The markets, like a finely tuned Italian sports car, not only make a lot of noise but need lots of love and attention. They also tend to spend a fair amount of time in the shop costing us money. We certainly saw lots of love and attention in the past few weeks as excitement built ahead of the US mid-term elections and the second round of quantitative easing (QE2).

Now that those events are in the past, the markets are left to digest the cold leftovers (a smaller than expected QE2 and the realization that the same old Congress will be around for a few more weeks). It doesn’t help that the BLS appeared to fiddle with the figures ahead of the last release, resulting in a “positive surprise” that seemed more than a bit empty. If you want to explore BLS figures, I recommend Mr. Mauldin’s column for a first brush and Shadow Government Statistics if you want to get your hands dirty with the details.

The next catalyst, which has a very good chance, is the extension of the Bush Tax Cuts. With State Governments cutting back expenditures, President Obama would only be shooting himself in his “2012 re-election campaign” foot if he were to further tighten fiscally by allowing federal income taxes to rise in the New Year. Will all the “Bush cuts” survive (ie. for those making more than $250k)? That is probably the only drama left in this upcoming catalyst. How long will this one last? Don’t be surprised if we are still talking about it in February.

So, what are the various “Systems” telling us?

From a Global Perspective, there is a preference for India, Metals (both precious, SLV, and industrial) and Emerging Markets. Fixed income, in all its flavors, has fully yielded the field to equities. In the US Sector portfolio, the Materials (XLB), Consumer Discretionary (XLY) and Q’s (QQQQ) are slightly ahead of the pack but with readings that don’t inspire tremendous confidence. On our short term commodity screen, Silver (SLV) has overtaken Sugar (SGG) and US Gasoline (UGA) has put in strong #3 showing which might be worth digging into (as the summer driving season is well past). In other portfolios, we see Non-US Properties (RWX) and Non-Japan Asia (EPP) still showing strength, most likely in expectation of receiving some of those still inflationary QE2 dollars.

Initial Ranking of Seeking Alpha Portfolio

A Portfolio Story

In order to make the Fund King System more accessible, we have started a blog series on the Seeking Alpha website which will track the fortunes of a 20 ETF universe. The portfolio starts with $30,000 and will be buying into the top three ETFs in that system (TUR, EWH and EPI) today. If you want to follow the blog posts, start here. If you want to follow the Seeking Alpha ETF Portfolio System, we have set up a separate page here.

Instructions for Portfolio Select and Portfolio Management

We are putting the finishing touches on the much promised instructions for using our new features. The video should be ready today and we will post the link on the front page, as a separate item on the Facebook page and in the main blog. Thank you for your patience.

A Nostalgic Story about Silver

I have thoroughly enjoyed all the conspiracy theories swirling around Silver, JP Morgan and its biggest ETF, SLV over the last few weeks.

When I was a young runner on Wall Street (back when stocks and bonds were printed on real paper), I took my outstandingly huge wages (I was 14 at the time) and bought shiny one ounce bars of silver for between 6 and 10 bucks a pop at a bullion dealer just off Broadway. I had amassed around 20 to 25 of them by the end of the summer and put them in box at the bottom of my closet. Less than a year later (it might have even been as soon as Thanksgiving vacation), my parents were taking the nice silver out of the drawers and locking it away. The Hunt Brothers had struck, driving silver well past $40 an ounce (and kicking off a rash of burglaries aimed at Grandma’s silver). My Dad gave me a look that said: “Don’t be greedy.” I was nearly mobbed at the bullion dealer on Broadway when I cashed in my small hoard of shiny silver bars. I held on to two or three (and watched them go back to $5 an ounce while they oxidized) but the lesson of “Sell High” stuck. For a while, I was one wealthy teenager!

So, could there be some fun and games going on in the Silver market? I wouldn’t bet against it! A lot of rotten ideas from the 70’s and early 80’s seem to be coming back into fashion. Where did I put those old ties?

Tagged with:

Filed under: AsiaETFInvestment IdeasMarket CommentPrecious Metals

Like this post? Subscribe to my RSS feed and get loads more!

Possibly related posts