Improving Your Chances of Never Have A Losing Year

If you are a manager and your strategy has ever had a losing year, why would anyone ever give you any money?  If you are a private investor and your general overall retirement fund of which you have power over has ever lost money, you need to find someone else to manage your affairs.    If you are an active trader, professional,  then you probably should never have a losing month.

If you are an strategist manager, rule number one is never have a losing year.   Sounds tough because even the great brand name investors have had not only down years but really bad down years.  Remember however, guys like Buffett, while value investing for the long term, they are really brand name savers.  If you are willing to hold a stock over a long period of time, up year and down year, then you don't understand risk and do not care if you an alternative upside opportunity even exists.   You are thus committed to "hoping" as the vast majority of stock holders are and inevitability reliant on massive intervention from central banks to make you good because the reality in today's world is that buy and hold investing is a fallacy.   From AAPL on down, ultimately you are going to have that really bad year. 

It has taken zero interest rates for seven years to support your stock portfolio.  Over the same time there has been almost no real growth in the economy, fewer employed, and an absolute fear of it all falling apart in we cannot revive our once dreaded enemy, inflation.  What's worst, the investing industry has now created the ETF trap where seas of predominately passive investment vehicles have been created to primarily capture the sales transaction for their hosts while offering little in the way of investment opportunity or protection. 

What's one to do?   Hold stocks for a short time horizon regardless of the tax implication. If you are worried about the taxes and not about losing years then you will never get it anyway.

Find great index managers providing absolute return strategies without ever having a losing year.
Find managers that have strong compound returns and can tell you what $20,000 would have done after a year or five years, and not based on some VAMI metric. 



More to come.

Least Risk Stocks of the Q8

February had a volatile trader's beginning but has ended as quiet as any action has been over the last seven years.  Valuations for stocks are stretched and the bulls just keep on explaining the upside as a series of fundamental equations.  The Fed is about to start raising rates and only an equities break of 15% or more in Q2 will stop it.  Top dogs such as AAPL remain over valued but continue to see little in the way of pressure as the hedge fund industry wants to accumulate on each pull back.  That of coarse could be bad news for AAPL as the hedge community struggles to break out of an almost perpetual under performance cycle against nearly every benchmark.  

In CoverRisk's Q8,  MSFT has the worst overall price risk rating with PFE the highest in the least risk category.  Last years least risk stalwart, GS, has entered the bad zone with BAC and F finishing the dark side.  AAPL, GOOG, and IBM are in the least risk zone with PFE as of today's action.

Unchain Unchanged

The year has given both bulls and bears reason to hope given the volatile crossing back and forth over this year's unchanged line.  The 10 year at first continued its bull move but now has recovered as rates have risen slightly after two encouraging job reports. 

It is easy to be suspicious of any continued bull trend given the age of the stock rally. Just like all of last year, indicators from CoverRisk.com again show up as the trend, though there have been some sell side indications.

AAPL still remains the most overvalued stock but has consistently remained in the CoverRisk metric of least risk.  Yes, a stock can be over valued and have least risk bias based on day to day metrics.  However, when AAPL finally turns, it will go down and catch its tail, right now a 40% decline.  No stock ever escapes, just a matter of when.  Why won't matter but will probably be inaccurate. 

IBM Reported To Take Drastic Action

Well the stock defenders at IBM hope they have found a better way than stock buy backs to impact their stock; fire 26% of your workforce right now.  The stock has declined to a near fatal level that if continued would have confirmed a major bear downtrend according to CoverRisk.com data.  This action certainly seems a bit spooky and not what the job growth forecasters might have in mind, but we now live in the world of rapid scramble job elimination fostered by the Tech world.  Maybe great for stock prices, but bad if you want to eat.   

ECB Caves In On Stimulus

Takes a promise of one trillion euros from ECB to get SP500 index up and into positive territory for the year. Over valued stocks such as AAPL and critically ill ones such as IBM have struggled this year with share buy backs being their only friend.  Central bank subsidies are now the greatest generator of stock returns as a world wide broken economic systems need constant life support to delay economic downturn.   

IBM Confriming Death Dive For Other Stocks?

IBM again slaughtered.  Share buy backs will reappear to try to stem the over the cliff potential.  The implication for other stocks in the world where game decisions strategies play the most important part in determining stock price value, little to do with fundamentals,  is huge.  APPL, probably the most over valued stock in the world has a Qriskvalue of around 60.  Now players are not easily budged and it is still ranked according to CoverRisk.com on the lower end of risk scale based on current scoring, but that can change in one day. 

Stocks Down On Zero As A Future

Selling is appearing on a regular basis as oil prices and other suspects play on world deflationary fears.  Central Bank's support of asset prices are now battling bearish trading scenarios where the results of prolonged periods of zero rates may have only produced a pump and dump end game as the Fed's zero may come to mean the return target of many assets.   In a job eliminating Amazonian world dominating not only shop keepers but large traditional high paying trickle downers, the dark clouds of low growth are forming.  This is not just about oil it is about how economic interventions did so much for so few and has left it out of the pockets of almost everyone else. 

IBM Meltdown

IBM, despite massive stock buy backs by the company, continues to trend down trading below the CoverRisk price trend established in 2007 and 2008.  Moves lower from here would be a contagion to all stocks.

Wealth Management of Manglement

One of the most bearish charts out there is an advertizement from Personal Capital showing they now manage over one billion dollars in client funds.  An almost exponential leap in participation has them all giddy but the story is really about the set up that has been taking place for all those willing to manage their own wealth with ETF products.  Scary down may emerge despite the Fed and Treasury arsenal and then all will be exposed to the ugly side of personal wealth management. 

CoverRisk.com: The Passive Risk Boat Is Loaded

An article by MarketWatch, Vanguard sets record funds inflow,  shows the lazy habits of investors when it comes to choosing how to handle risk.  Traditional mutual funds such a Vanguard and the growing number of ETF wealth management sites have enlisted public participation into the vast ocean of passive waters.  Channeling these products while denouncing the active managers, the risk world has been made simple.    However, active managers are like lawyers, everyone hates them until you need one.   Once that sinking feeling hits the passive community and benchmarks plunge the race will be into the lifeboats and out of the water.