Monthly Archives: November 2013

I’m on Market Call Tonight!

On Friday, November 29, 2013, I will be on Market Call Tonight on BNN (Canadian Business Show) 6:00 pm – 7:00 pm (eastern standard) with Mark Bunting.

Take this opportunity, open our Model Price Facebook application and follow along while I’m on the show answering viewer’s questions about individual stocks.

Would you say anything different based on your interpretation of Model Price Theory and chart?  You can make your comments via Facebook.

Should be fun!

modelprice

Sun Life (SLF) – Model Price Performance Update Blog

“One of your ‘Coming Out of the Blue’ stocks has hit your target level, what happens now?”

Great question?  Let’s do a review.

First, some background.

Back on February 28, 2012 I highlighted Sun Life Financial as a candidate for our unique investment strategy called ‘Coming Out of the Blue’.

What is this investment strategy?

A stock that has a positive transit of our last line or EBV-3 we call ‘Coming Out of the Blue’.  We color our last line, EBV-3, blue giving us the name of the strategy.  Model Price Theory (MPT) stipulates when a stock crosses or occurs a positive transit of EBV-3 the market, through the equity price of the stock, is communicating to model price users the market is starting to form a connection to the balance sheet of the company.  In other words the market is starting to believe the value of the stated corporate assets on the audited publicly released balance sheet of the company.

For investors this event, positive transit of EBV-3, represents two independent pieces of information interacting together that rarely, if ever, happens in the conventional world of modern financial analysis.  Once a ‘Coming Out of the Blue’ event occurs model price users can make an investment and patiently wait for possible ‘Jumbo’ Gains‘ to accrue.  The only proviso is if the company has a negative transit of the same EBV-3 level the investment position should be sold.

Back to Sun Life (SLF)

Sun Life had a positive transit back on February 28, 2012.  I alerted readers of this event here in this blog.  Here was the model price chart back on February 27, 2012.

Sun Life with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Subsequent to this original blog on February 28, 2012 I updated the Sun Life model price chart for readers on March 26, 2012 and annotated my target price for SLF at $36 per share.

Sun Life Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Here is the current model price chart of Sun Life as of last night’s computer run.

Sun Life Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Sun Life Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Rate of Return Analysis

I would have (and did) purchased SLF back on February 28, 2012 at $21.60 – plus or minus – and it’s currently $37.56 representing a simple gain of 77% approximately.  But wait, Sun Life pays a nice dividend as well!  With dividends reinvested at say 1%, Sun Life has returned almost 90% in the last 21 months.

Not bad!

So smart guy when do you sell?

I have blogged previously 99% of investors buy at the right time and the right price.  Selling is another story entirely.  One of my early investment mentors suggested only 5% of investors sell at the right time and price.

Do you want to be one of the 5% who sell Sun Life at the right time and the right price?

Model price to the rescue!

I wait for a negative transit, any negative transit.  Sun Life could have a negative transit of EBV (Green Line) tomorrow and I would be a seller.  Three years from now, hopefully I’m still an investor in SLF; the company could have a negative transit of EBV+2.  Yes, I would be a seller.  Simple.

Do I care how long this takes to play out – a negative transit? Not in the least!  Remember I purchased Sun Life at the right price and I’m still receiving a nice dividend.  SLF is currently paying a $1.44 a share in dividends – possibly higher three years from now – and my purchase price was $21.60.  I’m receiving 6.7% dividend yield on my original purchase.  So I can be patient for my sell signal or negative transit to occur.

Would I have put my whole portfolio in this ‘Coming Out of the Blue’ situation?

No.

You don’t have to.  Our Model Price App covers and has model price charts for over 2,000 companies.  As a rule I only put 2% to 5% of my portfolio in each ‘Coming Out of the Blue’ situation.  Also I am very mindful of industry concentration as well.

Conclusion

‘Coming Out of the Blue’ investment strategy is unique to model price.  No other investment firm or research house has this very easy to use investment strategy.  With our extensive model price database there always seems to be companies trading below our last EBV line or EBV-3 that I view as raw material for substantial future investment gains.  Also I try not to over analyze the corporate name and what the business press has to say about the company.  The less I know about the company the better – remember you want a portfolio of these names not one or two.  Diversify and be patient.

Not a bad way to run your portfolio, Yes!

P.S. Psst….Don’t tell anybody!

You want to be rich like Warren Buffett? Read This!

Last Thursday Warren Buffett, chairman and CEO of Berkshire Hathaway, reported his third quarter portfolio update.  He, or one of his hired fund managers Todd Combs or Ted Weschler, reported holding a new stock position in the third quarter: Exxon Mobil Corporation.  The size of the position suggests that it is a Buffett position.

Berkshire reported owning Exxon Mobil in the third quarter in an amended filing, but actually first bought the stock in the second quarter without filing, and hid the fact until now.  In the second quarter he bought 31,244,110 shares.  In the third, it added 8,845,261.  The average share prices for the two quarters were both $90.

As always when I hear such an announcement I rush to my model price charts to see what is happening and for a quick analysis.  I didn’t have to for Exxon Mobil, this model price chart is well known to me and Buffet’s purchase makes all the sense in the world.

If you want to be a successful investor in real estate the cliché is “Location, Location, Location”.  To emulate Warren Buffett in the equity markets you have to know Valuation, Valuation, Valuation (and tax-free compounding).  The business press will always tell you who, what, when and the where.  I will disclose the why and the how!  Let’s have a look at Warren’s playbook.

First, let me show you our super long-term model price chart from our database for Exxon Mobil.

Exxon Mobil with monthly price bars, EBV Lines (colored lines) and model price (dashed line)

Exxon Mobil with monthly price bars, EBV Lines (colored lines) and model price (dashed line)

As you can see our model price chart goes back to 1995, some 18 years.  I have annotated by ‘up’ arrows only two other times – 1995 and 2010 – that Exxon Mobil traded at the same EBV level that Mr. Buffett made his most recent purchase of XOM (EBV+3).

One of America’s largest and best-managed public companies is trading at a valuation only seen twice before over the last 18 years.  Mr. Buffett used this valuation level to purchase a sizable stake in the company.  This is why Mr. Buffett is one of the wealthiest men in the world.  The market is, for whatever reason, placing a valuation on Exxon Mobil that rarely occurs.  First, Mr. Buffett recognizes this fact and has the investment capital to take advantage of the situation.

Another secret of Warren’s that rarely ever gets any coverage is the man rarely, if ever, sells his main positions.  Warren has two things working for him when making an investment, the first is the valuation level of his purchase and the second is tax free compounding as the book value of the company goes up over time – as you can see in our model price chart in that our EBV (parallel multi-colored lines) slope upward on a logarithmic scale.  Another bonus is Exxon Mobil pays a dividend of 2.64% in line with 10 year US treasuries.

To summarize, Warren’s has some cash lying around.  One of the best-managed companies in the world, a company that can trace its roots to John D. Rockefeller, is trading at a valuation that’s only occurred twice before in the last 18 years.  Plus as an added bonus Exxon pays out a yield of 2.64% –  same yield one receives on US Treasury bonds.  (In ten years the US Treasury gives you your money back, one can only speculate what the value of Warren’s shareholding of XOM would be and the future yield the company would be paying.)

This is how the rich get richer my friends!

Watching Value (and Profits) being Generated Right Before Your Eyes!

Using our model price charts will allow you ‘in a blink of an eye’ to determine whether a stock is a buy, sell or hold.

Some of you heavy users of model price already know this.  Newbies your patience will pay off.  We are all here together to help.  No question is a bad one.  Participation will substantially change your market outlook, the stocks in your portfolio (Large cap) with the side benefit of increasing your net worth – maybe – and having a little bit of fun.

As you all know when you log on our Model Price app, our database is preset to the US side of the database (we have two databases one for US stocks the other Canadian) and the first stock that appears is Agilent Technologies Inc. (A-us).  I can’t help it but I have been observing this chart in a ‘blink of an eye’ over the months and I find it interesting.  Unfortunately there are over 2000 companies in our database and I cannot know all of them but I do look at a healthy number on a weekly basis.

Here is the model price chart of Agilent (A-us) that many of you have seen hundreds of times.

Agilent Technologies Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Agilent Technologies Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

What I find interesting in this chart and teachable by way of a blog post is the way stocks react over a certain period of time.  For instance, before last week’s price spike the company spent 7 weeks consolidating an up move in the stock price from the third week of September.  This price spike, in September, carried the stock price up to its’ model price.  Over the subsequent 7 weeks Agilent’s stock consolidated but our calculation of model price continued its upward – 35-degree – climb.  This increasing value gap was finally closed as Agilent’s stock price spiked upward in this last week.

I have been watching this model price chart over the last 7 weeks – as I have been opening our model price app, as you have – knowing that this price spike was going to happen (again high probability NOT certainty) and I ask you; “Wasn’t last week’s stock move predictable?”  The stock move was predictable but the timing of the move, of course, was anybody’s guess.  At least you could see the ever-increasing fundamentals or the fair market value of the company continually increase on a weekly basis.

The stock price of Agilent was just reacting to ever increasing fundamentals of the company.  Our calculation of model price (purple line) clearly showed positive fundamental change while the stock price consolidated.

Conclusion

There are so many ways of making a positive rate of return in your portfolio by using our model Price app.  Often times, as I am ‘Speed Charting’, I try to ignore the company name and just look what is going on with our model price chart.  Agilent’s model price chart is displayed first because our database is organized on an alphabetic basis and obviously Agilent is the lead company on the US side of our database.  Over the span of many months I have been watching value being created in this company and rates of return being made on a stock that probably nobody has ever heard of.  That’s the beauty of using our model price app. Often times big profits can be made on the most unlikely companies as you are witnessing the mathematical dynamics – the most important financial dynamics – being played out on possibly random unheard of companies.

Three Stocks I am Currently Watching – Yahoo, Micron, and Pitney Bowes

Let me say a couple of things up front before I get into the details about the three stocks mentioned in my title.  I am not recommending these stocks as investments, as you all know, but I am following them on a daily basis.  They fascinate me and in this blog I will tell you why.

Secondly I wanted to talk about other investment strategies other than “Coming Out of the Blue” that may interest my readers.  Don’t get me wrong, “Coming Out of the Blue” is one of my favourite investment strategies and I use it often.  However I do employ other investment strategies that fit my personality and the amount of time I can spend looking at a quote monitor.

Another very profitable investment strategy is looking for catalysts in a specific company or industry and using model price charts to pinpoint entry and exit points for profitable trading.  What kinds of catalysts do I look for?  A new CEO in a moribund or struggling company is one.  Maybe a new industry is being discovered like social media and marketing.  Or maybe technology is changing the dynamics of pricing and cost structure in an industry or company that will drive future profit growth where none existed in the past.  (The three companies selected each have a different catalyst at play.)

Again, I’m not looking for a quick buck here!  Sometimes catalysts can take many quarters or years to play out.  The critical point is how do you know you are on the right track with your investment?  Keeping an investment, often times for years, an investor or trader needs feedback – for me constant feedback – that the catalyst in play is still working for a positive rate of return expectation in your portfolio.

Model Price Theory (MPT) and charts allow you to observe the dance between improving fundamentals and stock price on a daily basis giving an investor/trader feedback you are on the right track – the money track.  This dance is what I call an “investment campaign”.

And believe me, I love campaigns!

To conclude, couple themes together like a major turnaround catalyst with a company or industry with a low valuation – low EBV level – brings together several ingredients necessary for major rates of positive return.  All an investor or trader needs is the patience to hold the position over a lengthy period of time.  By using Model Price Theory (MPT) and our model price charts during one of my campaigns gives me a comfort level that I’m on the right track with important, relevant feedback over a lengthy period of time.

So with this lengthy preamble let’s talk stocks!

Yahoo, Inc. (YHOO)

The Yahoo story is a corporate turnaround by a CEO who I believe gets “it”.  I have already written two blogs on Yahoo, here and here.  I have already professed in my first blog on Yahoo, back on August 21st, 2013 that I am a fan of Marissa Mayer and I have been watching our model price chart on Yahoo with keen interest for over the last year.

So let’s have a look at Yahoo’s current model price chart.

Yahoo, Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Yahoo, Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of YHOO subsequent to this post will be maintained on Facebook, here.

What am I watching on our Yahoo chart through our Model Price app?

For the last seven weeks the stock price has been pounding away at EBV+4.  I like this!  It’s like coiling of a spring.  Energy is being captured and stored.  At some future date this energy will be released driving the stock price higher – I’m talking high probability NOT certainty.  This same current situation occurred back in July/August – see arrow annotated in the above chart – where the stock price spent eight weeks following along our calculated EBV+3 (Red Line). After this eight week period Yahoo shares spiked upward taking only three trading weeks to achieve EBV+4.

A good CEO leaves a fingerprint of Model Price math that propels a company’s stock price and valuation higher.  Marissa Meyer is doing exactly this.  My hypothesis is Yahoo, Inc. shares will be much higher a few years from now with Ms. Meyer at the helm.  The current interaction of Yahoo’s stock price and model price math is confirming my hypothesis over the last year and I am fascinated of what the future holds for both Ms. Meyers and Yahoo.

Micron Technology Inc. (MU)

First off, I know nothing about D-RAMS.  I know nothing of what a D-RAM is, nor nothing about D-RAM pricing.  Yes, Sargent Schultz!

But I do know supply and demand.  Micron is a cyclical like gold, materials and oil stocks.  What I see in our model price charts are analysts constantly increasing earning estimates for this company.  My suspicion is that after 13 years of struggle and hardship for shareholders, the company may have finally found a sweet spot of product pricing, costs and lack of competitive pressure.

Let’s have a look at Micron’s model price chart

Micron Technology, Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Micron Technology, Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of MU subsequent to this post will be maintained on Facebook, here.

As you can observe Micron’s calculated model price has gone from around $4 in March to the current $32.  This meteoric rise in model price is as a result of the substantial increase in actual and future possible earnings estimates.  Again the last time something like this occurred was back in 2000, when Micron peaked out at EBV+7.  What is the share price value of EBV+7 with Micron’s last updated balance sheet?  We calculate EBV+7 at $83.62.  Again, I not saying Micron, the stock, is going to EBV+7!  However there is a probability.

I have also included a long-term model price chart of Micron Technology for your reference.

Micron Technology, Inc. with monthly price bars, EBV Lines (colored lines) and model price (dashed line)

Micron Technology, Inc. with monthly price bars, EBV Lines (colored lines) and model price (dashed line)

As you can observe our model price calculation has never been higher since 2006.

Pitney Bowes Inc. (PBI)

Let’s first observe the long-term model price chart of this company.

Pitney Bowes Inc. with monthly price bars, EBV Lines (colored lines) and model price (dashed line)

Pitney Bowes Inc. with monthly price bars, EBV Lines (colored lines) and model price (dashed line)

As you can see the EBV lines slope downward initially and then somewhat flatten out with jagged EBV lines.  Yes, they look crazy, compared with the typical smooth, upward sloping lines of a “normal” company in our model price database.

What is going on here?

The management team along with the board of the company decided to zero out or return the shareholders equity of the company to its shareholders back in 2008.  Slow growth/no growth companies do have this option, as long as their revenue stream is somewhat dependable, of returning the equity of the company to shareholders by way of share buybacks.  By shrinking the balance sheet of the company (equity), rates of return on capital jump materially.  Increasing rates of return on capital and our calculation of convexity – see Key Concepts – our model price calculation increases.

Looking at our short-term model price chart

Pitney Bowes Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Pitney Bowes Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of PBI subsequent to this post will be maintained on Facebook, here.

Observables for the above chart

1.  Yes, our calculation of model price is below the current stock price but our model price calculation is based on adding 4th quarter mean earnings estimates to the September balance sheet – the last updated balance sheet.  As you can observe this has an impact of an upward slopping EBV line from the end of September – see annotated up arrow on the above chart.  We cannot know how many common shares management will repurchase during the future quarter thereby flattening our EBV lines.  So I anticipate additional share buy-backs having a positive impact on our future calculated model price line.

2.  Valuation of PBI is at EBV+8 and I agree this is high.  As all my blog readers know I do prefer lower valuation companies.  But as I said previously, PBI has no shareholders equity in the company.  With a low or no shareholders equity this makes the valuation of the company very high.

3.  There are mathematical limits according to Model Price Theory (MPT) in terms of management reducing the size – assets and shareholders equity – of Pitney Bowes’s balance sheet.  Limits can also be reached in terms of the amount of debt the company can carry under normal business conditions.  Any internal company specific or external economic shocks could be fatal as the company’s resources and possible room to maneuver financially is very limited as the company presses on with this course of financial engineering.

Having said all the above you are watching financial engineering dynamic in its early stages.  Financial engineering performed correctly can be very profitable for investors over a period of time.

Conclusion

So I have these three stocks on my quote screen watching them intraday whenever possible.  Three stocks, three separate financial catalysts which model price math can trace through the feedback of the stock price on our model price charts and keep me on track holding these investments for the long-term.

Twitter’s IPO – A First Look with Numbers! (Update 1)

The underwriters finally priced Twitter’s stock this week.

The $26 offering price for the Initial Public Offering (IPO) of Twitter, Inc. was finally announced.  The final prospectus, with numbers, was filed with the Securities and Exchange Commission (SEC).  We eagerly downloaded the prospectus and starting imputing Twitter’s balance sheet numbers into our computer.

Here is a first look at our calculated model price chart of Twitter, Inc.

Twitter, Inc.'s Initial Day of Trading (Black Price Bar) with calculated EBV Lines (colored lines).

Twitter, Inc.’s Initial Day of Trading (Black Price Bar) with calculated EBV Lines (colored lines).

Observables for our Model Price chart above

1.  The $26 IPO price put the valuation of TWTR in the valuation zone between EBV+5 ($20.50) and EBV+6 ($32.55).  To contradict my earlier views – as I warned readers at the time we were looking at a preliminary prospectus with no numbers – this valuation zone was not unreasonable.

2.  TWTR shares immediately traded over $45 when the IPO was freely traded on the New York Stock Exchange.  This trading price placed the valuation of the company just over EBV+7 or $43.88.

3.  The trading action of TWTR over the last day or so is reasonable in context of a high tech IPO.  Nothing seems out of the ordinary, in terms of valuation and model price metrics computed by Model Price.

4.  An interesting observation is that Twitter, Inc. (TWTR) with a market close of $44.90 and Facebook’s (FB) market close of $47.56 have an identical balance sheet valuation as of the close of trading on Thursday, November 7th, 2013.  Amazing.  Obviously our calculation of model price is different in that FB has earnings and TWTR is still forecasting losses.  But the ‘public markets’ value these two companies in an identical matter relative to each company’s balance sheet.

5.  As a reminder, Facebook financials did take several quarters to settle down in terms of final numbers in shares outstanding and balance sheet items.  We expect the same from Twitter, Inc.  We do expect the quarterly EBV numbers to be credible but a few quarters from now our model price chart and EBV levels could be different.

Conclusion

Contrary to my earlier belief, Twitter’s market valuation is credible.  Earlier I thought and based on my preliminary analysis TWTR was being IPO’d at an EBV level over EBV+8 and with the initial pop in the stock, to $45, trading almost to EBV+10 making TWTR one of the most expensive stocks in our database.  However this is NOT the case.

I do find it interesting and I hope you do as well that the market is valuing both Facebook and Twitter on the exact identical valuation based on each company’s balance sheet.

A Review of the S&P/TSX 60 Index Market Strategy Update

It has been awhile since I talked about the Canadian equity market through the filter of an index so let me remedy this oversight with this blog.  The equity index we commonly use is the S&P/TSX 60 Index.   This index contains the largest capitalized companies in Canada.

Let’s start with our short-term model price chart of the S&P/TSX 60 Index.

S&P/TSX 60 Index with weekly price bars and EBV Lines (colored lines).

S&P/TSX 60 Index with weekly price bars and EBV Lines (colored lines).

As a reminder we aggregate all companies in the S&P/TSX 60 Index into one chart on a market capitalized basis (like the index itself), so we can see where the market – S&P/TSX 60 – is trading relative to its EBV lines.

Observables from the above chart

1.  As I have annotated on the above chart, the S&P/TSX 60 Index closed at 767.76 on Monday, November 4th, 2013.  Our calculated EBV+2 is 787, which is only 2.5 percentage points higher.  The lower zone or EBV+1 is 657 or almost 15% lower.

2.  The first half of 2013 was very lackluster for this Canadian Index as emerging country share prices were hit by the anticipation of the US Federal Reserve (FED) ‘tapering’ its bond-buying program starting in September of 2013.  From the index lows of the last week in June (677) this index rallied over 13 percentage points in four months as the FED reversed course and delayed its ‘tapering’ maneuvers until sometime in 2014.

3.  Canadian share prices are heavily influenced by US equity valuations and equity market performance.  This shouldn’t be a surprise to anyone participating in Canadian shares.  As US equities prices continue their upward climb so will Canadian share prices pushing the S&P/TSX 60 Index through EBV+2 – positive transit – giving Canadian equity investors a target of EBV+3 in terms of valuation.

Long-term look at the S&P/TSX 60 Index

To help readers with some historical perspective I have included our long-term model price chart going back some 18 years.

S&P/TSX 60 with monthly price bars and EBV Lines (colored lines).

S&P/TSX 60 with monthly price bars and EBV Lines (colored lines).

Highlighting a couple of items on our long-term chart.

1.  You can see the impact of Nortel and BCE (Parent of Nortel) on our EBV lines back in 2000.  The big increase in our EBV lines represents the large balance sheet of Nortel and the market weight of this one stock on the S&P/TSX 60 Index.  The subsequent fall in the same EBV lines represents write-offs on Nortel’s balance sheet and fall in market cap – mathematical influence – in the same index.

2.  The second observation is the valuation high this index achieves over a long period of time.  The maximum valuation is EBV+3.  Sure the index can stay at EBV+3 for a length of time however EBV+3 is as high as this index goes.  If in the future this index achieves a valuation of EBV+3 caution is warranted.  Conversely if the S&P/TSX 60 Index declines to EBV (Green Line), again anytime in the future, this would be an opportune time for market participants to increase their exposure to the Canadian equity market.

Conclusion

Model Price Theory (MPT) takes a unique approach to looking at valuation levels not only with regards to individual equities but also to equity indices.  The Canadian index S&P/TSX 60 will probably transit EBV+2 especially if the US equity markets remain strong.  Also sometime in the future this index will probably achieve a valuation level of EBV+3.  This valuation level will probably signify the maximum level the S&P/TSX 60 will achieve irrespective of the possible good economic news on both sides of the border.  The issue for investors will be timing as you can observe the index hugged EBV+3 for a number of years, starting in 2005 until the financial collapse of 2008.

November 2013 – Monthly S&P 500 Market Strategy Update

Can anything stop this US market?

The new Federal Reserve chair has been appointed.  The US Federal government is back to work.  The political nastiness has subsided so all Americans can focus their anger on the one website that doesn’t seem to work – www.healthcare.gov/.

We have two months to go for 2013 with seemingly no major issue that has the potential to rock negatively this ‘Energizer Bunny’ equity market.

As usual let’s have a look at the S&P 500 Model Price chart.

S&P 500 Index with weekly price bars andEBV Lines (colored lines).

S&P 500 Index with weekly price bars and EBV Lines (colored lines).

As a reminder we aggregate all companies in the S&P 500 Index into one chart on a market capitalized basis (like the S&P 500 Index itself), so we can see where the market – S&P 500 – is trading relative to its EBV lines.

Risk – Reward Metrics of the US Equity Market

As you can observe from the above model price chart, the S&P 500 Index closed at 1761.64 on Friday, November 1.  Our calculated EBV+3 for the month of November is 1614 that is some 8% lower than the current close.  This is your risk in the US equity markets as measured by the S&P 500.  If there was a financial shock of any kind look for a pull back to our calculated EBV (red) line.

The reward, obviously it is the top of the EBV zone, is calculated at EBV+4 or 2019 or some 15 percentage points higher than the November 1 close.  So obviously the reward is higher than the risk involved and US equities – principally large capitalized companies – remains a good deal for investors.

Equity Markets Gearing up for 2014

Markets are in an optimistic mood these days about 2014.  The International Monetary Fund (IMF) predicting growth at 1.6% for the US in 2013 is looking for 2.6% in 2014.  Also analysts are predicting 11% profit growth in American companies in 2014.  If anything should happen to these rosy forecasts then a market correction would be understandable but as it stands today the equity markets are looking forward to 2014 and maybe you should too.