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12/08/2014 meeting accounting documents

Attached are the finacial accounting spread sheets and the Scottrade statement closing 11/30/2014.

I have made some changes to the spread sheets to address computation errors due to rounding. Contact me if you have questions and wish to hear some derogatory comments about computer programers, the logic of “help” screens, and the helpfulness of VPN connections. There will be some more changes in the future to address the “petty cash” problem. Note, the total amount of dollars is correct and now matches the Scottrade statements. read more

OTM Market Update November 8 – Back to Trend

  • The S&P gained 0.9% last week, rising to 2031.21.
  • The Russell 2000 lost 0.2% last week, falling to 1171.86.
  • Long Bonds (TLT) fell 0.7% last week, falling to 118.39.
  • Asset Allocation Model:  50% stocks, 30% Bonds, 20% Optional.

At this time the technical models for the S&P, Russell 2000, and Long Bonds are all BUY.  The Asset Allocation model has recovered back to 50% stocks.  The underlying market strength that has propelled the S&P 500 all year long has driven the market back above all of the long term trend lines dating back to the beginning of the rally in 2009. I discussed as recently as last week the breakdown in small stocks, and the divergences between the major market index and what was happening to underlying stocks.  This has been a familiar story for much of 2014, so too is this advice:  follow the quantitative models, which have been correctly positive on the market as well as long term bonds for quite some time now.  The November-December period is traditionally a strong period for the market, which no doubt is fueling some investor confidence. I don’t like the underlying divergences, but as the indexes are going up and the models say BUY, who am I to argue? read more

OTM Market Update – November 1 – Not Sure I’m Convinced Yet

The S&P went up 2.7% last week, including a 1.2% jump on Friday.  It has reclaimed all that it lost in recent weeks, and is now at an all time high. Yet, despite the talk of analysts and others, I am not convinced that this trend will continue.  Let me lay out a few facts that have nothing to do with Bank of Japan actions or Fed actions, but do have everything to do with a lot of other people’s actions. Fact 1: The cumulative number of Advancing versus Declining NASDAQ stocks is negatively diverging versus the S&P.  The chart below subtracts the number of stocks going down in a day from those going up in a day.  If the trend is down in the BLUE line below, more stocks are dropping than going up.  Over the past few months, even though the S&P has generally been rising, more individual NASDAQ (smaller) stocks are falling than going up.  Signs that smaller stocks are having trouble.   Fact 2: If you subtract stocks hitting a new 52 week low, from stocks hitting a new 52 week high, you get the GREEN line below.  Again you can see that more NASDAQ stocks are hitting new lows than hitting new highs.  Yet the S&P continues to trend up.  This again is a sign of broad weakness in smaller stocks   Over the course of the past several weeks I have mentioned that small stocks lead large stocks.  So again we look at the Russell 2000 for guidance.  It is conflicting guidance.  Yes the technical model for the Russell 2000 is all BUY, but until it clears that upper RED resistance line I will not be convinced. The S&P 500 technical graph below is BUY for all timeframes.  As with the Russell 2000 technical model, all seems “GO”.   Summary It appears to me that headline-producing actions by various governments have driven investment in large, prominent stocks such as those in the S&P 500.  But there is definite weakness in the rest of the market.  The mechanical models say “BUY” but like the market in general they are being materially influenced by governmental activities. Be careful in your asset allocation and do not assume that it is time to be aggressive with stocks.  The asset allocation model (http://onthemarkinvesting.com/otm-asset-allocation/) only assumes 35% stock allocation at this time, versus 50% bonds.  Given the risk in the market as a whole, that seems appropriate to this observer. read more

OTM Market Update Saturday October 25

Despite the market uptick in the last few days, the asset allocation model (http://onthemarkinvesting.com/otm-asset-allocation/) still strongly  favors bonds over stocks.  It is predetermined to err on the side of protecting assets against substantial market drops.  You can expect it to slowly rationalize to a new steady state value as the weeks go by. This rebound in the market is not completely convincing, yet.  Technically the pierced long term trend lines have not been collectively passed on the upside for at least 3 days or by 3%.  The model itself continues to register “BUY” in the long term, but not yet in the intermediate or short term.  As a longer term investor, you may need to see some stability and direction in the market before you put many of your cards back on the table.  Or at least a “BUY” signal in the intermediate term S&P. Another point of reference is the Russell 2000.  The index has still not recovered (see below) from the most recent drop, and still does not register BUY on either the intermediate term or long term.  Remember that the Russell typically leads the S&P.  It is leading it up in the short term, but the strength does not appear yet to rebound back to previous levels. It is a fact that long term bonds are still favored by the market and by the technical model (see below).  This despite poor bond returns, fear of eventual inflation, and a VIX (fear index) gauge that at 16 is now back below the historical average of 20.   Between earnings season, general elections, and Ebola we have enough triggers to move the market around.  This is a time of short term “static” and financial news chatter.  If you are a longer term investor, stay away  from the headlines and watch the numbers.  Make sure your assets are allocated between the asset classes (stocks, bonds, real estate, …) in a way that you are comfortable with.  If this is a “traditional” 4Q then stocks will be strong, the trends will continue past broken lines, and we will resume the bull market.  But until then, stay alert. read more

OTM Investing Market Update October 11 2014

Unfortunately last week’s warning that trouble may afoot in the market (http://onthemarkinvesting.com/otm-investing-market-update-oct-5-2014-trouble-in-the-air/) proved to be accurate as S&P dropped 3.1% last week. As you can see below, the S&P index has violated two of the three long term logarithmic trend lines; the line most recently violated goes back three years.  The technical model itself has SELL status for both short and medium term.  And the OTM Asset Allocation model (http://onthemarkinvesting.com/otm-asset-allocation/) has shifted to equal weighting for stocks and bonds, which is an 800 basis point drop in stock weighting over the week. So what now? 1) Don’t panic.  We’ve had around 12 of these downside adjustments since 2009.  This is not necessarily the beginning of a major correction. 2) Do pay attention to your asset allocation.  If you have 50%+ of your assets in stocks, you may wish to dial that back to a 50-50 mix of stocks and bonds. 3) Do pay attention to the S&P.  If it drops below 1850 (another 3% drop) it will violate the last of the long term trend lines.  And likely this will also trigger a long term SELL in the model.  And it would likely trigger an inversion of the asset allocation model toward bonds over stocks. However what is just as likely to happen is that the market will take a breather, absorb this 12th correction since 2009, and continue its upward trek.  Either way, make sure you know what your plan is. read more

OTM Investing Market Update Oct 5 2014 – Trouble in the Air

If you just look at the S&P 500 chart, you’ll see some volatility but no violation (yet) of long term trend lines.  However, the Russell 2000 begs to disagree, and that is significant. The Russell 2000 is an index composed of the 2000 largest “small cap” stocks.  While it is far more securities than the 500 in the S&P 500, the total capitalization of Russell 2000 companies is only 10% of the S&P 500 large cap stocks.  Historically, small caps lead large caps, both up and down.  And that is where the concern lies. The chart below is a four year picture of the Russell 2000.  The index has dropped below its long term trend line.  It is SELL on all three technical models.  And the index is right at the neck of a head and shoulders pattern, which technically is a strong indication of a meaningful change in direction.   Looking at the Russell 2000 over the more recent, shorter period, you can see the peril in the indicator. The S&P 500 has yet to violate the long term trend lines that I pointed out last week.  But the increased volatility of the near term, coupled with the “divergence” of the Russell compared to the S&P, does raise a number of very serious questions about the strength of the current rally.  Small companies have fallen — will large companies follow suit? Conclusion:  Keep a very close eye on the S&P over the next week or two.  We’ll let the models take us where they take us.  But increased scrutiny is warranted. read more

October 1 2014 Market Update – Keep your powder dry

The overall technical model still shows a positive view on the S&P500 for the intermediate and long terms.  As you can also see, there are three resistance lines ranging in age from 1 to 5 years that have yet to be pierced. As the asset allocation page shows, it is still wise to remain in market index ETFs and funds.  No need to shift your assets to cash or bonds as a hedge for the intermediate or long term. read more

Ensuring Adequate Retirement Income – 5 steps

A short, to-the-point article from the Wall Street Journal about the 5 things to do to assure adequate income at retirement.  Good read.

URL Link to Article

How to Ensure Adequate Retirement Income

By JONATHAN CLEMENTS Aug. 30, 2014 8:30 p.m. ET Retirement is hard work these days. How do you generate enough income in a world where the S&P 500 yields roughly 2% and 10-year Treasury notes offer 2½%? Here’s my five-step plan:

1. Delay Social Security.

Suppose you retire at age 65, at which point you’re eligible for $20,000 a year in Social Security retirement benefits. If you put off benefits until age 70, you would miss out on five years of benefits worth $100,000. In the meantime, you’d likely have to cover your living expenses entirely out of savings. read more