Market Watch with Tom Waitt

July_27th_2011.mp3 Wall of Worry - Part 14    Fear and bearish forecasts still surround equity markets despite the fact the Dow Jones industrials has doubled from the lows set in 2009, and is currently up 8.4% so far in 2011. U.S. Debt Ceiling (Click For Larger Picture) The latest wall of worry concern is the U.S. debt ceiling which adds to recent distraught worries of unemployment, European unity, Mid East unrest and revolution, Oil supplies, housing crisis, mortgage foreclosures, bank failures, too big to fail bailouts, Japanese earthquakes and tsunamis, nuclear meltdowns, Chinese accounting, Russian corruption and now political wrangling as Democrats and Republicans prepare for Presidential elections in 2012. The debt ceiling is the legal limit on the amount of money the US government can borrow to pay its bills, which includes the salaries of federal employees, federal programs such as Social Security and Medicare and principal and interest payments to bondholders. The current l

July_20th_2011.mp3 Inflection Point    It is quarterly earning time as results of the second quarter are declared. It is amazing how analysts downgrade a stock after it announces bad earnings and upgrade a stock after it declares great quarterly results? As results are released there are more important things to look for.   KEY - KeyCorp (Click For Larger Picture) Most quarterly earnings come in as expected but a few surprises occur. In my 33 years of investing it always drives me crazy how analysts' change buy recommendations of yesterday to sell recommendations tomorrow after the fact, and turn to recommend a buy of a stock that has tripled while they had an outright sell recommendation prior to stellar earnings. Still there is a better way; this is a trading environment and requires active management it is paramount to think outside the box and apply risk/reward analysis to your investments. It is important to look past earnings and look for value. Is there a significant chang

July_13th_2011.mp3 Confidence Returning    Despite negative news media reports North American stocks are strong. U.S. equities have more than doubled since lows reached two years ago. Canadian stocks as measured by the S&P/TSX Composite are up 92%.   Retail Sales (Click For Larger Picture) Over the last decade uncertainty and fear has ruled, media pundits have caused the markets to climb a wall of worry. Despite record job losses, the housing meltdown, mortgage foreclosures, bank failures, bailouts of the auto industry, Mideast unrest and revolutions, Japanese earthquakes and tsunamis, nuclear meltdowns, financial concerns in Greece, Italy and weaker Euro market participants, stocks have doubled. It has been two years since the financial crisis hit panic levels. North American equities have recovered the losses by doubling in value from the lows. The markets have prevailed but not confidence. Not all individuals or mutual funds have recovered their losses. Most market pundits

July_6th_2011.mp3 Canadian Dollar Peak?    Has the Canadian Dollar peaked?   Canadian Dollar - US Dollar (Click For Larger Picture) In the last 3 ½ years we have seen the Canadian against the U.S. dollar trade as high as 1.1038 and as low as .7656. Recent high of 1.0585 failed to test the 1.1038 record high. A key level is now last weeks high of 1.0435. Currently 1.0338 a test of last month's low of 1.0089 and the 200 day moving average of 1.0117 acts as support. Failure to hold would put the Canadian currency under par in the .97 to .99 area. Global markets operate 24/7; the most active is the currency market which affects the price of everyday purchases and investments. To realize the absolute value of currency exchange rates consider this; a $25,000 U.S. car; the post war low on the Canadian dollar was .6179 in 2002 and reached a premium high against the U.S. of 1.1038 in 2007. The $25,000 U.S. car would have cost $40,460 in 2002 but only would have cost only $22,649 in 20

June_29th_2011.mp3 Fearless Volatility    Recent Global market concerns have focused on Greece with media reporting on riots in the streets that could be scenes of Vancouver losing the Stanley Cup.   CBOE Volatility Index (Click For Larger Picture) Fear mongering with round the clock reporting of political rioting in Athens, Cairo, Tripoli, spreading through North Africa and weak European countries with austerity issues. Yet North American equity markets remain strong and profitable. The VIX is the ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often it is referred to as the fear index or the fear gauge, which has remained quite low despite media reports which has allowed an incredible opportunity for traders in the markets. This is and has been a traders market, set your goals and targets and lock in a profit margin. Investment styles and strategies make or break per

June_22nd_2011.mp3 Approaching Support    The S&P 500 stock index has doubled from the lows set in 2009. Fear and bearish forecasts still surround equity markets despite its resilience.   S&P 500 Index (Click For Larger Picture) After doubling the S&P 500 index in value over the last two years while news media and many market pundits remained negative, the recent six week set-back which has eroded 8.2% off the index has them raising the bear flag. As we approach the end of the second quarter the pessimism is getting heavier with riots in Greece concerns of European unity, Oil supplies, the U.S. debt ceiling, Chinese accounting, Russian corruption, Obama's future, Mid East theaters of war, political infighting and Bank reforms. A challenge of the all time high on the S&P 500 (1576.09) would involve a 280.45 point move, a 21.7% advance which is likely to occur as an economic recovery takes hold. There are many opportunities to make money but it requires action o

June_15th_2011.mp3 Rising Dollar    Riots in Greece, Mid-East tensions, North Africa revolts, disaster in Japan, Global Government spending out of control, massive unemployment, rising food costs, markets are in disarray.   U.S. Dollar (Click For Larger Picture) Several weeks of negative economic news along with Global concerns has brought U.S. equities measured by the S&P 500 Index off 7.7% but still up 192% from the crash low in 2008. Uncertainty and fear rules with global 24 hour a day media reports highlighting the most recent crisis. The public is becoming very concerned over the financial situation in the United States. Worries soar that the U.S. economy is in a much worse condition than stated. Many feel credit will be too restrictive to support economic growth. On top of these concerns, fear mongering over passage of the debt ceiling, has many expecting the U.S to default on its debts. The value of the U.S. dollar has fallen and has near panic emotions for some follower

June_8th_2011.mp3 Copper-tone    The World is watching for signs of economic growth as stimulus packages have succeeded in doubling stock prices but have had little impact on unemployment levels.   Copper, High Grade COMEX (Click For Larger Picture) Economic recovery or double dip? Is more stimulus spending required? Concerns of slow global growth permeate every newscast. What indicator should we watch to gage the economy of the future? Recessionary fears are affecting communities globally and many are wondering if the situation is getting worse or if there is some improvement underway. Many gage the U.S. dollar value or bond yield levels but both these indicators have been influenced by massive deficit spending plans globally. Gold is an indicator of fear and uncertainty not of economic activity. Historically copper prices have been a more accurate indicator of economic activity. Copper prices soared in 2009 rising 262%, in 2010 copper rose 32%, to date in 2011 copper is dow

June_1st_2011.mp3 Unemployment Concerns    On Friday the U.S. Unemployment rate will be released, market pundits and economists have become obsessed with jobless claims and payrolls which have been slow to improve and kept many cautious and negative on equity markets. Despite this stocks measured by S&P 500 have doubled.   Civilian Unemployment Rate (Click For Larger Picture) Nonfarm Payrolls (Click For Larger Picture) It has been over 2 years since the financial crisis hit panic levels. North American equities have recovered the losses by doubling in value from the lows. However not all individuals or mutual funds have recovered their losses. Over the last decade uncertainty and fear has ruled, pundits have caused the markets to climb a wall of worry. Despite record job losses, the housing meltdown, mortgage foreclosures, bank failures, bailouts of the auto industry, Mideast unrest and revolutions, Japanese earthquakes and tsunamis, nuclear meltdowns stocks have doubled

May_25th_2011.mp3 Emotion and Commotion    Last week we focused on the shares of Barnes & Noble which was out of favor with 73.7% of the share float shorted and was trading at $13.90 below it's book value of $14.48. Last Friday a takeover was announced today the stock is $19.33 up 39%. Value & market emotion are key to success. Market Emotion Cycle (click for larger picture) Fear and Greed tend to rule at market tops and bottoms. In the movie "Wall Street" Gordon Gekko says Greed is Good as the market soars higher. In market parlance the opposite of Greed is "Fear" which is bad for Investments. The market has a tendency to scare people out at the bottom and suck them in at the top. The market emotion cycle sees optimism turn to excitement, the thrill leads to euphoria and "Greed" slipping to anxiety, denial and "Fear" followed by desperation panic, capitulation, despondency ,depression, disgust and doubt. Globalization is upon us with what happens half way around the globe

May_18th_2011.mp3 Potential Shortly    Isn't it amazing how analysts downgrade a stock after it announces bad earnings and upgrade a stock after it declares great quarterly results?   BKS - Barnes & Noble, Inc. (Click For Larger Picture) It is quarterly earning time as results of the first quarter are declared. Most come in as expected but a few surprises occur. In my 33 years of investing it always drives me crazy how analysts' change buy recommendations of yesterday to sell recommendations tomorrow after the fact, and turn to recommend a buy of a stock that has tripled while they had an outright sell recommendation. Perhaps they can use John Maynard Keynes Quote "When the facts change, I change my mind, what do you do? There are many opportunities to make money but it requires action on your part, each stock selected must show risk/reward of at least 2:1. Make the call - let me provide you with a unique perspective on your investments through a no-obligation cons

May_11th_2011.mp3 Forex Parity    Global markets operate 24/7; the most active is the currency market which affects the price of everyday purchases and investments.   Canadian Dollar - US Dollar (Click For Larger Picture) The FOREX Market (Foreign Exchange) FX, or currency market is a global, worldwide decentralized over-the-counter and computerized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, the most active with average daily turnover in global foreign exchange markets in excess of US$4 trillion. Recent commodity strength and U.S. Dollar weakness globally have pushed the Canadian Dollar though parity to the American Dollar once again. In 2011 the Canadian Dollar traded as high as 1.0585 U.S. dollars last week and as low as .9215 U.S. dollars within the last year. To realize the absolute value of this one year change consider a $25,00

May_4th_2011.mp3 Nokia Turnaround?    Where should you invest? Mutual Funds have been poor performers over the last 10 years. Gold and Oil stocks look toppy; interest rates of 3% are not enticing. It takes some original thinking and realizing that it is a market of stocks not a stock market.   Nokia Corporation (Click For Larger Picture) Common sense thinking makes investing simpler. If a stock has doubled or tripled it makes sense to be cautious, at the same time if a stock has fallen to a third of its former value caution is warranted. Unless there is fear in a stock, it probably doesn't have great capital gain potential. Occasionally a stock fits into a favourable turnaround environment. Through merger or partnering relationships, things start to turn and the prospects are at least possible. There are many opportunities to make money but it requires action on your part, each stock selected must show risk/reward of at least 2:1. Make the call - let me provide you with a unique

April_27th_2011.mp3 Dove or Hawk?    Today the U.S. Federal Reserve Chairman Ben Bernanke will hold a press conference, which is very rare; historically a statement is delivered but not a question and answer session.   30 Year Treasury Bond Yields (Click For Larger Picture) Many investors jumped out the frying pan and into the fire, in 2008 after losing 36% in stocks many investors ran into 30 year U.S treasuries which yielded only 2.83% in January 2009 and rose to 4.76% by June 2009 a loss of capital of over 25%. Out of the frying pan and into the fire. Historically through thousands of years it has been found the normal rate of interest is 7%. If we move to that level U.S. 30 year Treasuries will lose a further 30% of their principal value. In 1981 some will remember the Canadian prime rate reached 23% and reached 2.25% in 2009. Many conservative investors could find their savings tied up in bond funds in the wrong place at the wrong time. There are many opportunities to make

April_20th_2011.mp3 Oil Euphoria    Oil & Gas prices are the talk of the town, in the elevators, at the dinner table in the markets, the flavor of the month. Investors often act like lemmings, mythically following lock step till they fall off a cliff.   Crude Oil Light Sweet (Click For Larger Picture) The recent euphoria in Oil & Gas pump prices is a rerun of the past few years. In early 2007 a barrel of oil was $49.50 by mid 2008 it reached $147.27 a $97.77 advance, by early 2009 it had fallen to $32.20 a decline of $114.77. This time we have reached $113.46 a barrel almost as much as oil fell last time. It is interesting to note that despite the euphoria Crude Oil has had lower highs and lower lows which is not a bullish configuration. The Oil run will end as other avenues become more attractive. The key to investing is best explained by one of the top traders in the world George Soros; "Economic history is a never-ending series of episodes based on falsehoods and lies,

April_13th_2011.mp3 Confidence?    U.S. equities have doubled since lows reached two years ago. Canadian stocks as measured by the S&P/TSX Composite are up 91%.   Retail Sales (Click For Larger Picture) It has been two years since the financial crisis hit panic levels. North American equities have recovered the losses by doubling in value from the lows. However not all individuals or mutual funds have recovered their losses. Over the last decade uncertainty and fear has ruled, pundits have caused the markets to climb a wall of worry. Despite record job losses, the housing meltdown, mortgage foreclosures, bank failures, bailouts of the auto industry, Mideast unrest and revolutions, Japanese earthquakes and tsunamis, nuclear meltdowns stocks have doubled. The markets have prevailed; has confidence returned? Most market pundits are still negative warning of the inflationary consequences of easy money and lack of buying power of consumers. Despite this Retail Sales are up 7% from a

April_6th_2011.mp3 Risk Adjusted Investing    Investment styles and strategies make or break performance. What works and what does not may surprise many; the text books are wrong.   CBOE Volatility Index (Click For Larger Picture) The most popular investment strategy the foundation of most Mutual Funds "Buy and Hold" has not worked as the market ended with little change over the last decade. Indexing delivered flat results in major global markets. Text book advice is to "Diversify" when investing, splitting your investment dollars over a wide array of sectors. Perhaps it is time to think and question the way investments are made. It must hit home that we have a market of stocks not a stock market. Opportunities abound for many companies with incredible potential. Think and look what is going on around you. Why have an array of bonds and term deposits, when the rate they pay after tax doesn't even match the change in cost of living. Many rush into Oil or Gold after the price ha

March_30th_2011.mp3 Rising Inflation?    Inflation is described as too many dollars chasing too few goods; inversely Deflation is too many goods for too few dollars. Soaring commodity prices have the media and market pundits warning of rising interest rates and soaring inflation.   Interest Rates and Inflation (Click For Larger Picture) Which environment would you like to be in? If you have the goods people are rushing to buy like oil or gold or I-Pads your O.K. If on the other hand you are flush with real estate in an oil soiled beach in Florida; not so good. Many analysts warn that the current easy money policy by global central banks will devalue currency and push commodities including food stock to levels unaffordable by many already unemployed. Cotton prices have soared to levels not seen since the U.S. Civil War. Gold has hit record highs; Oil remains above $100 a barrel. Commodity prices are rising, forcing your grocery bill higher. Is inflation a problem? From 1914 until

March_23rd_2011.mp3 U.S. Dollar; Safe Harbour    Global markets are in disarray, Mid-East tensions, North Africa revolts, disaster in Japan, rising food costs, government spending out of control, massive unemployment.   U.S. Dollar Index (Click For Larger Picture) Uncertainty and fear rules with global 24 hour a day media reports highlighting the most recent crisis. The public is becoming very concerned over the financial situation in the United States. Worries soar that the U.S. economy is in a much worse condition than stated. Many feel credit will be too restrictive to support economic growth. The value of the U.S. dollar is falling and has near panic emotions for some followers and market pundits. What people do not realize that the U.S. dollar currently 75.95 was lower last November at 75.24 and at 74.21the year before and down at 71.05 in 2008. With all the commotion in the world the U.S. is the safe harbor. Money supply is at an all time high while the rate o

March_16th_2011.mp3 S&P/TSX Breakdown    What went up came down, fast, as the Toronto Stock Exchange fell over 1,000 points, a drop of 7.6% in a week. Gold and Oil was expected to soar with global events blowing up and melting down.   S&P/TSX Composite Index (Click For Larger Picture) Many investors have been burnt in the recent market decline as many pundits suggested resource and commodity stocks would send Canadian stocks higher. With revolutions occurring in North Africa sending shock waves through the Mid-East, questions on the unity of European countries over financial bailouts of weak members, deficit spending out of control and a U.S. political battle over the debt ceiling, earthquakes, tsunamis nuclear melt downs it has been an eventful series of concerns and uncertainty. There are many opportunities to make money but it requires action on your part, each stock selected must show risk/reward of at least 2:1. Make the call - let me provide you with a un