Archive for November, 2013

The Iranian Drone Threat

Wednesday, November 20th, 2013

November 20,2013

 

I realize this isn’t financial ….but

Ever since 911 I have been extremely sensitive to the possibility of our aerospace  technology being hijacked and used against us.

Both Iran and Pakistan have governments which are capable of being subverted and brought further under the control of  “War of the Worlds” Jihadi fundamentalists.

That should eliminate Iran from having a ” full carry ” nuclear permit the way an unstable person should be excluded from owning assault weapons.  Pakistan’s nuclear capability  is a fait accompli , and,  I understand that capability  was financed by Iran.  Iran is known as the world’s banker for terrorist organizations.

So, all the current talk about sanctions having forced Iran into an accommodative mode I consider dangerously self deceptive.

Now, the latest wrinkle…..  Iran has developed an attack drone  which has a 1,250 mile range, the capability to remain aloft for up to 30 hours ,and carry air to surface missiles.

So, instead of being forced to develop a long range rocket capable of carrying a nuclear warhead, all that is required is a kit to allow the drone  to be assembled in the USA and something like  a bag of anthrax…….nice!

Our main risk is that we will talk and talk about nuclear potential while they are devilishly working , under the radar,  to present us with another  fait accompli involving drone capability and chemicals.  Pearl Harbor, 911 and the Libyian embassy incident have  reinforced my belief that , as a nation,  we are not as great at  preventing as we are  at responding……..once the cat is out of the bag.  I don’t think we should take that type of risk with Iran.  The price of being late is too high.  The price of trusting characters such as  an Ahmadinejad is too high.

” Everyone return to your seats. We are returning to the airport ” !  I just  can’t seem to  get this trick out of my mind !

I would be more inclined to follow and fully support Israeli  policy on this one.  They seem to be able to perceive danger and act on it  lot quicker than our experts..   Israel is  well within the announced present range capability of the Iranian drone, so the Israelis  have already been presented with a situation where the potential risk to their families and homeland  is high.  Let us see how good our present administration is at convincing Israel  talk and more talk with Iran  is the most prudent  policy. Plus,  I would continue to keep full sanctions in place until Iran PROVES to us that it has a stable, secular  government that can be trusted to withstand Jihadi Fundamentalism.

 

Richard Maurice Gore

 

A Midcourse Adjustment

Monday, November 18th, 2013

November 18, 2013

No argument, the ETF…” VTI” from Vanguard offers the widest exposure to the total USA stock market….over 3,000 holdings. Its plain vanilla, inexpensive to own, and offers great liquidity as the largest USA mutual fund..(.except, it isn’t a mutual fund,  its an ETF.)

However, ETF index funds offering different slices of the USA equities market become more attractive than 3,000 plus holdings as the trend climbs because a great many of the lower priced stocks contained in VTI have become pricey compared to the mega caps.  As you will see below, this has had an impact on VTI since September 30 as lower price stocks seem to be holding this ETF back relative to mega caps.

Since September 30…..appreciation

OEF                    Top 100 Big Caps             7.5%

MGC                   Vanguard 350                   7.2%

SPY                     S&P 500                             7.2%

VTI                    Total US Market                         6.6%

QQQ                   Nas Daq 100                       6.4%

IJR                      Small Cap 600                   5.6%

VB                        Vngd  1700 small cap       5.1%

VGK                     Vngd Europe                      4.1 %

VWO                    Vngd Emerging                  3.7%

VNQ                      Vngd REITS                       2.1%

Therefore,  I have decided to sell half my VTI position, taking profits, using the proceeds to purchase OEF, SPY and MGC.  The fate of my VTI position will determine the fate of my other positions.

 

Richard Maurice Gore

My Second Escape Route

Thursday, November 14th, 2013

November 14, 2013

 

I should have mentioned in yesterday’s post that I do have a planned route to escape a loss should VTI plunge below it’s 200 day moving average  with more than 5 days remaining till month end.  If less than 5 days remain, I do nothing.

The only reason for this is that I am not yet a full cycle member of the VTI trend trading club.  This is an untested solution that seems reasonable to me and in keeping with rule number 1, preserve capital.  I have already witnessed how fast this market can turn to wipe out a profit.

With today’s price of VTI at $93.03 and my average cost $87.01, I am ahead 6.5%.  If I placed a 5% trailing stop loss, chances are I would be out with a small profit or a very small loss. Of course I am hoping this doesn’t happen until the stop loss would trigger at least a 10% gain.

Then, if VTI’s price re-emerged above its 200 day trend line by month end, I would  acknowledge that I out smarted myself and plan how to get back in step.   If the price didn’t re-emerge, I’d smile and wait for the next month end buy signal when I would become a full member of VTI’s trend trading club !

As the market edges higher, low interest rates notwithstanding,  the chances of a 200 day violation increase.  At present,  ( S&P 500 ) is ahead 162% since it’s low in March 2009.  Before Black Monday 1987 occurred,  ( 20% S&P  decline in one day  ),  the market had run up 176% since 1982. ( This data per last week’s Barron’s )

So, here I am with one eye on VTI’s leash and the other scanning the horizon for a rogue event that will cause this market to upchuck profits before it can resume its climb on a settled stomach.

As of today’s VTI close $ 93.03….my 5% leash would trigger a market sell order at $88.38  ( until  November  25th ).  After that, no action till month end.  Then, starting Dec 1, the leash goes back on until December 25.

Richard Maurice Gore

 

I’m Back…Mid November Update

Wednesday, November 13th, 2013

November 14, 2013

Please don’t ask what happened.  I’m not a techie, and I don’t point fingers.. ..especially when I don’t have the facts.  Suffice it to say my nephew did all the heavy lifting to get me back up and I am very thankful he is a techie with  very wide and strong web relationships.  Of course, being vulnerable is not my strong suit,  and for sure I hate to look in the mirror and say ” there stands a mendicant”.   So, I’ll be looking to do what I normally do….look for an opportunity to seize the controls and create a new Blog with me in nominal and functional control.

Now for the Update…..  If you had invested in VTI,  December 30, 2011 and were still holding it, you have 476 days invested without a sell signal and you are ahead 47.91%.  This trade represents the essence of trend trading….” stay with the trend till the end “.  To me its a very reasonable compromise between day trading and buy and hold.  You don’t get whipsawed on a daily basis ( or more often ! ) and you don’t suffer losses such as those that took place after the dot. com boom of 2000 which saw the S&P 500 lose 47% and the Nasdaq almost 80%.  It happened again during the financial crisis years of 2007 – 2009  which saw the S&P 500 sell off 56% over 19 months.

I wish I could say I have been holding VTI ( now the worlds largest ETF ) since December 30, 2011.  I didn’t  become a holder until early this year and  on December 30,2011 my perspective on the market was still evolving and I was probably closer to joining the ” Sit In on Wall Street ” than investing  in what I saw as a crumbling ” wall of worry ” ( see Archives  my Post of November 13, 2011 – ” Its November but Risk Off “).

But, I have been attempting to get in step with VTI by dollar cost averaging into my present position after the end of each month.  My mandate is to not liquidate until VTI ends a month below its 200 day simple moving average.  At present VTI’s 200 day average is $84.04 and my average cost is $87.01. That means I would lose 3.4% if that occurred.  Of course, VTI could decline even more than 3.4% by month end, involving me in a greater loss as my entrance fee to joining the VTI trend trading club.  I’m willing to accept that, knowing I’m neither a loose emotional cannon nor tied to a buy and hold strategy that could wreck my investment program and destroy my confidence in the market.  As of now my potential loss is becoming less and less as the market drags the VTI moving average higher and higher.

There is a lot of noise out there right now and I’m doing my best to ignore it by keeping faith in my moving average methodology, watching the horizon for potential moving average crossovers. (  For instance if the 50 day moving average trend line penetrated the trend line of the 200 day moving average ) and of course, interest rates.  If medium and long term interest rates ( and the prospect of what is about to happen to them ) remain reasonably benign,  the sun will shine and the waves will continue to roll.  In my opinion, the biggest risk to this market will be the consensus seeing a change in Fed policy  after a Fed meeting.

 

Richard Maurice Gore