The Tasgall Group

I didn’t realize it, but just found out that Rydex actually has an equally weighted S&P 500 ETF — the ticker symbol is RSP (complete with options, though they don’t seem very popular).

In case you’re wondering about the releative performance, take a look at the 3 year comparison of prices: RSP:SPY. ? When the market was going up, RSP handily outperformed the SPY…? but when the market turned down in May, the equal weighting index underperformed, giving up its relative gains for the last 12 months.

So, it looks like RSP is a good choice during market strength, but might give up a lot of it’s leadership when the market becomes choppy…

I’m wondering if the under/over performance of RSP can act as any sort of indicator, like the NYSE Advance/Decline Ratio, or the NDX:DJX ratio…

Investing or Trading are interesting activities in that just about everything you do or don’t do can be looked at in concrete terms as some type of “failure”.

If I bought AAPL stock last month, I might have made money… but I was wrong because I didn’t wait to buy as the price went lower before finally perking up 2 weeks ago.

If I sold XOM in May, I may have avoided a 10% drop in the price that quickly followed… but I was wrong because I would not have owned it as the price is above the high set in May. (more…)

Given the bond flavor of our recent posts, I thought it might be interesting to talk about the bonds of other countries.? The US isn’t the only stable, developed nation offering bonds but I think we tend to forget (surely it’s not patriotism) that.? In particular, check out?this post about the potential for UK bonds or being long the Pound in general.? If the macroeconomics of a government are part of why you do or do not buy a bond, then why not look for better macroeconomics for your money?? I can understand that it requires more research to learn about someplace so far away but it might be well worth it.? I need to look into the correlations however with the US bond market because you should never underestimate the power of the US influence on the globe.

More on the yield curve…

Conventional wisdom has it that bonds are the safe haven investment and that they are the alternative to stocks. When stocks are drifting downward, the logical place to put your money is into bonds. Your biggest investment decision is to decide how much asset allocation to put into bonds versus stocks.

Unfortunately, this conventional wisdom came to prominence in the last 20 years which happens to coincide with a rather large bull market in bonds. (more…)

With all the talk around about “If stock are down, go bonds”, I suggest that a savy investor might want to first calculate the probability of stagflation occuring (rising inflation combined with economic slowdown like in the ’70s).? If we hit something like that, the both stocks and bonds go down.? I’d appreciate any input into this concept as I could be missing something but I don’t want to see any body jumping out of the pan into the fire without considering the possibility.

I wrote an email to a friend to give him a quick primer on how to get exposure to Gold and the precious metals sector. Here it is for the Tasgall audience as well…

If you?re looking to invest in Gold, there are basically 5 different ways:

• Mutual Funds
• Gold Stocks (majors, minors, exploration stage)
• Gold ETF (GLD)
• Futures – full contracts (100 oz per contract), minis (33 oz per contract)
• Options on Futures (only on full size contracts)

(more…)

Every once in a while, I get this wierd urge to check the latest mortgage rates. For me, it’s not enough to just look at Bankrate.com or to hear the nuggets that show up on the evening news…

Instead, I actually go and plop in my credit score, loan amount, etc. over at E-Loan. I got my mortgage from E-Loan when I first bought my house, and their website is probably the easiest to use and has the most reasonable rates of any that I have seen.

So, despite the fact that everyone is saying that we have the highest rates since 2002, the rate for my loan would be a whopping 7/8% higher than 1.5 years ago when I locked in my rate. The monthly payment would be an incredible $86 more.

Yes, rates for ARMs have gone up much more than the rates for fixed mortgages, but they also went down a lot more in 2002 as the FOMC was inflating the housing bubble er… lowering rates. ARMs are not as rate competetive as they used to be, i.e., the situation is returning to normal.

I just saw this quote:

Jim Rogers, the co-founder of George Soros’s Quantum hedge fund, says oil prices will reach $100 a barrel, possibly this year.

Rogers said declining supplies from existing fields and a lack of new oil discoveries will drive prices higher.

?The bull market has about 10 or 15 years to run,? he said. ?How high it’s going to go I don’t have a clue during that time, certainly over $100 a barrel or over $150 a barrel before it’s over.?

(Bloomberg)

Yes, Jim Rogers is “da man” when it comes to identifying fundamental conditions. But he’s horrible at timing and not a good trader (both by his own accounts). As he thinks we could hit $100 this year, I would take that as a contrarian signal that the price of crude is going lower.

Of course, that’s not enough of a signal for me to risk my own money on…

I’m a little concerned about all the gap-down moves that I’m seeing in the last few days…

• YHOO – down 18% on 7/18
• AMZN – down 21% on 7/26
• GWW – down 12% on 7/17
• NSC – down 9% on 7/26
• GLW – down 14% on 7/26
• ROK – down 10% on 7/26
• NFLX – down 20% on 7/25

These are not small companies either… all of them withe the exception of NFLX belongs to the NDX, SPX, and/or DJIA and has a market cap over $5 billion.