Quarterly Review – Q1 2015 – Part 1: North America

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SYNOPSIS
The markets declined sharply last week, with one highly unusual exception. The S&P/TSX Venture Index climbed +1.6% over the week, while the three major US indexes were down more than 2%.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio dropped to +51%, but that is still well above the benchmarks which have turned negative.

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Seasonality… We’ve expanded our coverage of April’s calendar effects to include the “18 Day Earnings Month Effect”. April produces the highest returns of the four opportunities each year. We haven’t covered this before, and hope that you find it interesting.

Smart Money… In what appears to be the largest one month gain in the history if the SSICI, institutional investors (the so-called “smart money”) became more bullish on equities during March. The Global ICI increased to 120.1, up 15.1 points from February’s revised reading of 105.0. Confidence among North American investors increased the most, with the North American ICI rising 30.0 points to 135.4, up from February’s revised reading of 105.4. However, the European ICI fell by 1.6 points to 104.4 while the Asia ICI fell 4.0 points to 90.3.

Topic of the Week… Quarterly Review – Q1 2015
With the first quarter of 2015 behind us, let’s review our progress over the first three months and have a close look at the current outlook going into Q2.

Buy & Hold Investing: How is This Still a Thing?

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SYNOPSIS
The markets rebounded nicely after two prior weeks of serious declines. Nasdaq rose 3.2% last week to maintain it’s top trend ranking among the indexes we follow. Oddly, only the S&P/TSX Composite Index had a decline last week, albeit a small one.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +114%. The PTP AGR is still well above the benchmarks shown in the mini-chart below. All three improved over last week.
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Topic of the Week… Buy & Hold Investing: How is This Still a Thing?
We’re big fans of the weekly American TV show, Last Week Tonight with John Oliver. A favourite (occasional) segment is called How is This Still a Thing? The show’s staff assemble lots of facts and figures that typically show that some concept or common practice really has no place in the 21st century. Topics have included Ayn Rand, The Sports Illustrated Swim Suit Edition, and Columbus Day. For those unfamiliar with the show and for your general amusement, here’s Daily Savings Time: How is This Still a Thing? DST is an absurd concept and it’s assumed history (it has something to do with farmers?) is false. Yet we (and about 70 other countries) go through this unjustified routine every year, as if it was important.

I don’t believe that the show has ever done a financially-themed How is This Still a Thing?, so we’re going to script one for you this week… on Buy & Hold Investing. We believe that it’s just as absurd as Daylight Savings Time, and the history of it is full of myths. We hope to convince you beyond any reasonable doubt. You can be the judge of how successful we are.

Bulls & Bears – 2015 Edition

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SYNOPSIS
Last week was a second in a row for major declines across the market indexes that we follow. The S&P/TSX Venture Index was off 3.5% in a single week. All index trend values have turned negative except for Nasdaq, which clings modestly to the upside.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is currently +86%. The PTP AGR is still well above the benchmarks shown. We’ve added a new mini-chart to the Synopsis, so that you can see our results at at glance. While our AGR increased the other two benchmarks declined.
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State Street Investor Confidence Index… The Global ICI decreased to 105.2 in February, down 1.4 points from January’s revised reading of 106.6. Confidence among European investors declined the most, with the European ICI falling 8.2 points to 105.9, down from January’s revised reading of 114.1, while in Asia the ICI fell by 5.3 points to 93.8. However, the North American ICI rose by 3.1 points to 104.3.

Seasonality… We’re starting to have a look at April and what that month might have in store as far as calendar effects are concerned. Historically, it’s the best month of the year for the Dow Jones Industrial Average!

Topic of the Week… Bulls & Bears – 2015 Edition
We mentioned last week that the current bull market, launched in 2009 after the 2007-2008 meltdown, is now six years old! Is that a long time for a bull market to last? Or is there the potential for many years of continuation? Well, the “relative” in relative trend analysis™ (RTA) is all about putting things in perspective. This week’s topic is an extensive look at bull and bear markets over the past half century.

The Cheat Sheet Path to Optimizing Do-It-Yourself Investing

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SYNOPSIS
As I write this the latest bull market has reached it’s sixth anniversary. That puts us ahead of the average duration of a bull run, but there have been longer ones. We’re not yet seeing any of the signs of “frothy excess”, that are characteristic of a major market top. The possibility of US interest rate increases is a looming cloud, but the US dollar is increasingly strong, and economic activity isn’t as enemic as it has been for several years now. The market action last week, however, was a bit harsh, as the major indexes that we track headed considerably lower.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is currently +68%. The PTP AGR is still well above the benchmarks shown. We’ve added a new mini-chart to the Synopsis, so that you can see our results at at glance.
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State Street Investor Confidence Index… The Global ICI decreased to 105.2 in February, down 1.4 points from January’s revised reading of 106.6. Confidence among European investors declined the most, with the European ICI falling 8.2 points to 105.9, down from January’s revised reading of 114.1, while in Asia the ICI fell by 5.3 points to 93.8. However, the North American ICI rose by 3.1 points to 104.3.

Seasonality… Our own summary for March is supplemented this week with Brooke Thackeray’s latest videos on seasonal trends that you should expect right now.

Topic of the Week… The Cheat Sheet Path to Optimizing Do-It-Yourself Investing
Cheat sheets are an awesome, yet underused category of documents. They are built on the “less is more principle”. Enormous amounts of data are condensed onto a single sheet of paper… sometimes even smaller than a single sheet, or sometimes as much as two pages printed back to back. Some are created with a spreadsheet program, others are more textual or algorithmic (e.g. flow chart decision tree style). In the past we’ve discussed how you might prepare one or more types of cheat sheets as part of your weekly routine.. just after we release the latest trend and consistency numbers. The PTP tracking table is one example. Another would be a condensation of the data tables in the Data & Charts Workbooks onto a single sheet of paper for quick reference. Today we focus on a stock picking cheat sheet, that you might find useful… either as a template to build your own, or to simply use as-is.

Investing in Reefer Madness!

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SYNOPSIS
As I write this Nasdaq has cracked through 5000 for the first time in 15 years. Does anyone even remember the tech glory days of the 90’s? That came to an end in March, 2000; and Nasdaq hasn’t approached 5000 since then… until now! Last week, however, the S&P/TSX Venture Index had the best one week performance… up 1.7%. Changes in the other indexes were almost nonexistent. Nasdaq still leads the indexes by trend, though, so we may see more good times ahead for tech.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio backed off a bit to +68%, as we abstained from any trading last week. PTP is still well above the benchmarks (S&P 500 +21%; S&P/TSX +20%).         
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Seasonality… We sum up expectations for March. It’s generally an up month. Depending on the stock index, it ranks 4th (S&P 500, S&P/TSX Composite Index) to 6th (DJI, Nasdaq) relative to the other 11 months. The historical fraction of the time that March ends higher ranges from 59% to 66% (again depending on the index). Average gains for the month are about 1%. Subsections that normally outperform the S&P 500 included Retail, Steel, Transportation, Railroads, Chemicals, and Software & Services.

Topic of the Week… Investing in Reefer Madness!
A little over a year ago, as marijuana legislation allowing recreational use in some US states took effect, we had a look at what this might mean for investors. We thought we’d update that report this week. A year ago, there were only a handful of publicly-traded opportunities, and they were penny stocks for the most part… a little too risky, even for us. Since then, the number of pot-related IPOs has grown, but are the opportunities any better? You’ll find out in this edition.