The Delusion of Expertise among Financial Advisors Redux

SYNOPSIS

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If only it were this simple to put an end to Trump’s grand plan to start a world-wide trade war. The rhetoric is already taking its toll on the markets. So the Dow dropped over 1400 points over the week, while the S&P 500 was off 5.9%. Which statistic sounds worse? Of course the DJI number; so the media were all over that to spread hysteria. In fact though the Dow was down 5.7%… a little less than the S&P 500. And the ever popular Nasdaq fell 6.5%, making the 1400 point drop in the Dow look pretty good!

PTP… Naturally, our PTP score suffered with the overall market decline last week, in addition to the impact of a bit of trading. Buying into a dropping market was not such a good idea, but we didn’t know that early in the week. Both the S&P 500 and S&P/TSX Composite Index APARs turned negative by Friday’s close.

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Day by Day… Here’s how last week played out on a daily basis. The percentage changes in the actual indexes are shown relative to the previous Friday close. The results are grim, with US stocks taking the brunt of the losses.

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PTA Perspective… The Delusion of Expertise among Financial Advisors Redux
“Redux” is a handy, but not often used, word that means “brought back”. Every now and then we pull a piece from our archives that has withstood the test of time, while at the same time is not simply a chapter describing previous events. We’re talking about a theme or some research that is as valuable now, as when we published it the first time. And yet, it contains knowledge that is still not well-appreciated in the present. In this case we’re talking about the delusional nature of financial advisor expertise. Come to understand how limited so-called “financial advisors” really are.

Maximizing the Motion Metaphor!

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SYNOPSIS

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Sigh! You’ve heard this from us many times before. It’s good to have a cartoonist visualize an ongoing (perpetual?) problem for investors… hysterical media!
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PTP… Our PTP Score (profit speedometer) has taken a breather again… down to 202% from 390% previously. Meanwhile, the S&P/TSX Composite Index APAR turned positive again at +6%, while the S&P 500 APAR retreated to +8% from +23% the previous week.

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Last Week in the Major Indexes… In a bit of an about face. the major US indexes fell on a one-week basis (1.0-1.5%) while the Canadian indexes were modestly to the upside. Nasdaq continues to lead on a trend basis, and only the S&P/TSX Small Cap Index has a negative trend value.

PTA Perspective… Maximizing the Motion Metaphor!

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All too many investors look at their gains and losses without a second thought to the time frame. Meanwhile, so many analysts pick price targets with only the vaguest reference to when the target will be achieved, because they know that no one will remember what they said in the distant future. Typical remark… “XYZ could reach $200 in the long term.” So this week we simply want to remind you of the many advantages of always looking at the velocity of your portfolio and the velocity of the stocks that you might consider buying. We also look at the fun aspects of investing this way. As an investor you can actually picture yourself as a race car driver, not someone running in a hamster wheel.

9th Anniversary of the Latest Bull Market! Or is it?

SYNOPSIS

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Tariffs continued to be a big part of media coverage last week. If Trump manages to set off a worldwide trade war, everyone loses, but the US in particular.

PTP… Our PTP Score (profit speedometer) is on the move again… up to 390% from 101% previously. Meanwhile, the two benchmark APARs improved too. The S&P/TSX Composite APAR is still slightly negative, but the S&P 500 score turned positive to +23% from -9% a week earlier.
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Last Week in the Major Indexes… In the week-over-week tug of war, the numbers were mostly positive again last week. Gains ranged from zero to +4.2% on the week. We now have 4 major indexes with positive trend values again.

PTA Perspective… 9th Anniversary of the Latest Bull Market! Or is it?

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Friday was supposedly the 9th Anniversary of the beginning of the current bull market, which began on March 9, 2009. There was a steady stream of stories on the topic from all the major Biz News outlets all day Friday and continuing into the weekend. So, we thought that we would weigh in on the event too; in spite of our mixed feelings about these magical numbers.

NEO: a Quick First Look at Canada’s Newest Stock Exchange

SYNOPSIS

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The pendulum swings both ways, and while there’s practically zero evidence that Trump had anything to do with a continuing bull market that was in place for eight years before he was elected, there is abundant evidence that investors are running scared now… entirely due to his policies and threats. His tax cuts for the wealthy had minimal positive impact on the equities markets, but his attempts to launch an international trade war are quite reminiscent of Herbert Hoover’s similar tactics that took the US and most of the rest of the world into the 12 year long Great Depression starting in 1929.

PTP… Our PTP Score dropped a bit to 101% from 130% previously. The two benchmarks fell quite a bit too, with the S&P 500 APAR dropping from +12% to -9%, and the S&P/TSX Composite counterpart dropping to -20% from -7%.

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Last Week in the Major Indexes… Essentially all the one-week numbers were negative or unchanged across the major indexes. Many of the declines were -2% to -3% over the week.

PTA Perspective… NEO: a Quick First Look at Canada’s Newest Stock Exchange

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If you can get over the horrific logo, we want to introduce you to Aequitas NEO… Canada’s newest securities exchange. Given that we ignored the Canadian Securities Exchange for years, before it became an epicentre for entrepreneurial startups, we want to make sure that doesn’t happen again. We’ll tell you what NEO is all about, and what it might mean to you. Spoiler alert… don’t get your hopes up just yet!

Coping with Trend-Less Markets!

SYNOPSIS

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It’s a pity that bribery runs rampant in American politics. OK… so they call it lobbying, but it’s the same thing. Anyway, while the gun issues are front and centre in the media, the equities markets are slowly coming back from that nasty “correction” a few weeks ago. We still need another 100+ S&P points to get back to the latest highs of late January.

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PTP… Our PTP Score gained a bit more to 130% from 125% previously. The two benchmarks improved too, with the S&P 500 APAR up to 12%, while its S&P/TSX Composite counterpart remains on the negative side at -7%.

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Last Week in the Major Indexes… We had some reasonable improvements over the past week, but we still have some major indexes with negative trend values. You can see the specifics in this week’s full-edition of TrendWatch Weekly.

Investor Confidence… The February 2018 results for the State Street Investor Confidence Index have just been posted. This is not an opinion poll. The SSICI is a measure of actual money flows between equities (higher numbers) and safer income securities among institutional investors (the “smart” money). The Global Investor Confidence Index increased to 107.4, up 4.4 points from January’s revised reading of 103.0.

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As usual we provide more detail on the regional ICI’s in the Investor Confidence section of TrendWatch Weekly.

PTA Perspective… Coping with Trend-Less Markets!
After a stock market “correction” (decline of 10% or more from recent highs), a whole lot of equities with nice consistent trend values lost those. We’re left in limbo, until there is a significant recovery or the confirmation of a further decline into a long term bear market. There’s very little to suggest that a bear market is just around the corner, but we may be a few weeks away from starting to see new highs in the major indexes again. So, what do you do in “limbo-land”. We offer some suggestions this week. Everything from creating short-term income opportunities to wild and crazy research projects. Sitting on cash for a while is OK. Not making the best use of this time to increase your profit potential is not.