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Personal Finance

Research generates best deal, in any kind of market


Posted by Ozzie Jurock via Jurock's Reals Estate Insider

on Tuesday, 28 August 2012 08:28

There is a fine Chinese saying: The best time to invest in real estate was five years ago.

The second best time? Now! That has been true, particularly in Vancouver, for 50 years.

In real estate investment - the only time to act is now. Always.

Most of the questions I get these days are on the following subjects:

"Is this still a good market?"

"Should I wait till it crashes?"

"Is the boom over?"

"Can I write a low offer in today's market?"

In 38 years of experience, I have never seen the "great deal of a lifetime" advertised (or if I did, it turned out it wasn't).

I have never seen a realtor who really liked lowball offers, including myself.

I have never read in the paper that "this is without doubt the best market ever," when it really was. I also have never subscribed to the theory that one should defer actions to a better day.

There are no perfect markets, no perfect situations, and no 167 secrets to make that great buy. You are not buying a market, you are buying a well-researched home for your family or an investment you intend to keep for years.

In fact, often the best deals come in slower markets.

What matters are the actions that you take:

- Identify your goals. Do you want to resell at a profit? Do you want to create a passive stream of income?

- Look at the market cycle - at a high? At a low?

- Understand that timing is more important than location.

- Identify the kind of property you'd like to own.

- Identify a neighbourhood that has those properties in it.

- Look at everything that is for sale there.

- Look at everything that sold there.

- Look at all the price reductions.

- Look at all the 'by owner' sales.

- Get on the ace condo marketers' lists.

- Keep reading and learning.

- Keep doing it till you find a deal.

All the deals are not gone; they are still there waiting to be found, looked over and - most of all - created. As investors, we must look for cash-flowing properties in B.C., low down payments, good 'employment' areas, a good base of tenants. That means that if we want certainty of return and low risk we need to find cash flow properties that are priced under $150,000. And yes, these deals are still every-where in B.C. - from Port Hardy (3 bedroom, 3 baths fixed upper - $55,900), to Kimberley (ski condo $72,900), to Nanaimo (four-plex for $489,000).

Of course, what investing in real estate really needs is - work! It takes work to find the deals, and work to get your investment-oriented realtors, qualified mortgage brokers, bankers and home inspectors lined up.

All good deals are created and negotiated. So, storm the net, hit hard, and keep shooting on the net. Don't ice that puck.

In real estate investment - the only time to act is now. Always.

Ozzie Jurock is a senior real estate adviser and the publisher of Jurock's Real Estate Insider. He can be reached by at oz@jurock.com">oz@jurock.com or Jurock.com.

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Gold & Precious Metals

Gold: First Mover Advantage


Posted by Frank Holmes via US Global Investors

on Tuesday, 28 August 2012 07:30

In the Investor Alert, our investment team shares charts and data that we believe provide readers with a first mover advantage. While markets don’t always move like we anticipate, recognizing historical trends can provide an edge if you act quickly.

Last week, gold bugs were rewarded with the long-awaited positive momentum in the yellow metal, and on Friday, bullion rose to about $1,670. After falling below the 200-day moving average, gold had been stuck in quicksand for several months. With the jumps in the price last week, bullion swiftly rose above this critically important long-term moving average.

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Bloomberg reported on Thursday that gold investors were the “most bullish in nine months” as its survey of 29 of 35 analysts indicated that they expected prices to rise—only three were bearish toward the metal.

One chart that might turn those three bears to gold bulls was featured in a recentInvestor Alert. I noted that gold’s 12-month rolling return in standard deviation terms triggered an extremely low sigma event, dipping below a reading of -2. To our investment team, this signal means that investors should expect gold to experience a significant price reversal.

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Price reversals, of course, work both ways—the oscillator above also tells you whether gold has climbed too quickly and should be expected to fall. If you take a look at the previous “peak,” when gold rose above 2 sigma, the chart sent out a chilling warning signal that gold was due for an eventual correction.

Last August, when the price of gold was reaching all-time highs, I reminded investorsthat it would be a non-event to see gold decrease by 10 percent. In fact, I felt that this correction would be a healthy development for markets, because it would act to remove the short-term speculators while the long-term story remained on solid ground.

Gold still hasn’t made it back to its all-time high, but Stifel Nicolaus’ gold-to-crude oil ratio suggests gold climbing to $1,900. According to Stifel’s research, the gold-to-oil ratio based on the price of Brent has historically “shown a tendency to run to around 16.5x.” In other words, the price of the yellow metal is usually about 16.5 times the price of a barrel of Brent oil. With Brent trading around $116 per barrel last week, the math tells us that gold could go to $1,900.

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The long-term fundamentals for gold stand on solid ground. Way back in March, Ian McAvity stated that the “extreme behavior of major central bankers and the absurd ‘risk-on/risk-off’ surges of liquidity across all markets fueled by those liquidity injections sloshing around markets rather than reaching any economy is frightening, and the most bullish fuel they could throw at the gold market.” Liquidity keeps flowing today, as central banks have continued their massive global easing cycle throughout the summer. In McAvity’s opinion, “The gold price volatility is more a reflection on the U.S. dollar and euro paper and the madness of an asset bubble. Gold will be the last man standing on the other side of the valley.”

Even the Love Trade—gold buying out of China and India—isn’t over, despite rather tepid quarter-end results from the World Gold Council. In his latest Greed & Fear document, Christopher Wood from CLSA says that he believes the media overreacted to China’s gold demand. With gold demand totaling nearly 800 tons from June 2011 to June 2012, he points out that the country “is still buying a lot of gold.”

As for gold demand in India, his team hears that people are buying gold with cash to avoid the higher duties. “As a result, these cash purchases will not be recorded in the official data,” says Wood.

In addition to these factors, there’s a new growing demand coming from central banks. Wood sums it up for investors: “The conclusion for investors is stupefyingly simple. Stay long gold.”


U.S. Global Investors, Inc. is an investment management firm specializing in gold, natural resources, emerging markets and global infrastructure opportunities around the world. The company, headquartered in San Antonio, Texas, manages 13 no-load mutual funds in the U.S. Global Investors fund family, as well as funds for international clients.

For more updates on global investing from Frank and the rest of the U.S. Global Investors team, follow us on Twitter at www.twitter.com/USFunds or like us on Facebook at www.facebook.com/USFunds. You can also watch exclusive videos on what our research overseas has turned up on our YouTube channel atwww.youtube.com/USFunds.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility.



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Personal Finance

10 Smart Things To Know


Posted by Tyler Bollhorn via StockScores

on Tuesday, 28 August 2012 00:00

perspectives commentary

This week's Stockscores Market Minutes video looks at how to use the Stockscores Market Scan tool to find trading opportunities plus my regular market analysis. Watch it by clicking here.

I have spent my summer writing a book about trading, look for "The Mindless Investor" this Fall!

Here are 10 things that every trade should keep in mind,

1. Know that not every trade is profitable.
Since the stock market can not be predicted, every trader needs to accept that they will be wrong some of the time. What separates good traders from the rest is their ability to throw in the towel when the market proves them wrong and take the loss.

Doing this allows them to maintain their financial and emotional capital. Don't leave money in a loser that is more likely to continue to be a loser, it is too deflating and expensive.

2. Know what your tolerance for risk is.
Traders who are able to make smart decisions can beat the market. However, the greatest hurdle to doing so is overcoming the emotional traps that cause traders to make bad decisions.

The reason we succumb to our emotions is because we are afraid of losing. It is the risk we take that creates emotion; take too much risk and you are likely to make bad decisions.

Therefore, you need to know what your limits are. What dollar amount of risk causes you anxiety? If you can not make a trade with out fear then you are taking too much risk. For some, that means never trading since they simply can not handle the risk of financial loss. However, over time and with success you will begin to build up your tolerance for risk, just take it one step at a time.

3. Know who is in control of the stock you are trading.
Never ever buy a stock that is going down. Stocks in downward trends are controlled by the sellers and they will continue to go down until the sellers lose control. While it is tempting to get a deal on a stock, to try and buy it at bargain prices, the actual act of doing so is very challenging. The market is not always rational and the bottom is difficult to predict because we do not know what is motivating the sellers to act.

Making money is simple. Buy stocks that are going up, short stocks that are going down. If the stock chart has rising bottoms, the buyers are in control. If the tops are falling, the sellers are in control.

4. Know who is in control of the overall market or sector.
A big factor in a stock's performance is the performance of the overall market or the stock's sector. If the oil industry is strong, individual oil companies will be able to do better.

Any trader who has a hold time frame beyond a few days should first consider the sector and focus their attention on the sectors that are outperforming the market. Strong stocks in weak sectors are not as likely to do well as a moderate stock in a strong sector.

5. Know the price point where the market proves you wrong.
If we accept that we can not be right all of the time then we need to have a plan for what we will do when we are wrong. Arbitrary stop loss orders are not effective, they must be based on past opinions of the market.

Remember that the stock market's job is to put a price on fundamentals. This is difficult since fundamentals are always changing but we do find that the market is good at putting upper and lower boundaries on the fundamentals over a period of time. The lower boundary of fundamental value shows up on a stock chart as a price floor while the upper boundary will be a high price point that acts as a ceiling. Breaks through these price ceilings are caused by a change in the perception of fundamental value. So too with price floors, if a stock closes below a well established price floor then we can guess that the market has found a fundamental reason to accept lower prices.

So, when you buy a stock, understand where the price floor is. Look for well established low price points and plan to exit a buy if the stock closes below that low point. The reasoning is simple; if a stock closes below a psychological floor then it is likely that investor perception of company fundamentals has changed.

6. Know what the expected value of the trade is.
Good traders do not fly by the seat of their pants. They develop a set of rules and then test those rules to determine the expected value of trades using that strategy.

The expected value of a trading strategy is the probability of being right times the average profitability when you are right minus the probability of being wrong times the average loss when you are wrong. Using this equation you should see that success trading is not just about whether you are right or wrong but how much you make or lose when you are right or wrong.

A trader can make a lot of money only being right 10% of the time if they capture very large gains when they are right and only small losses when they are wrong. In the same way, a trader can lose money even if they are right 80% of the time if they have big losses on individual trades.

7. Know that the media knows nothing of value.
While there may be entertainment value in the media, using it as an information source is doomed for a couple of reasons.

First, the media tends to react rather than predict. Trading the stock market well is far more lucrative than reporting on it so it should be difficult to trust the analysis provided by financial reporters.

However, to be fair, there are some financial reporters who are able to uncover valuable information that could be lucrative if only you and a few friends knew about it. The reality is that the media is speaking to a large audience which means the information that they distribute will be priced in to the stock almost immediately.

It may be interesting to hear some like CNBC's David Faber report on a merger of two companies but capturing the value of the trade around that transaction will be difficult because the market will move so fast once he announces his discovery. The market is efficient, making the media's voice merely entertainment.

8. Know that the market never lies. 
I have met so many liars in the stock market business over the past 20 years. I think that many of them actually believe what they are saying but, the truth is, people's judgment is clouded by greed.

The stock market is a giant polling mechanism allowing people to cast their opinion with their money. If you think the stock market is going up, you buy. If you are right, you make money. It is a simple and powerful machine that determines value and, since no one wants to lose money, it is very efficient at telling the truth.

The truth may change from one moment to the next but one thing will not change. Arguing against the market is a fast way to lose money.

9. Know the difference between pullbacks and reversals. 
The profit is in the patience. Very few stocks go up day after day after day; with all strong trends there are pull backs against the trend. These pull backs are important because they shake out weak hands and recharge buyer interest. So long as the pull back is not an indication of a change in the perception of fundamentals.

Stocks do not go up forever; there will come a time when the trend must reverse as money moves out of the stock. Learning to know the difference between a pull back and a trend reversal is important if you want to maximize your overall profitability.

Generally a reversal comes when a trend line or important area of support is broken. Allow for the short pullbacks so long as the primary trend remains intact.

10. Know yourself. 
If you do not know yourself you can not know success as a trader. Trading well is a matter of mastery over emotion. While very simple, trading is hard because our emotions get in the way and we succumb to fear and greed. If you know what motivates you and understand how you react to risk and reward you can begin to succeed as a trader.

perspectives strategy

The market is very slow right now, partly because it is the tail end of the summer when most traders would rather be enjoying the weather than sitting in front of a screen and partly because the market is waiting to see what the US Federal Reserve does in terms of monetary stimulus. The market expects some sort of action by the September meeting of the Fed, much of the strength over the past few weeks has been pricing in that expectation. Now that the market has speculated on QE3 happening, investors want to see the proof. That is why stocks have stalled at resistance.

That means it is harder to find Alpha stocks, those that move faster than the market. One sector of the market that has been strengthening and looks to be in the early stages of a long term turnaround is the US Housing market. Consider the XHB ETF to participate in the recovery of the US Housing market.

perspectives stocksthatmeet

1. XHB

XHB is making a break on the long term monthly chart this August, it should continue higher in the months, and perhaps years, to come.

charts

References

  • Get the Stockscore on any of over 20,000 North American stocks.
  • Background on the theories used by Stockscores.
  • Strategies that can help you find new opportunities.
  • Scan the market using extensive filter criteria.
  • Build a portfolio of stocks and view a slide show of their charts.
  • See which sectors are leading the market, and their components.

    Disclaimer
    This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don't consider buying or selling any stock without conducting your own due diligence.

 



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Currency

US dollar starts to breakdown as gold and silver surge ahead


Posted by Arabian Money

on Monday, 27 August 2012 16:41

A head-and-shoulders pattern in the US dollar chart has broken down and it looks like a big fall is coming for the greenback (see chart below). The warning indicator is rising gold and silver prices, up three and nine per cent respectively last week, a trend that is likely to continue with some volatility.

In his latest commentary chartist Clive Maund said: ‘As we can see on the 8-month chart for the dollar index its drop last week has brought it down to a clearly defined important support level, with this sharp move towards a rising 200-day moving average creating a considerable degree of ‘compression’ that coupled with the support at the current level is likely to trigger a rebound. It looks like a head-and-shoulders top is forming in the dollar.

‘…so a likely scenario here is that we see a rebound short-term which takes the index back up towards the left shoulder high in the 83 area, and such a rebound would of course be the occasion for a reaction back in gold and silver, which should be jumped on as an opportunity to build positions further ahead of the major breakout. Here we should note that the dollar looks very weak so it might not make it as high as 83 before it turns tail and breaks down.’

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Posted on 27 August 2012Categories: Banking & FinanceBond MarketsGold & SilverUS Dollar via ArabianMoney.net



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Stocks & Equities

7 Key Psychological Points of a Short Term Top


Posted by Victor Adair via VictorAdair.com

on Monday, 27 August 2012 09:52

I moved to the sidelines Tuesday Aug 21 after being bullish the US stock market for the past couple of months. I posted a note on my blog Tuesday Aug 21 about my "change of heart."

On Aug 20 I had said that I would remain long until the market told me that it was no longer going up...well, I think we got a signal that the short term rally is running out of steam. I did NOT go short...the trend remains up from the June 4, 2012 lows, the Oct 4, 2011 lows and the March 2009 lows...as my long time friend Dennis Gartman says, "In a bull market there are only three different positions you can have, long, really long or aside."

The "psychological set-up" for what looks to be at least a short term top had several parts:

1) the VIX, the fear index, had closed at a 5 year weekly low close Aug 17...no worries mate,

2) the DJI had closed Aug 17 at its highest weekly close since Dec 2007,

sc

3) the DJI had rallied ~10% from the June 4 lows...on very low volume and could easily have been seen as short-term overbought,

4) the story of Apple's rising market cap was becoming increasingly public...the "news" that it had eclipsed the previous All Time High Market Cap set by Microsoft years ago hit the "front pages" all over the world on Monday...and on Tuesday APPL jumped to new all time highs early in the day...dragging the overall market with it...and then turned lower...taking the overall market down,

5) the S+P 500 share index briefly traded to new highs for the year on Tues Aug 21, and to its best levels since May 2008, but then turned lower,

6) The Spanish and Italian stock markets turned lower early Tuesday, after being the hottest stock markets in the world since Draghi's famous, "We will do whatever it takes" comment July 26,

7) US bond yields, which had been trending higher since July 26, turned lower Tues Aug 21.  

The DJI dropped 300 points from Tuesday's highs to Friday's lows. It rallied back Friday on media comment suggesting that QE3 is coming soon....and perhaps also rallied back on short covering after a quick 3 day drop...the market has, after all, been climbing a wall of worry for nearly 3 months...the 300 point drop in the DJI may have been only a brief correction.

QE3: There was a lot of speculation this past week about QE3...especially following the release of the Fed minutes on Wednesday. There were public comments from Fed members and lots of media comment. The timing of QE3 is particularly in question with the Jackson Hole meetings at the end of this week and the November elections looming....it would seem that if the Fed is going to start QE3  they have to act soon.

In precious metals the sequence of the rallies had Platinum first out of the gate (Aug 16) with specific impetus from the violence at the South African mine, then Silver broke out (Aug 20) and lastly Gold broke out (Aug 21.) The PMs had been in a narrowing range for the past few months and a breakout appeared imminent. The upside breakout in gold on rising open interest is positive...but I was not a buyer...either I was too slow to see the opportunity or a little suspicious of the move in the thin markets of late August ...or both.

Trading: I start this week virtually flat in my short term trading accounts...looking for worthwhile trading opportunities...and hoping to trade what the market is doing...rather than what I think it should be doing!

 

Article provided by:

Drew Zimmerman
Investment Advisor
Union Securities Ltd. | Vancouver, BC
Tel: 604-646-2031 | Fax: 604-646-2067
Email: dzimmerman@union-securities.com
Web: www.union-securities.com

Victor Adair

Victor Adair is a Senior Vice President and Derivatives Portfolio Manager at Union Securities Ltd. Victor began trading financial markets over 40 years ago and has held a number of senior positions during his long career as a commodity and stockbroker. He provides daily market commentary on CKNW AM 980 radio Vancouver and is nationally syndicated on Mike Campbell's weekly Moneytalks radio show. Victor's trading focus is primarily on the currency, precious metal, interest rate and stock index markets and his clients are high net worth individuals and corporations.

You can reach Victor Adair at: 



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