TIMINGTRUTH.COM NEWSLETTER

2010-07-06

CURRENT SIGNAL TRENDS:

The first half of 2010 was not good for the global equity markets which was down over %10.  China was especially hard hit (-27%) along with oil and the Euro currency.  The good news is that US Treasuries and gold were up as investors move into these safer positions.  Those subscribers following our strategy were alerted earlier and were able to move their money from stocks into bonds in time to avoid the worst.

NEWS:

The big news this month is that the recovery isn't as robust as the politicians spin it.  (Surprised?)  Recent figures from our government shows that when the federal funds propping up several sectors ended so did the recovery.  A notable example was the drop in home sales when the tax credit expired.  The situation was summed up by Atlanta Federal Reserve President Dennis Lockhart when he indicated that while serious risks remain for the U.S. economic recovery, the economy should be able to heal at a modest pace as unemployment falls gradually.  He indicated that the U.S. economic recovery still lacks a solid base.  He commented that the economy slowed the first half of 2010.  The employment picture remains "sobering."   (We encourage our readers get their financial house in order, not out of fear but because it the wise thing to do.  Eliminating debt should be a top priority for everyone.)

LONG TERM  MARKET TRENDS:

This chart shows the last 6 months.  Painfully we see that all the equity indexes are below their January starting points.  Note the four indexes cover US, Small Cap, Emerging, and Europe/Far East markets.

OUT STRATEGY INSIGHTS:

It is in times like these that the TimingTruth strategy reveals its value.  The market has been trending down for over six months.  Should you buy, hold, or sell?  If the market is near its bottom then you should buy; if its a mid course correction you should hold; if the trend is continuing down then you might want to sell.  First, no one can predict the future so no one, including us at TimingTruth, can say with 100% certainty.  What can be done is an objective, data driven analysis so that the emotional bias can be removed.  Six months of a losing market strains our emotion and many might sell.  It is true you would be down 8% with SPY if you had invested exactly six months earlier. However, if you had invested 12 months ago you would be up by nearly 12%, even after watching the market decline for 6 straight months.  Twelve percent gain in twelve months is not bad.  But if you invested in Mar 2009 you would still be up over 47%.   The point is that investing is a long term process and it should not be influenced by short term emotions.  Use data to determine the long term trends or subscribe to a service that will provide the analysis to you.  Below is the same chart except we start it in March of 2009.