East having followed her growing up years at Jiddah with an educational focus on Journalism and Political Science at British and USA schools. Her acknowledged role model is TV journalist, Christine Amanpour.

But who is she ?  I got an insight by watching the Showtime documentary on Anthony Weiner. She impressed me as a soft, loving, supportive wife and mother, standing helpless and knowing better with eyes downcast and sad, while her husband, Anthony Weiner,  self- destructed and brought shame on her little family.  What I didn’t see was a bag woman for Hillary  projecting a hardened  edge in the vein of a Megan Kelly.  She is widely acknowledged as a person of enormous intellect and it is obvious Hillary sees her as a loyal friend and important asset, especially when it comes to deciphering middle east politics.

Other final thoughts….  It is being said that Comey was in a no- win situation, so he protected his ass. My contention is that he  should have looked beyond the impact on the FBI and James Comey. You and I have skin in the game and it is widely acknowledged that his announcement of further investigatory involvement is benefiting Donald Trump and will be pointed to as a major contributing factor if Hillary should lose. He should have kept his mouth shut and protected the FBI and his reputation by being able to point to an exhaustive effort while the election was playing out.  Nixon won in a landslide but was brought down by the facts that emerged post-election.  That is a better scenario than influencing the election.  And, what if she is innocent ???

I am a self- professed student of World War II and all the mistakes that led up to it including the self -deception of the German Industrialist Class that they could control…you know who….after the election.

I am not going to use the N word ( N-zi ). I am going to substitute the word “demagogue” as in Huey Long, Joe McCarthy, Benito Mussolini and Hitler. The essential cultivating ingredient for the growth of demagoguery is the  willingness of the population to gamble everything for change.  In my opinion, thanks to an obstructionist Congress which refuses to reform itself or  recognize that 1% of the population controls 90% of our wealth, we have created a core group which sees the candidacy of Donald Trump as our sole and last possibility for change. They are willing to overlook the veiled seriousness of comments like I could shoot someone in the middle of Fifth Avenue and still be elected.  They are encouraging the country to follow Donald and jump into the abyss because they see no alternative to haves versus have-nots

I am afraid to think of the aftermath.

I realize this has nothing to do with investing….except that 401ks abhor uncertainty.

Richard Maurice Gore

October 31…SPY still on a BUY

November 1st, 2016

October 31, 2016

As of right now, you made the correct decision to hold SPY these past ten months.

$1,000,000 invested in SPY on December 31, 2015 would now be worth $ 1,042,821 (4.28% excluding dividends )

Please remember, SPY is the benchmark against which all portfolio manager  performance is measured.

So, why pay anyone anything to handle your portfolio, if they can’t outperform SPY.  With just one share of SPY, you have a portfolio of the 500 largest  USA stocks with only market risk, and no risk specific to any one stock. And, you get a dividend of 2.20% plus the future growth of these companies.

Of course, there is still a two-month “wall of worry”  to climb before you can say you made it through 2016 in one piece.

The latest GDP growth figures should encourage Janet Yellen, Fed Chair,  to raise interest rates in December and , probably, the market won’t like that. Also, there is the uncertainty of the USA election and the market abhors uncertainty. Other possible surprises could include a confrontation over Syria, Ukraine, South China Sea etc., domestic terror .  And, who knows what tricks Putin has up his sleeve to create uncertainty in our digitally dependent world ? And, don’t forget this week’s jobs report which could point to economic weakness or an expectation of inflation.

So,  there is your  “wall of worry” for the market to climb.  But, do take comfort in the fact that you don’t have the myriad of negative surprises inherent in owning a specific stock, such as exploding cell phones etc.

I usually add to my portfolio, which revolves around SPY during November / December and this year I’ll begin that process as soon as the market reacts to the election.

Richard Maurice Gore

September 30 Signal

September 30th, 2016

October 1, 2016

Since SPY closed September above its 200 day moving average ( $216.92 vs $206.27 ), SPY continues on its Buy Signal,  up 5.3 % year to date, ( 6.94  % including dividends )

For sure , you know I am convinced the low level of interest rates makes equities ( read USA Stock Market ) the only game in town.

Enter the low energy, orange fluff head,  threatening, at the debate, a  market crash if the FED raises interest rates.

Now, what do you do if you are Janet Yellen, simultaneously being accused of keeping interest rates low to help Hillary Clinton but with insufficient evidence to raise rates…….. The answer……nothing.

In my opinion, this means its safe to invest in the leading stocks of sectors which do their business in dollars with minimal cross currency exposure….if the price comes to you…as it could courtesy of  banking woes and lower oil prices.

I believe in this market,  I am writing puts in companies such as FB and NVDA  instead of blindly purchasing the stock at today’s price. I’d rather take delivery at a discount off today’s price plus pocket a premium for having had the courage to have written a Put that gives me some price cushion without altogether excluding risk.

Richard Maurice Gore

SPY 500 a buy until Sep 30, 2016

September 1st, 2016

August 31, 2016

The USA stock market, as represented by the Etf  symbol “SPY”, is a basket of 500 USA stocks which trade as one stock.  SPY ended August at $217.44 per share, only 32 cents above August 1, and that says a lot about its lack of direction.

The good news is that the 200 day simple moving average of SPY is $204.03,…6.16% below today’s closing price.

So, the bullish trend continues.  This is reinforced by the fact that bond yields are low and offer almost no competition to the earnings yield of stocks.  There may be a misguided interest rate increase by the Fed but there seems to be nothing behind it in terms of strong data that would argue for a trend of rising interest rates.

If you had a million dollars invested in SPY on December 31, 2016, and ignored the December 31 sell signal, your million dollars would now have a value of $ 1,066,543 ( 6.65% excluding dividends ) ( 4,905 shares )

If you followed the sell signal of December 31 and then repurchased shares at the subsequent buy signal, your million dollars would now have a value of $1,040,667 ( 4.07% excluding dividends ) ( 4.786 shares )

If I had had my liquid resources invested at the million dollar level, my million dollars would have grown at the rate of 8.4% , but this is me unchained and investing in anything I want, based on my recognition that the investment climate is safe and that I am investing in Etfs and specific names that do most of their business in the USA. That means I am invested in IWM ( 2000 smaller cap companies ) and offshoots realizing that SPY companies contain too many energy names and firms that are forced to translate foreign earned profits into shrunken dollar profits on their quarterly income statements, or export at a disadvantage because of the dollar’s strength..

I am under invested at present based on my belief that SPY will continue to grow, but very slowly until the dollar weakens. My risk is  that the market will move higher with me not participating sufficiently. My thought is that stocks will sell off a bit but remain in the ” buy ” zone and offer better prices than at present for the next leg up.

Richard  Maurice Gore

July 31 SPY still on BUY

July 31st, 2016

July 31, 2016,

WSJ Headline July 30 / 31 ” USA in Weakest Recovery Since 1949 “

Just another brick in the USA stock market’s ” Wall of Worry ” ?

For me, as an investor and trend follower, it’s a significant signal that while SPY may still be in an uptrend, the trail is going to get narrower and flatter from here,  and more dangerous for individual stocks unless they carry attributes tuned to the new reality.

For me, SPY on its own,  won’t do it at this point.  Contains  too many oil dependent names….too many names dependent on higher interest rates for operating margin….too many names  dependent on a weak dollar to generate exports or protect dollar profits  already earned overseas.

For me, instead of SPY I will tilt heavily toward indexes whose components are USA focused.  Instead of SPY, I am attracted to the Russell 2000, IWM,  whose components are are smallish and not as likely to be dependent on foreign activity for profits .  I also like Utilities ( XLU ) and REITS, VNQ, as, generally,  they benefit from low interest rates.

Weak recovery will mean growth stocks possessing the right mix of attributes will provide outsize rewards.  The attributes I favor are #1 the story must make me conclude the stock possess a sustainable competitive advantage as evidenced by #2,  acceptable growth in Revenue coupled with sufficient Cash Flow to impressively  reward investors with dividends, buy backs, debt pay down, and / or  intelligent acquisitions and meaningful R&D investments. And, finally, #3, the chart.  It must  say that this equity in my portfolio will pass the test that 90% plus of stock pickers  fail…beating SPY.

I am only 60% meaningfully invested but  I am willing to go 100% to acquire great stocks  at great prices if somebody in the balcony shouts ” Fire “.and the audience rushes for the exits.  And, me remaining in the theater will still take some courage, with me constantly reminding myself that interest rates  are saying the market is a screaming buy.  That SPY is still above its 200 day moving average is consoling but not as re-assuring as low interest rates, a quiet Janet Yellen and declining DJT poll numbers versus ( ugh ) Hillary.

In terms of holding SPY versus following the model since January 1.

Buy and Hold:  4905 shares x $217.12 =  $ 1, 064, 974 ……6.5% excluding dividends

Model                 4786 shares x $217.12 =   $ 1, 039,136…….3.9% excluding dividends

RMG  mixed Portfolio……………………………………………. .7.1%   excluding dividends

 

Richard Maurice Gore

 

 

 

Month End SPY Signal, June 2016

June 30th, 2016

June 30, 2016

 

If I had told you last Friday, after the BREXIT announcement, that SPY would close June above it’s 200 day moving average of price, would you have believed me ? Was the sky falling in, or were there international money funds just trying to scare the hell out of you so that they could  pick up your shares at a more reasonable prices.?

As it turns out, the sky isn’t falling, exactly, but if you will look down and ahead , it would be fair to conclude the road may be littered  with potholes sufficiently deep to ruin you low profile rims, if not your portfolio.

On one side of the equation, you have low interest rates which may remain unchanged into 2017….plus an earnings season which gives every indication of being positive for stocks, well, some stocks.  On the other side of the argument, you have,  BREXIT and the potential for a  level of  international political and economic uncertainty that will make the dollar a safe haven for the forseeable future.  And that means it will be tough for dollar exports and inward remittances of overseas profits which need to get translated into dollars.  I’ve concluded, for me its best to stay with USA companies whose profits are mainly driven by USA revenues.

My lineup includes SPY  and Put writing involving July $200 and August $180 contracts.

ETFs  in descending order of investment: IWM, MDY, SPY, SDY, VNQ, XLU, ITA and XBI

Equities in descending order of dollars invested: T. VZ, NOC, TASR, AMZN,DLTR,FB, MCD, BAESY, SNE

Utilities: ED, EXC, AEP

If you had ignored the December 31, sell signal your $1 million invested in SPY  ( Shares  4905   ) would now be worth $1,027,744

If you had acted on the sell signal and repurchase signal,  you would now have ( Shares 4786   )  and they would be worth $1,002,811

The next buy / sell signal for SPY will be generated at the close of business July 31

 

Richard Maurice Gore

 

 

SPY Model Still On Green

June 1st, 2016

June 1, 2016

SPY closed May 31, 2016 at $209.84 per share.

SPY’s 200 day moving average of price closed at $ 199.97,

At 4.9% above SPY’s 200 day moving average the BUY signal for SPY remains in effect till the close June 30, 2016…..if you follow the back tested model I follow….which has generated only six trades since January 1, 2000…..five of the six SPY trades have been winners. The model has dramatically out performed BUY and HOLD.

I use the SPY model more as the backdrop for all my market decisions.  I, personally,  would not go out and buy SPY at $209.84 per share. Instead, just yesterday  I wrote 10 contracts to buy  SPY at $200, even if the price of SPY is $190 or lower at the options expiry  July 15.  I was paid a premium ( yesterday ) of  $1.07 per share to make this commitment.  This will work out to be 4.339% per annum .  The annual dividend for a shareholder of SPY is 2.20% per annum.  So, I am being paid more than twice the annual dividend of SPY ( now, not quarterly ) ) to be bullish on SPY at $200 per share.

If SPY had closed on May 31, below its 200 day moving price average, sell signal ,  I would not have made this trade. I would have been trying to guess how much SPY would sell off  and would use some of my sidelines money to write contracts to buy SPY,  at that estimated  level, for a greater premium… and continue to nibble in this fashion as SPY moved lower.

In this way, I would be averaging down my cost of SPY, something I would not do with any stock,  which could be sent to zero.  SPY will eventually come back, even if my heirs need to show some patience !

At some point soon, I will amend this post ( in upper case, as a postscript  ) to update your wealth effect if you ignored the December 31, 2015 sell signal and had continued to hold till  today ….versus following the model exactly. ( SEE POSTSCRIPT BELOW )

Richard Maurice Gore

PS: IF YOU DID NOT SELL YOUR 4,905 SHARES OF SPY ON JANUARY 4, THEY WOULD NOW BE WORTH $ 1,029,266…2.93 % EXCLUDING         DIVIDENDS

IF YOU FOLLOWED THE SPY MODEL AND SOLD JANUARY 4 AND THEN REPURCHASED AT HE BUY SIGNAL, YOUR 4,786 SHARES             WOULD  NOW BE WORTH $1, 004,294., EXCLUDING DIVIDENDS.

The model has no chance to get even until after the next sell signal.

 

Fed Up with the Fed

May 21st, 2016

May 21, 2016

Think smart guys can’t  get it wrong ?

Our ” Best and our Brightest ”  got it terribly  wrong  in  Viet Nam and did it again , a generation later , in Iraq.

Now, enter our  regional Fed officials ,  letting us,  know they have the  power, can toy with our financial anxieties  and that the jury is out on a June interest rate increase.

There seems to be no rational explanation why regional Fed officials can’t constrain themselves and just  let the next move, or non-move, be obvious and be data driven, rather than an ego driven mouth trip.

We used to play a game called ” Bullish or Bearish “.  This is a game for wannabe ” traders ” and requires fast and intuitive thinking.

An event is announced,  and it is your task to verbally pinpoint the impact on different areas of the financial  market; currency,  precious metals, the stock market,  the bond market,  housing market etc  that would be positively or negatively impacted by the event.  And, that’s at the macro level.  You can drill down through sub categories into specific situations.  The more specific you  get the more valuable your correct answer.

For instance, at the start of the financial crisis ,  I had  said the housing market was collapsing  and mortgage loans were beginning  to default. And , you said  you were  bearish on buyers  of Collateralized Debt Obligations, CDOs ,  and ultra bearish on issuers of Credit Default Swaps ( Credit Insurance Issuers ) and named AIG as a short target you would have been a gzillion percent correct !

This week,  the Fed hinted strongly  about a rate increase in June.  So  investors,  ( governments,  institutions , hedge funds,  and individuals ) ,  must consider the hint tantamount to an announcement and see the need to consider the  bullish or bearish implications of the hint becoming  reality.

Any increase in interest rates by the Fed will strengthen the  dollar because, simultaneously,  interest rates in Europe are being  lowered  to stimulate economic activity. Europeans  will buy dollars and invest  in USA issued bonds, because money seeks a higher return.. ( Short the Euro ? )

A  stronger dollar will make it more difficult for USA firms to export because a stronger dollar will weaken the purchasing power of the local currency of  overseas buyers ).  Loss of exports will mean loss of USA jobs. ( Buy equities targeting USA sales, including overseas exporters  to the USA , and avoid USA exporters carrying a cross currency sales pricing handicap.? )

The stronger dollar will make it more difficult for USA firms whose overseas manufacturing , operating  and sales activities, result in an accumulation of foreign ( local ) currency profits.  These profits need to be considered converted back  into dollars  whether or not the actually  remitted home to the USA, because such non-repatriated profits will still get included in the USA parent’s consolidated income statement. But,..at a lower cross currency valuation  , and thus  have the net effect of reducing  the consolidated  world wide profits of the USA firm.

How many times have you heard that the quarterly result of  a USA company was a disappointment because overseas earnings did not translate well on the USA firm’s consolidated  income statement ?.   Also, lower stated profits will have  an inhibiting effect on the capital investment decisions made  by USA Boards.. ( Avoid USA firms which generate a substantial amount of operating profits overseas ? )

As the dollar gets stronger, the price of commodities, including oil,  gold and precious metals weakens.  And this means closing down rigs, mines etc and the loss of more jobs.

The down stream impact of a strong  dollar will negatively impact overall consumer confidence and undercut any attempt to create the ” wealth effect”  required to get consumers to buy houses and big ticket items. The consumer is 70% of GDP and a stronger dollar can be the psychological wet blanket the stock market can absolutely  do without to push toward  higher stock prices.

Bottom line, based on the present lackluster performance of our economy, a rate increase by the FED could dramatically increase the possibility of a recession. Not Needed YET !  Got the picture ?

So then ..Why increase interest rates ?

1 – To keep Russia and Iran on their heels ?

2- To give the big USA banks the profit margin they need to create profitable loans. ?

3- To give China the possibility to keep exports ( including to us ) steady so that China’s expansion doesn’t falter and create the need for further  Chinese currency devaluation..?

4- To give Europe and under developed countries an opportunity to reflate their own economies by exporting to the USA while American expansion takes a time out for the sake  of world prosperity.?

5- To give the market a rest and re-set of valuations  before the next leg up.?

None of the above are worth snuffing out an upward trending stock market ( wealth effect )

To me, it seems the smart money, including George Soros and Carl Icann, already recognize this and they  are bad mouthing the Market because they have established positions which will allow them to invest at more ” realistic ” valuations if the FED makes good on its hint…

Count Mini Me in with the smart money because   I am way under invested,  but still invested enough  to check my year to date  unrealized Profits at the end of each day.

We are still on a ” buy SPY ” signal.  But,  I am committed to accept  SPY shares  at $180 and $ 185 per share if SPY falls below$ 180 and $185  by July 15.  I do not consider it prudent for me to blindly buy SPY  at today’s closing price of  $205.89. when I can get paid a premium equal to SPY’s yield for being patient instead of exposed.

Remove the interest rate cloud and I will consider getting  much more involved and aggressive, bearing in mind that for the past 50 years between May and November the average gain in the market has been only 1.3%……November thru April 7.2% average gain.

Richard Maurice Gore

 

 

 

 

Index to Gore Time Capsule Posts

May 9th, 2016

May 9, 2016

All are found in the April archives except ” Lilibeth Gore and Me ” which is in May archives

#1     Maurice Gore….To the New Babies, Sammy and Cooper

#2     Throggs Neck

#3     Home Base,  2923 Myers Street

#4     My Fathers Family

#5     My Mother’s Family

#6     A Few More Words About Ruthie

#7     Maurice Gore,   Of  The Merchants Bank of New York

#8     A Tale of Two Banks

#9     ” My Matt ”

#10       Lilibeth Gore and Me

 

 

 

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