FYI: (The Linkster says, stay as far away from these funds as you can, the leverage will kill you !)
Short-term traders were gifted some new power tools this week in the fast-moving biotechnology and energy sectors
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/05/29/triple-bull-and-bear-etfs-debut-in-biotech-energy/tab/print/

Hi Hank, Hi Guys,
Please do not interpret my posting of Jim Stack’s Las Vegas presentations as my ringing endorsement of his advice. It is not. I like his historical research and his reliance on multiple market directional indicators. I don’t necessarily agree with his conclusions. I don’t subscribe to his services,
I posted Stack’s recommendations on MFO for informational purposes. Stack is one of my favorite financial money managers because of his dependence on statistical research, but also because he is a recovering Aerospace engineer. In that regard, we share a common background that demands a heavy commitment to safety factors. That commitment is reflected in his conservative, defensive investment philosophy and strategies.
Stack has enjoyed success as a money manager, but he is a relatively small player in that field with a very limited audience. The chances that his clients would all follow his incremental equity reduction advice is small; the likelihood that a wider audience would act on that advice is remote with the probabilities approaching zero. The fear of a market meltdown as a self-fulfilling Jim Stack prophecy is just not in the cards.
Stack’s track record is a mixed bag. Since he adheres to a defensive policy, he tends to partially reduce equities early. I agree with many MFOers that Gurus are not especially prescient. Remember the CXO Advisory Group’s Guru Rating database. The overall success score was just below 50% with the highest value at the 68% level. That data reinforces my long standing observation that forecasters can’t consistently forecast.
Stack was not evaluated by CXO Advisory. Based on my general assessment of Stack’s methods, I speculate that he would have been slightly above middle of the road in that rating.
I agree that market timing is hazardous duty, especially in the short-term because of emotional investor noise, and amplified when synchronized into a herd reaction. An old cautionary saying about joining the crowd warns that “running with the herd might get you trampled”. That’s wise words,
But I do like to collect and compare Guru predictions. When properly assembled and used (I mentioned the success of a Kalman Filtering approach in earlier submittals), the herd opinions can improve the odds of success.
As an aside, it seems like many investment organizations are now using fund team managers instead of individual superstar managers. DFA and Dodge and Cox serve as excellent mutual fund examples.
Regrettably, nothing is ever perfectly simple in the investment process. Conflicting evidence must always be carefully collected and weighed. That’s one reason why information source diversity is so important. Independent analyses and interpretations are critical. I often wonder just how independent these analyses really are. There appears to be an incestuous relationship among many popular market writers and pundits.
When reading this post, please recognize that I do like Stack and rate him highly along with several other money matter advisors. But these other advisors often offer disparate market opinions. All “experts” are not equal; the value I extract from them is weighted.
The first step before making an investment decision is to gather information from several primary sources. A second step is to sort and evaluate these data without falling victim to data overload.
Avoiding “analysis paralysis” is an issue. I’m sure all MFOers approach this step differently. The decision making process is itself an art. I use a very, very informal form of the Kalman Filtering approach whereby I weight the various inputs with an estimate of their accuracy record. Ben Franklin used a check list and sequentially eliminated elements from each side. Whatever works for you is the best approach.
Thank you all for participating in this thread. I did not anticipate the interest when I reported the scribbling that I made at the MoneyShow conference.
Best Wishes.
Edit: Hank, I too am 81 years old and am still in the market. However my commitment and enthusiasm are both easily overshadowed by the fine folks participating in the MFO exchanges.

"No assumptions are necessary. Jim Stack is directing his advice to all investors: to you, to me, to MFOers, and to his legion of loyal followers."
---
Wow - If Stack's advice is to be taken seriously would his vision than not become a self-fulfilling prophecy?
Here's why: If all investors decided to ratchet-down their equity exposure by 10-15% based on Stack's forecast, equity valuations would than adjust downwards to reflect the new reality. In fact, they might well over-shoot on the downside.
I haven't learned a thing from this thread. There are hundreds of bright people like Stack whose views are worth reading. We can learn from all of them. None deserve the attention Stack seems to be receiving here. I got a lot more out of JohnC's thread on "bullish" or "bearish" as I was able to identify different types of investors (here at MFO) with the varying outlooks offered - and none of the views were served up as sacrosanct.
There's another issue here which seems to have largely escaped discussion. That's this whole notion of trying to time markets. Yes - Stack is merely advocating "reducing exposure". To me, that's a cute way of saying: try to time markets. And I think that's terrible advice for younger investors attempting to grow a retirement nest egg. For "oldsters" (probably the predominant group on this board) who have already accumulated a nest egg, timing makes a bit more sense from a defensive point of view, but is still a "dicey" (a begrudging nod to Vegas) proposition - the benefits of which are highly dependent upon both the investor's temperament and goals as well as a whole host of unknowns.

So my question is which Large Cap companies have not already been priced today for future growth? Instead of only using Price Earnings ratio PE), one recent wealth tracks interviewee (Tom Russo) suggested evaluating company growth based on a company's ability to increase market share.
I wonder if anyone here own funds where the manager's focus is on companies that dominant market share or are strategically trying to achieve increased market share. Attention to mergers and acquisitions might be one method of increasing market share. A recent merger deal between Broadcom and Avago maybe attempting to increase market share to compete more effectively with companies like Qualcomm and Intel.
The oil and gas industry as well as the commodities sector seem ripe for M&A (Mergers and Acquisitions). Columbia Funds had a fairly successful fund UMBIX that isn't talked about much these days.
Anyway, here's an interesting article on the complexity of cross border mergers:
Avagos-Pending-Broadcom-Purchase-Taps-Arcane-Tax-Structure
I wonder that as QE continues in Japan, Europe and China, will this cheap capital encourage more of these deals, cross border or not.

FYI: A growing number of state legislatures are trying to solve the nation’s retirement savings crisis.
Last week, Washington state became the second state in the nation—after Illinois—to authorize its own state-run retirement savings program for a broad spectrum of companies. The goal: to get small businesses, many of which don’t currently offer retirement savings plans, to deduct contributions from employees’ paychecks and funnel them into individual retirement accounts, where money can grow tax-deferred until retirement.
Regards,
Ted
http://blogs.wsj.com/totalreturn/2015/05/28/states-tackle-americas-retirement-savings-shortfall/tab/print/?mg=blogs-wsj&url=http%3A%2F%2Fblogs.wsj.com%2Ftotalreturn%2F2015%2F05%2F28%2Fstates-tackle-americas-retirement-savings-shortfall%2Ftab%2Fprint

FYI: Some investors building equity income portfolios seek out ETFs holding big dividend payers. Others focus on exchange traded funds that consistently grow dividends. But what's more important than high yields or dividend growth?
Regards,
Ted
http://license.icopyright.net/user/viewFreeUse.act?fuid=MTk0OTU0MTQ=
Enlarged Graphic:
http://news.investors.com/photopopup.aspx?path=ETPlist_150529.png&docId=754704&xmpSource=&width=428&height=183&caption=&id=754703

FYI: Top-performing large-cap funds in the past 10 years have been driven by a combination of growth and value stocks. Since 2013, growth stocks have been the main performance engines.
Regards,
Ted
http://license.icopyright.net/user/viewFreeUse.act?fuid=MTk0OTUzMjQ=
Enlarged Graphic:
http://news.investors.com/photopopup.aspx?path=WEBlv0528_1K.jpg&docId=754574&xmpSource=&width=1000&height=1152&caption=&id=754548

I was able to purchase VVPLX earlier this week for the required minimum in my non-taxable account with Scottrade for no trade fee with no hassle (already own VVPSX in the same account).
I was not able to buy VVPLX through Wellstrade/Wells Fargo as it had a "hold/sell". Rep. kept stating the same thing. Fido had it listed available for $2,500.
Incidentally, M* posters are clamoring for some type of dedicated thread for opening/closing/limited access to funds similar to that of MFO.
http://socialize.morningstar.com/NewSocialize/forums/p/349533/3648101.aspx#3648101
I want to give thanks to ViveBene for his post in the M* link above!

Hi Old Joe,
Yes it does matter. Not only does it matter, it matters greatly what is our perceived position within any cycle.
Let's use Stack's baseline asset allocation model to illustrate. Early in the current Bull cycle (like 2009), Stack would likely have 90% plus invested in equities. He believes it is now late into the cycle, so his equity asset allocation has been defensively reduced to 75%. As more of his Indicators turn Red, his equity asset allocation will drop still further. I seem to recall that he never goes to a zero equity percentage.
So, as a cycle matures, asset allocations are adjusted according to the Stack strategy. The article cautions investors to consider the gray-beard nature of the current Bull cycle.
Best Wishes.
Edit: Sam Stovall's sector rotation strategy is also tightly coupled to the perceived cycle maturity.

Niche.
Hmmmm. Emerging markets contribute over 49% (and climbing) of global GDP but only 9% of global market cap, according to FTSE. The US contributes 19% (and falling) to GDP but 51% to global market cap.
I suppose if you assume that the stock market is efficient and investors are rational, then you would indeed assume that we were worth every penny (and more) of what's invested in our market.
David

Advice for Graduates: Buy Stocks
Posted on May 27, 2015 by David Ott Acropolis is a fee-only wealth management firm,
When I graduated from college 20 years ago, the world was a different place: only a few people had cell phones,the Internet wasn’t useful for anything, and nobody used email or instant messaging.
I should note that I didn’t have to walk to school uphill both ways – that was before my time.
A lot has happened since I graduated and started participating in financial markets:
The good news, though, is that stocks represent ownership interests in operating businesses and as long as the system is based on capitalism and we have the rule of law, stocks should earn more than bonds or cash.
But, who’s to say what the next 20 years will look like? Right now, non-US stocks look a lot cheaper than our markets, so it’s not hard to think that their returns will at least match ours or potentially be higher. That said, while US stocks will likely have lower returns over the next 10 years, no one can say much about the 10 years beyond that.
So, young grasshoppers, buy stocks and do it in a diversified, global way.
http://acrinv.com/advice-for-graduates-buy-stocks/

We've got some GABEX too, and sometimes I wonder if it's pretty much of a closet index fund for the S&P 500. Overall the performance has been reasonable, though.

Hi Guys,
This morning, I’m in the process of tossing my notes from the 2015 Las Vegas MoneyShow. They have limited shelf life. During those visits, I always make a point to attend one of Jim Stack’s lectures. His talks always inform.
Stack is cautiously optimistic and expects positive equity returns in the near-term. However, my notes say that he is assuming a more defensive posture. His current equity allocation is in the 75% range; the remainder is in cash equivalents. Typically, Stack commits north of 90% to equity holdings.
He is currently getting mixed signals from his multi-dimensional market indicator array. I myself have little confidence in any single individual’s forecasting acumen. But, if the projections are made independently from each other, there is some merit to an assembly of the wisdom of crowd approach. Therefore, collecting predictions from a band of honest practitioners is not an entirely bad idea.
I thought you guys might be interested in the whys and wherefores of Stack’s predictions and modeling. Here is a Link to a recent MarketWatch article that is based on his work:
http://www.marketwatch.com/story/bull-market-is-closer-to-the-end-than-investors-think-2015-03-16
Be sure to click to page two which lists some of the reasons for Stack’s partial movement towards a more defensive asset allocation. Stack is never an all-in or all-out guy. He characteristically makes incremental changes as the signals turn either green or red.
As I mentioned, Stack uses a variety of market direction Indicators. Here is a Link to a recent USA Today article titled “6 Signs the Aging Bull is in Late Innings”:
http://americasmarkets.usatoday.com/2015/03/09/6-signs-the-aging-bull-is-in-late-innings/
Stack’s analyses are always data dense and intensive. The 6 signs presented in the article are only a small portion of those that he monitors. If you like that, he just might be your man. Like all market gurus, he has both good and bad years. His record is that the good years greatly outnumber the bad years.
If your interest is peaked you might also want to examine his Coppock Guide and his “Bellwether” indicator. He can swamp you with the scope of his many signal generators. I don’t know how or if he weights them. I also don’t know the super stocks that Stack incorporates into his Bellwether indicator. Lots to learn so good luck.
Best Regards.

I'm seriously considering selling my stake in GGZ, Gabelli Global Small Cap CEF, after reading this article about how Mario and his kin have locked up ownership of Gamco and related enterprises. Sleaze, in a word.
http://www.nytimes.com/2015/05/27/business/dealbook/a-shareholder-advocate-in-word-but-not-in-practice.html?_r=0

The search for yield and credit quality (flight to safety) by world markets put downward pressure on the interest rate of US high quality bonds.
This realty has to be weighed against the upward pressure the Fed will eventually put on interest rates. The Fed's mandate is not a global mandate, but markets are global.
It makes it difficult for the Fed to raise rates while the world is still de-leveraging because if the Fed raises rates, the world markets will pile in on these high quality bonds that pay a relatively higher rate than other high quality global bonds.
"Well boys just stick with me, we're in a tight spot" (Oh Brother Where Art Thou)

FYI: The Market Leadership Strategy is designed to be a small portion of your overall investment portfolio. Our goal: to provide an easy-to-use investment approach with a potential for powerful returns.
The Market Leadership Strategy indicates a potential to outperform the S&P 500 with less risk. See below how to implement this strategy.
Regards,
Ted
http://investwithanedge.com/leadership-strategy

FYI: Several pillars of the six-year bull market have shown signs of weakness this year. One hasn’t: The amount of cash corporate America is returning to investors.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2015/05/28/morning-moneybeat-buybacks-alone-cant-drive-stocks-up-forever/tab/print/
Current Futures:
http://finviz.com/futures.ashx

FYI: (In case you missed the E-Mail)
Regards
Ted
Dear friends,
One of the most frequent requests from readers has been to provide timely notification of events that cannot wait until our normal monthly update. That seems reasonable. Our plan is to provide updates to you folks but only if the information is timely and compelling.
The imminent closure of Vulcan Value Partners (VVPLX) meets those criteria. In April, Vulcan announced the closure of VVPLX and all of their related strategies without advance notice. That’s an entirely prudent and shareholder-friendly decision, so we had no opportunity to warn you in advance of the closure. We reported in our May issue:
Vulcan Value Partners (VVPLX) has closed to new investors. The firm closed its Small Cap strategy, including its small cap fund, in November of 2013, and closed its All Cap Program in early 2014. Vulcan closed, without advance notice, its Large Cap Programs – which include Large Cap, Focus and Focus Plus in late April. All five of Vulcan Value Partners’ investment strategies are ranked in the top 1% of their respective peer groups since inception.
Presumably persons with an interest in the fund objected to the abrupt closure. Vulcan filed an amended statement with the SEC, announcing the fact that the fund would now be closed on June 1, 2015.
Effective as of the close of business on June 1, 2015, the Fund will close to new investors, except as described below. This change will affect new investors seeking to purchase shares of the Fund either directly or through third party intermediaries. Existing shareholders of the Fund may continue to purchase additional shares of the Fund.
Vulcan Value and its sibling Vulcan Value Partners Small Cap (VVPSX, closed) are both very good funds. Morningstar has awarded five stars to each fund. MFO’s rating system, which is considerably more sensitive to risk and rewards consistency, gives both of them our top honor, Great Owl funds, which means their risk-adjusted performance exceeds their peers’ in every applicable trailing period greater than 12 months. Since inception, VVPLX has outperformed its large-growth peer group by about 3% per year with substantially less risk.
Our original 2011 profile of VVPSX quoted manager C.T. Fitzpatrick’s self-assessment: “We buy 900-pound gorillas priced like 98-pound weaklings. We have a five-year time horizon. Usually, our investments are out of favor for short-term reasons but their long-term fundamentals are sound.” During Mr. Fitzpatrick’s 17 year tenure with Southeastern Asset Management and the Longleaf Funds, his team was ranked in top 5% of money managers over five, ten, and twenty year periods according to Callan and Associates. He runs a compact portfolio of about 40 names, a third of which are mid-cap stocks. While they do not always hold their investments for five years (price appreciation sometimes requires them to move on), their standard is straightforward: if they aren’t comfortable with the idea of holding a stake in a firm for five years, they won’t buy it.
Interested parties might want to (quickly) review the Vulcan Value Partners website for details.
A second fund closure is also imminent: effective June 1, 2015, the T. Rowe Price Health Sciences Fund (PRHSX) will be closed to new investors. The $14 billion fund has substantially outperformed its peers under manager Taymour R. Tamaddon, who joined in February 2013: $10,000 entrusted to him on the day he took over the fund has grown to $21,600 while the average health care manager would have grown the investment to $20,000. The problem, of course, is that Mr. Tamaddon follows Kris Jenner’s phenomenal run as manager. With Mr. Jenner’s departure, Morningstar ceased analyst coverage of the fund. Nonetheless, it has had two-plus very solid years under Mr. T. and sports Price’s trademarks: low expenses, risk consciousness and consistently solid performance. As with Vulcan, you might want to do a quick review of the fund’s webpage.
As ever,
David

FYI: Western Asset Management boosts holdings of longer-dated U.S. government bonds to levels not seen since the end of 2014.
Regards,
Ted
http://www.investmentnews.com/article/20150527/FREE/150529937?template=printart

The NASDAQ biotechnology index lost almost two-thirds of its value in the two years ended Sept. 30, 2002, according to data compiled by Bloomberg. The index currently trades at a price-to-earnings multiple of 86 compared with 19 for the S&P 500.