Don't Miss Out On Great Gains! - Best Investment Newsletter

Click for FREE sample of Kirk Lindstrom's Investment Letter

Don't miss out! Subscribe Now, pub-7001134751860982, DIRECT, f08c47fec0942fa0

Search For More

Friday, February 25, 2011

ECRI's WLI at 42 Week High: 'Get While the Getting Is Good'

The Economic Cycle Research Institute, ECRI - a New York-based independent forecasting group, released its latest readings for its proprietary Weekly Leading Index (WLI) this morning.   (More about ECRI)

You can read my full article at Seeking Alpha:
ECRI's WLI at 42 Week High: 'Get While the Getting Is Good'
How to play ECRI's Signals: I own a lot of small cap stocks in my personal "explore portfolio" so I own SPY (SPY description and charts) to get a more market weighting in this trading portfolio. If I wanted to recommend just one ETF to be long the market and take advantage of ECRI's outlook for an upturn in the business cycle, it would be the Total Stock Market Index VTI (VTI description and charts), which has BOTH large and small cap stocks. I also own the total stock market index fund at Vanguard, (VTSMX) as part of my personal core portfolios. Vanguard discourages trading its index funds so VTI is the vehicle of choice for that.

KEY ECRI Articles:
Lakshman Achuthan - Beating the Business Cycle

“This easy-to-read book tells you how the respected ECRI calls turning points, and how you can, too.”
—Jane Bryant Quinn, Newsweek columnist

" The Economic Cycle Research Institute can justify a certain smugness now that business cycles are back in fashion."
--Harvard Business Review

“Shows... how far the state of the art in cycle forecasting has advanced, and how investors can profit from it.”
—Jon Markman, award-winning CNBC/MSN financial columnist 

Thursday, February 10, 2011

Gold to Silver Price Ratio Near Multi-Decade Lows

The gold-to-silver price ratio, defined as the price of an ounce of gold divided by the price of an ounce of silver, closed Wednesday at 45.16 This means an ounce of gold is just over forty five times more expensive than an ounce of silver.
Charts of the gold-to-silver price ratio, GLD, SLV, Gold and Silver prices plus the rest of my Seeking Alpha article at:
Gold / Silver Price Ratio Near Multi-Decade Lows
As my chart shows, twenty years ago in 1991, gold was over 100 times more expensive than silver. Since then, the gold-to-silver price ratio never went below 41.51.

Tuesday, February 08, 2011

Dow-Gold Price Ratio at Strong Resistance

The Dow-gold ratio is right at its long-term, down-trending resistance level. The Dow-gold ratio is defined as the ratio of the price of the Dow Jones Industrial Average (DJIA) divided by the price of gold.

Charts of the Dow-gold ratio price ratio and the price of gold plus the rest of my Seeking Alpha article at:
At 8.96, the DJIA, measured in how many ounces of gold it takes to buy the 30-stock Dow, is up 27.5% from its 17-year March 6, 2009 low of 7.03. But, as the chart shows, the ratio has been in a fairly flat, two-year trading range as it moved from long-term support to resistance.

Saturday, February 05, 2011

Fund Flows: Equity, Bond & Money Market Yearly Totals

Equity, Bond & Money Market Fund Flows - Yearly Totals & 2011 YTD
Weekly Data through 02/02/2011     
Equity Fund Inflows $107 Mil
Taxable Bond Fund Inflows $4.4 Bil
Equity Fund Inflows $2.3 Bil
Taxable Bond Fund Inflows $3.6 Bil

Fund Flow Totals by Year & 2011 through 2/2/11 
Table 1 AMG Fund Flows for Full Year - $B
Fund Flows for Equity Tax Bond MM Fund
2003 40.8 40.7 NC
2004 95.0 11.3 (64.3)
2005 71.9 9.3 89.0
2006 52.5 29.9 308.3
2007 111.3 68.8 569.5
2008 3.5 (3.3) 608.0
2009 6.0 172.0 (280.2)
2010 24.8 148.4 (392.3)
  • NC = Data Not Compiled
  •  += Some data points for Money Market Fund flows between March 2010 and July 14, 2010 are missing but the overall trend is clear. 
  • Raw data from Lipper Weekly Fund Flows Report: 
This table shows a summation of the weekly fund flow data. Money Market funds yield next to nothing so people have taken money out to buy bonds as well as live on during the recession and long recovery period with high US unemployment (9.0%)

  ExETFs—For the week ended 02/2/2011 all Equity funds report net inflows totaling $2.279 billion, with Domestic Equity funds reporting net inflows of $1.674 billion and Non-Domestic Equity funds reporting net inflows of $0.605 billion... ExETFs—Emerging Markets Equity funds report net inflows of $0.549 billion, the group’s thirty-fifth consecutive week of positive flows...  Net inflows are reported for All Taxable Bond funds ($4.445 billion), bringing the rate of inflows of the $2.756-trillion sector to $2.181. billion/week...  International & Global Debt funds posted net inflows of $0.704 billion...  Net inflows of $0.421 billion were reported for Corp-High Yield funds while Flexible Funds reported net inflows of $2.050 billion…  Money Market funds report net outflows of $-21.973 billion…  ExETFs—Municipal Bond funds report net outflows of $1.069 billion, their twelfth consecutive week of outflows...

Friday, February 04, 2011

ECRI's Future Inflation Guage at 9-Month High

The Economic Cycle Research Institute, ECRI - a New York-based independent forecasting group, released their latest readings for their proprietary monthly Future Inflation Gauge  (USFIG) this morning. (More about ECRI)

ECRI’s U.S. Future Inflation Gauge (USFIG) rose again in January. The value of the USFIG lies in its ability to measure underlying inflationary pressures and thereby predict turning points in the U.S. inflation cycle.

The USFIG advanced to 101.6 (1992=100) in January from 100.5 in December, as did its smoothed annualized growth rate to 4.4% from 2.7%.
 Commenting on the data,  ECRI's Co-Founder, Chief Operations Officer and author of "Beating the Business Cycle", Lakshman Achuthan said: " With the USFIG climbing to a nine-month high, underlying inflation pressures are starting to simmer."

KEY ECRI Articles:
Lakshman Achuthan - Beating the Business Cycle

“This easy-to-read book tells you how the respected ECRI calls turning points, and how you can, too.”
—Jane Bryant Quinn, Newsweek columnist

" The Economic Cycle Research Institute can justify a certain smugness now that business cycles are back in fashion."
--Harvard Business Review

“Shows... how far the state of the art in cycle forecasting has advanced, and how investors can profit from it.”
—Jon Markman, award-winning CNBC/MSN financial columnist 

Wednesday, February 02, 2011

Growing Up Without A Cell Phone - A Look at Change

I found some of these ideas on a forum I participate in. I've added and updated a few to make it more personal. If you are 40, or older, you might think this is hilarious!

When I was a kid, adults used to bore me to tears with their tedious diatribes about how hard things were. When they were growing up during the Great Depression they had to make their toys; what with walking twenty-five miles to school every morning.... Uphill... Barefoot... BOTH ways... No TV, had to go to movie theater to see moving pictures... yadda, yadda, yadda.

When I was a kid, my grandmother still had a "party line" where others could hear your calls.  If they were on the phone, you had to hang up and use the phone later when they were finished.  They didn't have dial phones in the early days and they had to wind the one clock they had for the whole house. 
And I remember promising myself that when I grew up, there was no way in hell I was going to lay a bunch of crap like that on the younger generation about how hard I had it and how easy they've got it!

Well, that is not true... I remember wondering how much things would change because a man just walked on the moon and I saw it live on a black and white TV...

Like the generation before me, I can't help but look around and notice the youth of today do have it easy compared to my childhood. Just like my generation, you don't know how good you've got it!

Keeping Time:  We knew how to wind a watch and tell time using a clock with dials.  We didn't have digital clocks.

I mean, when I was a kid we didn't have the Internet. If we wanted to know something, we had to go to the library and look it up ourselves, in the card catalog!! That meant hanging around after school to use the "school library" or a bus trip to an adult library with more books.

There was no email!! We had to actually write somebody a letter - with a pen! Then you had to walk blocks to put it in the mailbox, and it would take like a week to get there! You had to stand in line at the post office to buy stamps, none of this ordering stamps online or in bulk at Costco.

Punishment:  Child Protective Services didn't care if our parents beat us. As a matter of fact, the parents of all my friends also had permission to kick our ass! Nowhere was safe! We had to treat adults with respect.

Music: There were no MP3's or Napsters or iTunes! If you wanted to steal music, you had to hitchhike to the record store and shoplift it yourself! Way before CDs, we listened to records. Every time you played them the "needle" in the stereo record player would slowly wear the record out. If you lent your favorite record to a friend, it usually came back scratched with fingerprints and never sounded the same again.

Recording Music: You had to wait around all day to tape a favorite song off the radio and the DJ would usually talk over the beginning to ruin it! There were no CD players! We had tape decks in our car. We'd play our favorite tape and "eject" it when finished, and then the tape would come undone rendering it useless. Leave the tape in the sun on the dashboard and forget about it sounding good ever again.

Phones:  We didn't have fancy crap like Call Waiting and voice mail. If you were on the phone and somebody else called, they got a busy signal, that's it! We had to DIAL a phone too. You had to wait for the dial to return before dialing the next number. It was agony to keep redialing a friend that was on the phone or out since you could not leave a voice mail message. I thought my first phone with push buttons for each number was a gift from heaven and my first phone that stored three phone numbers a miracle of technology for the time it saved!

Keeping in Touch: There weren't any cell phones either. If you left the house, you just didn't make a call or receive one. You actually had to be out of touch with your "friends". OH MY GOSH !!! Think of the horror... not being in touch with someone 24/7!!!

TEXTING: During a summer job at Hewlett-Packard in 1978 I figured out how to text other workers in different computer rooms (yeah, we actually had to go to another room or area to use a computer terminal!) using the computer to save me calling them on the phone. I was told the computer was a tool and not a toy so I should keep this game playing to a minimum.

"Who's There?" And we didn't have fancy Caller ID either! When the phone rang, you had no idea who it was! It could be your school, your parents, your boss, your bookie, your drug dealer, the collection agent, the police ... you just didn't know!!! You had to pick it up and take your chances. Of course, sometimes we took advantage of this and played games with people using the phone.

Video Games: We didn't have any fancy PlayStation or Xbox video games with high-resolution 3-D graphics! We had pinball at one friend's house whose parents were nice enough to let him have such a big, noisy game. Otherwise we had to play at the pizza parlor or bowling alley with our hard earned money that didn't last long. In highschool I remember the invention of "Pong" then came the Atari 2600 with games like 'Space Invaders' and 'Asteroids'. Your screen guy was a little square! You actually had to use your imagination!!! And there were no multiple levels or screens, it was just one screen.. Forever! And you could never win. The game just kept getting harder and harder and faster and faster until you died! Just like LIFE!

My senior lab project in college at UC Berkeley was a pong game made with LEDs and discrete digital chips! I used a counter chip and had it keep score with new HP LEDs I got from my summer job for extra credit. I wish I had a digital camera to take pictures of the mass of wires of this cool project.

Digital Cameras:  Pictures to remember things were expensive.  You had to buy "film" you put in a camera.  It was expensive and came in rolls of 12, 24 and 36 pictures.  As I kid I could only afford a 12 picture roll of film a year to take a few black and white pictures.  Oh yeah, you also had to pay for developing which was more than the film until mail order developing came along.   12 pictures cost about a weeks allowance so I didn't take many.

TV:  You had to use a little book called a TV Guide to find out what was on! You were screwed when it came to channel surfing! You had to get off your butt and walk over to the TV to change the channel!!! The only remotes were on very expensive COLOR TVs like the one at my grandparents. When I was very young, our TV was black-and white!

Forget about watching your own shows on your own iPad or laptop.  We had one TV to share with the whole family.  If you father wanted to watch a silly, old movie in black and white when your favorite show was on, you were out of luck, you missed your show.  There were no DVRs and VCRs to record one show and watch another and no internet to stream the show later at any price.

Cartoons:  There was no Cartoon Network either! You could only get cartoons on Saturday Morning. No VCRs or DVD players to park kids in front of TVs watching cartoons either if you had little brothers or sisters to take care of. You actually had to entertain them or get them to read a book.

Cooking:  And we didn't have microwaves. If we wanted to heat something up, we had to use the stove! Imagine that! I paid about a weeks take home salary from my first engineering job to buy my first microwave!

Entertainment: Our parents told us to stay outside and play... all day long. Oh, no, no electronics to soothe and comfort. And if you came back inside... you were doing chores, reading books or doing homework!

Car seats. You're kidding? You wore a seat belt. If you were lucky, you got the "safety arm" across the chest at the last moment if your mother had to stop suddenly. If your head hit the dashboard, well that was your fault for calling "I GET THE FRONT SEAT" in the first place and making your little brothers ride in the back.  The only "air bag" in a car was a loud, fat relative or little brother who never shut their mouth.

Facebook Friends:  I started out this article writing, "I found some of these ideas on a forum I participate in." Back in high school and after college, if I wanted to communicate with friends about a common interest, we had to all get in the same room at the same time and actually look at each other! We called it a silly name like "science club" or "Shelby Mustang Club" or "Corvette Club" or .... you get the picture.

See! That's exactly what I'm talking about! You kids today have got it too easy. You're spoiled rotten! You guys wouldn't have lasted five minutes back in 1960s and 1970s or any time before!

The Over 40 Crowd

Please feel free to add your own changes in the comments section.

Followers - Click "follow" to get an email alert for new articles

Kirk Lindstrom's Investment Letter Performance