Image via WikipediaA study of 45 years of stock market data shows that some strategies produce greater returns than the S&P 500 while others produce less. A range of strategies were tested with the past data, re-balancing the strategies annually, with each strategy involving the 50 stocks which met the criteria for inclusion.

Here are the conclusions:

• Avoid buying last year's losers each year - as a rule, losers continue to be losers.
  
• Avoid buying companies on high multiples such as high price to sales ratio.
• Buy companies with high relative strength (shares that are rising) in combination with a value factor such as low p/e or low price to sales ratio (overlooked or out of favor sectors or old economy).
• Low price to sales stocks tend to out-perform the higher p/s stocks.
• Low price to cash flow stocks tend to do better than high p/cash flow stocks.
• Low price to book stocks tend to perform better than high p/b stocks.
• Price to sales ratio is the best single value ratio to use for buying market beating stocks.
• Last years earnings gains alone are worthless when determining if a stock is a good investment.
• Large well known stocks with high dividend yields tend to outperform the S&P500.
• Relative strength is the only growth variable that consistently beats the market.

Conclusions from James P. O'Shaughnessy's book "What works on Wall Street".

Labels: Stock market, strategies

Jim Rogers' commodity funds
"Bottom will come when market goes up on bad news."

“I am going to make a lot more money in agriculture than I am in gold or any stocks on the board. I know the inventories of food are the lowest they been in fifty years. Farmers cannot produce anymore. There is a shortage of tractors, tractor tires, seed, fertilizer. There is a shortage of farmers.”

“We are going to have an inflationary nightmare. Througout history whenever people have printed a lot of money, six months a year later you have terrible inflation. May I repeat again. May I urge you to buy some agricultural products. Massive inflation is coming and the only way to protect yourself is to be out of paper assets and into real assets.”

Jim is buying commodities and Swiss Francs. He is currently in short term treasuries but expects to get out soon and go short more government long term bonds. He also says commodities are still in a bull market, and has used this downturn to add to commodities, especially gold, and he expects to make the most money in agriculture in the years ahead.



The inventory of food is the lowest in 50 years. There is a shortage of farmers, tractors, tractor tires, seeds, etc. Jim says the bottom in equities will come when the market goes up on bad news.


Rogers International Commodity TRAKRS Index - $RCT

ELEMENTS Rogers Intl Commodity ETN - RJI

ELEMENTS Rogers Intl Commodity Agric ETN - RJA

Labels: agricultural products, commodity, Jim Rogers

Ten people who predicted the financial meltdown

from the Times Online - Money Central

1. Vince Cable - deputy leader of the Liberal Democrats
November 2003: “The growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level. What action will the Chancellor take on the problem of consumer debt?”




2. Christopher Wood – chief strategist of CLSA, a broking firm in the Asia-Pacific Market.

October 2005: "Investors should sell all exposure to the American mortgage securities market."
2007: "Some institutions have been behaving like leveraged speculators rather than banks… The UK economy is heading for a sharp shock. It just remains to be seen how bad."

3. Founders of www.stock-market-crash.net




4. Henry Weingarten - astrologer, head of the Astrologers Fund





5. Nouriel Roubini - economics professor

On September 7, 2006, at an International Monetary Fund meeting, he announced that a crisis was brewing.

6. Nikolai Kondratiev - Russian economist
In the early 1920s, he predicted an imminent dip, and he was proved right with the Wall Street Crash in 1929. The current crisis may mean he is about 10 years out – but, still, not a bad prediction for a man who died in 1938.

7. Founders of Housepricecrash.co.uk – property website
In October 2003, its founders predicted “one of the potentially biggest economic boom bust events in living memory” was coming.

8. Lord Oakeshott - Liberal Democrat Treasury spokesman
He warne the government of the possible collapse of Icelandic banks back in July: "What steps [have] the United Kingdom financial authorities taken to satisfy themselves, independently of the Icelandic financial authorities, of the solvency and stability of Icelandic banks taking deposits in the United Kingdom?”

9. Stephen Roach - senior executive at Morgan Stanley
In November 2004, Mr Roach predicted an “economic Armageddon”.

10. Ron Paul - Republican Congressman - and Peter Schiff, his economic advisor
Back in September 2003, Mr Paul told a House Financial Services Committee that: “Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market.This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions."

Labels: debt, Stock market, United States

Biblical financial principles
Debt-free in 15 months, with the help of her church



CNN Transcription:

BOLDUAN: Ten years ago Clements was $30,000 in debt holding about 100 credit cards with nowhere to turn. She finally found financial rescue in a surprising place - church.

With the help of this chorus at the First Baptist Church of Glenn Arden in Maryland, Clements was death free in 15 months and remains so today, weathering the current financial storm with ease because of what the class called biblical financial principles.

CHARLES ELLERBE, FINANCIAL FREEDOM TEACHER: God tells us that life is cyclical. OK? Nothing is -- you're not going to be up all the time, you're not going to be down all the time. Life is cyclical.

You have to prepare when life is good, knowing that the bad times are coming.

BOLDUAN: Clement worked out a deal with her credit card companies to pay down the debt. She also cut back to the bare necessities.

CLEMENTS: No more eating out. Simple things like coffee and Danish in the morning was a ritual that ceased.

BOLDUAN: It's the kind of discipline the former money watchman under the Clinton and Bush administration says the federal government desperately needs.

(On camera): It's not going to be easy, correct?

DAVID WALKER, FORMER U.S. COMPTROLLER: We have to get back to basics. We need to be able to re-establish tough budget controls. We need to reform Social Security, our tax system, our health care system.

BOLDUAN: David Walker has been warning of the dangers of a debt- ridden government since he left office. He's now the star of a documentary on the topic called "I.O.U.S.A."

WALKER: People need to understand how to budget. They need to prepare for a better tomorrow. And so does the United States government.

BOLDUAN: Clements says the road to debt freedom was long and tough. She made a credit card collage as a reminder and she hopes to serve an example. CLEMENTS: And a lot of people do try to keep up with the Jones's, but my advice to them is stop trying to keep up with the Jones's because they're broke.

BOLDUAN: Kate Bolduan, CNN, Waldorf, Maryland.

Labels: bible, Christianity, debt

More Jim Rogers quotes

"I would tell you what has always worked throughout history and I'll tell you what has always not worked.

The Japanese tried this in the 90s, they kept putting band-aids on and they wouldn't let people fail. You remember the term "zombie" companies, "zombie" banks? Well it's eighteen years later and the Japanese stock market is still down over 75 percent. They talk about the 90s as a lost decade.

America tried it in the 70s - they wouldn't let anybody fail. We had one of the worst economic decades in American history - high interest rates, high inflation, a collapsing currency. It didn't work.

Korea in the 90s, took a hit. They had a horrible two or three years but, since then, they've been one of the most rapidly growing economies in the world. The Russians took a horrible hit - since then, they've been one of the most rapidly growing economies in the world.

This is not politics, this is not philosophy. I'm telling you what has worked throughout history and what has not worked throughout history.

Look it up."

"Let 'em fail two by two or three by three. I mean, what is this? Banks have been failing since the beginning of time and they're probably going to fail again until the end of time.

The way it's always worked successfully has been, let the incompetent fail and the competent people - banks, mainly in this case - take over the incompetent banks and everybody starts over.

Yeah, you have a very bad year or two but we've had the worst excesses in the credit market we've had in world history. Never before in world history have people been able to buy a house with no money down, and many of them bought four or five houses with no money down and no jobs, and then the bankers were saying, "This is fun, let's do it with car loans, student loans, credit card loans".

We've had horrible excesses -this has to be cleaned out."

Labels: banking, Jim Rogers, Stock market, United States

Check out your bank's health!

Check out your bank's health with the Banks and Thrifts Screener from TheStreet.com:

 http://www.thestreet.com/screener/index.html?src=ratingsindex&tab=3

According to Martin Weiss, any bank rated B- or above should be fine.

Labels: banking, ratings

Jim Rogers is very entertaining to watch!


Jim Rogers, who once ran a hedge fund with George Soros, was the earliest investment author to predict the boom in commodities of the last few years. He, like an old professor, is tired of saying the same things and seeing the same foolish decisions. It seems like he's tired of being right and no one listens.

And he gives great explanations about how the market works and great phrases of disapproval of the governments mishandling of the current crisis:

"The way to solve this problem is to let people go bankrupt, then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."

Is this a CRASH? "Yes, you can call it what you will, it’s very clearly a crash. Things are caving in; it’s really a liquidation. People are selling everything where no matter what the fundamentals, no matter what the underlining values, they gotta sell. It’s forced liquidation. We’ve had this before in history. We’re having it again."

"The market looks ahead. The market is looking ahead and seeing currency turmoil, high inflation, high interest rates, perhaps trade wars, perhaps protectionism. That's what the market is looking ahead and seeing. The market is not declining because of something else."


"We're setting the stage for when we come out of this of a massive inflation holocaust," - about the current rescue plans of flooding the markets with liquidity through debt and printed money.


"We had the worst excesses we had in credit markets in world history. We're going to have to take some pain. Many people bought 4-5 houses with no money down and no job… you think we'll just say well, that's too bad, we'll start over and nobody loses their job? Be realistic."

About the G7 meeting:  "What they (G7 leaders) need to do is go down the bar and leave the rest of us alone."

"Mr. Paulson, Mr. Bernanke, that guy at the New York Fed Ken something, every week they have been dead wrong. Why would you listen to them? I wouldn't listen to them."

"What about all the people in countries that minded their manners, saved their money, didn't get overextended and now all of a sudden they're being asked to bail out a bunch of guys on Wall Street who were incompetent at best and some of them crooks? I thought it outrageous that anybody has to step in a bail out a bunch of 29 year olds driving Maseratis."


"I have an enormous amount of cash and I've been using it to buy more Japanese yen, more Swiss Francs, more agricultural products… there's a liquidation phase going on, where everything is being liquidated. They're selling everything in sight. In a period like this the way you make money coming out of it is to own the things were the fundamentals have not been impaired."


"I'm not sure I'm going to buy equities, when the market caves in I'm not sure equities are going to come out on top. When you have a panic, you buy the things where the fundamentals have been unimpeded. Morgan Stanley (MS) is not coming out of this unimpeded. ..."

"Right now everything is being liquidated, everything. In a period like this, the way you make money coming out of it is to own the things where the fundamentals have not been unimpaired. Commodities are the only things I know that are unimpaired. Supply and demand are still terribly out of balance."

Labels: agricultural products, hyperinflation, Japanese yen, Jim Rogers, Swiss franc

Invest in Real Estate

That is SCREEN Real Estate: 21" monitors. (Update: All of them found new owners!)

Thinking about adding an extra monitor for your trading?
Need more space to put your charts?

You can get the idea from Ross Farr trading cockpit below.

A possible and risky Taser-like play

Small float, defense/security company, new technology, non-lethal weapons, constant terror threats, war in Iraq.

Metal Storm Ltd (MTSX, $5.49 on 6/25/2004) - Metal Storm Limited is engaged in R & D of electronic ballistics and programmable electronic firing technology.

MTSX $5.49 on 6/25/2004

Investing with an eye on the Interest Rate Cycle

Stage I - rising interest rates:
When the Short Term interest is in rising trend, one can consider going long on money market funds.
When Long Term interest rises, one can consider going long on 2 to 5-year Treasury notes till maturity and placing a tighter stop loss in corporate bonds, dividend paying stocks and mutual funds. Long Term interest rates can lag 4 to 5 weeks the changes in T-bills and CDs. Short Term interest rates start to fall while Long Term rates are still lagging at highs.

Stage II - plateau:
When Short Term interest is in a flat trend, one can consider going long on 6-month Current Income Funds (CIFs) and 6-to-12-months T-bills at the beggining of the plateau as well as money market funds, 90-day T-bills, 90-day Commercial Paper and CDs for the entire stage.
When Long Term interest reaches a plateau, one can consider holding Treasury notes till maturity and discard other long term buys.

Stage III - declining interest rates:
When Short Term interest is in a declining trend, one can consider selling money market funds and not renewing other short term investments.
When Long Term interest is in a declining trend, one can consider going long 2-to-5-year Treasury notes (looking for the ones with large float and narrow bid-ask spread) on 50% of the portfolio and holding till maturity (even if it was wrong-timed), keeping 20% in foreign higher-interest savings accounts in currencies that are in a rising trend or very cheap (Canada, England, Swiss, ...), and, when the decline is established with the Dow Jones Utilities starting to rise in the 4-month chart, buying high quality 2-to-10-year corporate bonds (rated Aaa to A-), tax-free dividend-paying stocks and mutual funds.

Stage IV - interest rates bottom:
When Short Term interest is at the bottom, one can consider disposing of all short term instruments but holding a little change in money market funds, buying 90-day Canadian Treasury bills or British Warbonds (gilts) if their interest rates are higher.
When Long Term interest is at the bottom, one can consider holding all the securities bought at stage III.

During all stages:
One can consider keeping 5 to 10% in gold stocks and trade them, buying on weakness and selling on strenght.

Things to avoid according to this strategy:
municipal tax-exempt bonds, Long Term bonds, below A- corporate bonds, Latin American banks/savings, futures, EE and HH savings bonds and bear market rallies.

This strategy was conceived by Samson Coslow during the 80s. Sam Coslow was the pioneer in the use of stock market and economic indicators and investment newsletter writing, one of the first gold bugs.

Mark Cuban spills the beans

In Ancient Greece, white beans indicated positive votes and black beans negative. Votes had to be unanimous, so if the collector 'spilled the beans' before the vote was complete and a black bean was seen, the vote was halted. With time, the expression "spill the beans" became the term for "divulge a secret".

Mark Cuban made money selling his companies MicroSolutions (to CompuServe) and Broadcast.com (to Yahoo!), made money by going long and then short in tech stocks and now is having fun owning the Dallas Mavericks.
In his blog, Mark Cuban told his opinion about the stock market. Don't miss it!