We are happy to announce that our new Market Signals newsletter is now available to all investors. You can sign up by clicking HERE.
The Market Signals newsletter provides access to the same data and tools that we use in our successful hedge fund – the kind of tools that have only been available to wealthy investors and the big financial institutions.
Through our free, weekly Beyond Buy & Hold newsletter and our book, you have been learning about our powerful new investing system – a system that provides better investing returns with lower risk. Now with our Market Signals newsletter you can put the strategies and the investing techniques to work in your own portfolio.
With the Market Signals newsletter and the Beyond Buy & Hold investing system, you get:
Peace of Mind – Since the primary objective of our system/model is to avoid large losses in bear market crashes, you can sleep better knowing that your money will always be protected against big losses. We also lower investment risk by only investing in major large cap index funds representing the S&P 500 and the Nasdaq. You receive the great returns of the best ETFs, and you avoid the pain when the markets suffer through prolonged bear market downturns. You get the best of both worlds – high returns and portfolio protection.
More Time – It’s so simple and easy since we recommend exactly what you should be doing with your investments. Since the system only recommends portfolio changes about five times per year on average, there is very little work involved when you follow along with our system. And since, our recommended portfolios are very simple, when a change is made, implementing those changes takes very little time. You don’t need to follow the talking heads on CNBC or even follow the financial news if you don’t want to. You can spend your time doing the things you really enjoy.
Better Investment Returns – The S&P 500 delivers annual investment returns of 9% per year over long periods of time if you simply buy and hold an S&P index fund. But with a buy and hold strategy you are forced to suffer through big losses (40% to 50%) when markets crash. And since the average bear market lasts for about five years, your investments go nowhere for long periods of time. Our trading system/model not only protects your money in bear markets, but we also trade the volatility in bear markets to produce gains while the major market indices are going nowhere. As a result, you can expect annual returns that are 3% to 4% higher * than the S&P 500 and that are much smoother over time. The average 401K investor only generates annual investment returns of 4% to 5% per year. The expert stock pickers and mutual funds can’t beat the returns of the S&P 500 in the long run. You will have the opportunity to get higher returns than you could get anywhere else. *
Independence – With our Market Signals newsletter, you can produce investment results that are better than any mutual fund or investment advisor by doing it all yourself. You don’t need to follow their flavor of the month and you can save lots of money on fees.
Here’s how it works:
Every week before the market opens on Monday morning, you will receive the current recommendation on how to invest your retirement account or other long term investment funds. Each recommendation includes our recommendations for what assets to own and how much of each asset to own.
The output from our data driven investment system is a market risk assessment. The system produces a risk level of HIGH, MEDIUM or LOW and we use a color-coded symbol for each (RED=HIGH, YELLOW=MEDIUM, GREEN=LOW).
If there is no change in the risk level from the prior week (90% of the time) there will be no change in the investment recommendations.
If the risk assessment changes, we will provide a recommendation on exactly how to position your investment portfolio based on the specific risk level that our model indicates. Since our portfolio construction is so simple, any change will come with a recommendation for only one or two trades or changes to your portfolio.
It is that simple and easy. Market Signals also comes with a Satisfaction Guarantee. You can cancel your subscription at any time for any reason.
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Happy Investing,
Phil
Disclaimers *The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
The recent problems in the banking sector have added more volatility to an already unstable stock market. And problems in the banking/financial sector usually lead to problems in the stock market. So far, the banking issues seem to be isolated but there are likely to be more surprises ahead.
The issues with the regional bank collapses (Silicon Valley Bank, Signature Bank, etc.) seem to be driven by management failures and do not appear to be widespread at the moment. At SVB, they made bad decisions on the deposit side and the investment side of their operation. Their depositors were too concentrated among a small number of businesses and individuals, and they made poor investment choices. Prior to the interest rate increases in early 2022, they had most of their depositor’s money invested in long term bonds. Most individual investors were smart enough to avoid long term bond investments at this time. In January of 2022, long term bonds were yielding less than 2% per year. For a measly 2% return, SVB was exposing itself to huge losses if interest rates increased – which they did. You know the rest of the story.
While there have been other regional banks that have collapsed, the problem seems to be limited to the regional banks that have had less oversight. Credit Suisse is a much bigger international bank, but Credit Suisse has been in trouble for many years. Their problems aren’t new and European regulators and UBS have backstopped that problem. Even though the bigger US banks do not appear to have the liquidity problems of the regional banks, look at the stock price of Bank of America compared to the regional banks. It has not fared much better than the smaller banks.
The Bank of America stock price is more representative of the bigger problem going on in the banking sector which is directly tied to inflation, interest rates and the actions of the Federal Reserve. The Federal Reserve has raised interest rates faster and higher than any other time. They were ridiculously late in reacting to the increase in inflation and, as a result, were forced to raise rates significantly over a short period of time. Banks and our financial system are obviously impacted by changes in interest rates. And big changes in rates that happen rapidly are difficult for banks to manage. The regional banking problem is one of those “unintended consequences” that result from government interventions like this.
Inflation has been driving these interest rate hikes. Here is what has been happening with inflation over the last two years. You can see that the inflation rate started to rise rapidly in the second quarter of 2021. It reached 8% at the beginning of 2022 and peaked at 9% in May of 2022. But the Fed waited until the first quarter of 2022 to start fighting inflation with a higher federal funds rate. They made really dumb arguments as to why inflation spikes were going to be temporary. This is yet another example of when you should not believe anyone that tells you that “this time is different”. Because they were nine months late, they were forced to raise rates rapidly. It is highly likely that there will be more unintended consequences that appear as a result of the rapid change in interest rates.
You can also see from the previous chart that inflation rates are declining. This is good news. But you also need to be aware that inflation rates are calculated on a trailing 12-month basis. So, the January 2023 inflation rate of 6% is the increase in prices since January 2022. January 2022’s 12-month inflation rate was 7.9%. So, prices in January 2023 are roughly 14% higher (6% plus 7.9%) than they were in January of 2021. The May 2023 inflation reading will be very interesting since the May 2022 rate was 9%. Inflation has always been very stubborn and takes a long time to subside.
Even though the regional banking issue seems to be contained at the moment, we should all be prepared for more unintended consequences.
Happy Investing,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
We are still in the middle of this challenging bear market. As of Friday, March 10th, the S&P 500 is down 18.7%, the Russell 2000 is 27.1% off its previous peak and the Nasdaq is 29.5% below its previous peak.
After a nice move higher in January, prices dropped in February and early March. All three indices still remain above the October lows, but the recent trend is negative.
Let’s look at another view of the S&P this year to see what the technical analysts are seeing. Charts like the one below show what are called price support (lower line) and price resistance (upper line) levels. You can see that the S&P broke through the top line on the graph in January but the reversal in February has brought us back below the price resistance line.
We have been stuck in a sideways market for the last ten months. The S&P 500 has bounced between down 10% and down 25%. Currently, prices are just below the midpoint of this range. Markets like this are the toughest to read. Until we break out of this range, it will remain difficult to determine any kind of long-term price movement.
Throughout 2022, we have been comparing this bear market with the bear market of the 1970’s. The graphs line up well as you can see below, and the seventies were the last period where we experienced high rates of inflation. The 1970’s market was only halfway through its decline at this point and continued falling for another year. It bottomed out with a price drop of 45%. This year’s market is still following the slow and steady decline we observed in the early 1970’s.
When we compare the current bear market to the full 1970s bear market the picture is not encouraging. We would like to see the orange line move higher and move above the 1973 trend line.
The market continues to bounce around based on inflation data, interest rates and the policies of the Federal Reserve. The most recent indication is that the Fed is expected to remain aggressive in its fight to bring inflation down. It is likely that the Fed will need to tip the economy into a recession to snuff out inflation. Historically, bear markets don’t reach a bottom until the middle or end of recessions.
We remain cautious as a result and our model and funds remain in cash at the moment. We are pleased to be earning 4.5% on our cash investments as we wait for things to sort themselves out.
The reality is that no one knows if the worst is over or not for the stock market. Because of the uncertainty, it is important to follow a disciplined approach to stock market investing. Our approach to investing relies only on quantitative measures of actual price trends. We make no predictions about which way the market will head in the future. We simple react to what the market is telling us and can make money if the market goes down or if the market goes up. Stay disciplined, my friends.
Happy Investing,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
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