March 23, 2005      Quick Ramblings

 

1.    I read Richard Russell daily www.dowtheoryletters.com and his PTI went bearish today, for the first time I think, since I been a subscriber.


Here are a few of his comments today, " My PTI declined 3 today to 5562. The moving average was 5563. I wish it had been more decisive, but they don't arrange the market for Richard Russell. At any rate, my PTI closed 1 point under its 89-day moving average, and this constitutes a "sell signal." " and " CONCLUSION -- Kind of a strange day. The breadth falling apart, new lows spurting higher, but the big average resisting or at least trying to resist. With the averages resisting the downside, you'd think it was time for a rally. Tomorrow's the last trading session of this four-session week, so they might try rallying the market tomorrow.

Remember, the McClellan Oscillator is VERY oversold. With the averages resisting the downside, the market "should" be set for a rally. This market is very tricky and very professional. Fascinating to watch and costly to mess with."


Nevertheless, we have been reducing our short dollar positions, our equity positions are higher than they have been in some time.  I am certainly concerned with all investments, most of all I am concerned with low interest rates rising and how inflation will hurt portfolios that are merely focused on short term fixed income.

2.    Here is what someone posted to William Fleckenstein today at http://www.fleckensteincapital.com

" Fleck, It appears to will take a complete 180 in thinking to get people to really buy mining stocks. If the economy is slowing, it appears they use the slowdown in physical demand for gold and silver to sell the stocks. if the economy is strong, it appears they use the dollar will strengthen on rates increases to sell them off?
I believe we are significant time period away before reality sets in and these stocks go anymore beside drift lower!
Plus with inflation, it is beginning to eat into the costs of these companies but revenues are not increasing because prices are not.  It just seems like it is a no win situation owning these stocks for long-term, better for just a trade
"

Here was Fleck's response :

" I am posting this because I received about 10 just like this within an hour after the FOMC-inspired sell off yesterday... I don't control the markets- please don't complain to me... if you don't like the way metals trade- sell 'em... but I plan to buy more. We have seen all this many times before, in the short run- markets often make no sense... "

Please keep in mind that we have been reducing our Precious Metals positions, nevertheless, I thought this would be interesting to read.


3. Here is an excerpt of a quick email i sent to a few clients today:

" here is a quick and haphazard update for you. If you would like a long discussion, just ask. It might be good to speak (with that said, all is well ).

some quick thoughts follow:

a. Interest rates rising, this will temporarily hurt portfolios. unlike 1998 - 2000 (can't remember exact dates), interest rates could go a bit higher.

b. Because of 1. above, I am holding down the fixed income portfolio allocation, at the same time looking for dividends, and hopeful long term bargains. please be patient. could take 3 years to take hold (no promises).

c. Previous safe havens for us were gold and oil. Those have run up incredibly, hence, they are now concerning me.

d. Short term cash is great, EXCEPT, inflation will destroy purchasing power. See our discussion from yesterday, which discusses this.


e. The answer to all of above is patience, patience and patience.


Have a good one everyone. If you ever have questions, concerns, ideas, etc. Please feel free to contact me.  Incidentally, here is a picture of my 3 kids and me at the top of Madonna Mountain at Smugglers Notch, VT ( I'm the one with glasses and gray hair :-)