The Tasgall Group

Well, Friday saw the release of the real PCE, my favorite of macroeconomic indicators and the one I feel leads all others down the road.? After revisions, the drop from the last release was pretty intense, from around 4% y/y to only 2% y/y.? This is like a bomb siren.? Rather than buying a new set of Gucci loafers, the consumer may be buying cement shoes for corporate profits.? I expect that the next set of quarterly numbers could begin to paint the next few months red in the equity markets.? And given the recent rally in stocks, the old adage of sell high comes to mind.

Think about all the interconnections that go into this.? Oil/gas demand could finally fall leading to lower prices in a commodity that isn’t in low supply to begin with.? Corporate profits will decline with less spending.? All of this would call for lower interest rates which means a lower dollar.? But the Fed might have a hard time lowering rates now without causing a crises due to the amount of government debt owned by foreign entities (lower rates makes our debt less attractive).? I wonder if Ben likes his new job.

You can draw connections all day long and get pretty tangled up.? The key is to find good value in all of this and exploit it, especially after any declines in asset prices in your favored vehicle.

Every day, Trading Markets has a web link to Everything you need to know for day-of-the-week. Consistently in the past week, nothing’s been out of the 3, 4 or 5 range, which based on their site means that none of their indicators are leaning in any particular way on these stocks. While they don’t tell you want indicators are used in the PowerRating formula, I’ve found that you cannot get a PowerRating on any stock that hasn’t been trading for more than 200 days. A “How To” for PowerRatings can be found here. Based on their studies which have been back-tested to 1995 (yeah, I know, it’s relatively easy to find something that would have worked if you only knew about it), stocks rated 9 or 10 have on average been the S&P 500 over the next 5 days by a better than 14-1 margin. The success rate? Unsure, and there’s a paucity of information that I could find by searching for independent testimonials, independent commentary, or external reviews of the PowerRatings system.

Make no mistake, there’s something slightly shady about this since everything on the site points to standard glitz and glam to make things look so easy. What I’ll do over the next month is come up with several batches of stocks (let’s say 30), get PowerRatings on this batch and see how the do after 5 days. I’ll do this as many times as I can and report the results here.

My daily routine is non-existant, mainly due to my investment choices thus far. As you both know my focus in on asset allocation coupled with dollar cost averaging within me and my SO retirement accounts. One account gets 2 installments per month, the another gets one installment per month, and our IRAs get one installment per year which I try to market time as much as possible within a range of 1-2 months in the year. My investment options are self limited at this point to index funds, since that allows me the ability to minimize expenses and go along with the research that shows that index funds out perform 80% or more of the actively managed funds. Since I cannot invest in many of the excellent actively managed funds anyway within my employer sponsored retirement accounts, I don’t bother looking too hard at the actively managed funds–not a good use of my time. (more…)

On a daily basis, I do a couple of things…

• Daily news & chart briefing
• Monitor news and markets during the day
• Review positions to see if I should sell anything (preferably before close of day)
• End of day review

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I’m curious about what each Tasgall member does each day to keep a finger on the pulse of the world and the markets in particular.? For example, do you have a morning routine of blog reading or news watching?? What charts?and such do you check on a regular basis, if at all?? How often to you deal with your investments and in what manner?

My routine is constantly changing and growing, primarily because I’m constantly finding new sources of information from other people.? But this is what it typically involves:

• A quick check of updated Bloglines feeds focused mainly on sites like Minyanville, Economist’s View, Big Picture, etc. and, of course, Tasgall.
• Write something on Tasgall blog.
• Log into Barchart.com ($) and check the latest futures charts for a general picture of commodities.
• Pull up my FX accounts to see how things are looking.
• Spend some time checking my personal finances to make sure everything is on track.
• On weekends, rebalance my Uberman’s Portfolio (new).
• Also on weekends, spend some hours throwing around new ideas and testing them.
• In general, try to find?convergence between what I’m seeing and reading and hearing.

All in all, nothing too fancy or regimented, but it’s what I find myself doing day-to-day.? I’d like to peek into other people’s routines to see if I can adopt some good habits.

I absolutely enjoyed this and will be posting these somewhere to be in view at all times and will recite them daily:

Defining Features of Market Pros

Hopefully, The Tasgall Group is a perfect way to fulfill #5.

I just wanted to point out a couple of links I’ve added to our blogroll. The first is Minyanville, an unique online “town” of market-obsessed characters with a nack for out-of-the-box thinking. Their daily “Five Things You Need To Know (to stay ahead of the pack on Wall Street)” and “Random Thoughts” are priceless and wonderfully irreverant. Once you catch on to their style of dry, often subtle humor, you’ll feel right at home. The second is Economist’s View, a constant flow of articles and commentary on all things that might interest the economist in you, especially if you are Keynesian in your leaning. It’s a great place to read editorials from major papers that are normally subscription-only.

Also, I should mention that I’ve recently become a user of Bloglines. I was looking for a good RSS feed reader when I learned that this web-based service seems to be more favored that most download-and-install types. Given that I have a preference for all things web-based (see Meebo) because they are always “with me”, this fit the bill perfectly. I’ve already added Tasgall to my subscriptions.

There is a good section in one of the Market Wizard books about option expiration and why there tends to be a lot of volatility. I will try to recreate the blurb here… (more…)

An excerpt from John Mauldin’s e-letter:“The market was already up 120 points when the Fed made its announcement and then roared ahead almost another 100 points. So it was not all Bernanke. In fact, I tend to think it was more likely end of the quarter gamesmanship, with funds working to move their favorite stocks up, moving into stocks that will look good in their portfolios and dumping the dogs. If XYZ stock is up 10% for the quarter, you want some of it in your portfolio to show investors you were on top of it. Of course, you don’t have to say you got to the game late.

End of the quarter rallies are common. Any old excuse will do. My bet is that whatever the Fed did would have produced a rally, short of stating that they had decided a recession was in order.”

Interesting stuff and good to keep in mind. I need to create a calendar with items like “End of quarter games might cause a rally–don’t read anything special into a suddent 100+ plus gain!” and other similar friendly reminders.

Andy Kessler has a pdf version of his book How We Got Here available for free from his website. The book is about technology’s contributions to history and increases in the standard of living. Kessler was originally trained as an engineer, and he takes an engineer’s approach to the situation.

I read Kessler’s book Running Money a couple of years ago and his writing style is engaging and accessible. He also wrote the first chapter (titled Signposts in the Fog) of Just One Thing. He also has a pretty good blog here.

(The pdf is 212 pages, ~670kb.)