FastTools Version 2:07 is for the FTF61.DAT funds database. 11/10/2008
To send me an e-mail:
brian_stocks@prodigy.net
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Brian B. Stocks,
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CA 95055-3587
FOUR RELIABLE INDICATORS OF MARKET HEALTH
The current "Train Wreck" that is severely injuring many people should have been obvious to FastTools users almost a year ago. On 10/23/07 the four Advancing/Declining Volume and New Highs/Lows indicators produced by MY.ABC which
I named NYVAD, NSVAD, NYHLS, and NSHLS first started showing a pattern of lower Highs and lower Lows. This is a sign of very poor health for the internals of the NYSE and the Nasdaq and should have got your attention. I moved out of
the market on 11/9/07 and apart from a couple of short forays into Junk bonds have been out of harm's way ever since. These four indicators are definitely better than relying on just the two McClellan Summation Indexes which are based
upon daily advancing and declining issues. As a subscriber to FastTrack and a user of FastTools you are one of a very small number of investors that hopefully avoided the carnage and have been in a highly conservative investment mode
for at least most of 2008, and still have a small profit YTD, mine is certainly nothing to brag about but a gain is a gain. A 3-Year chart showing a very obvious market exit point in the vicinity of 11/09/2007 Summations of the New Highs/Lows and Advancing/Declining Volume Summations for the NYSE and NASDAQ
This is what you want the indicators to look like if you are a Momentum investor:- A transition from Unhealthy to Healthy - Be careful to not jump the gun.
This chart doesn't show a glimmer of recovery yet.
WHY BUY AND HOLD DOES NOT WORK.
Draw your own conclusions about what the future holds - no one knows. The blue line starts on 12/28/92, about two months after my retirement, and the day I walked into a Fidelity Investments Service Center for the first time. I kept my
daily results in a notebook until November 1998 when the BEANS module in FastTools was finished and did away with the need for a notebook. I was too lazy to enter the missing data for every single day so I just entered enough data
points into my BEANS.FNU file to fill in the missing six years. BEANS=1731.11% (ANN=20.17%) - OTC-C=132.95% (ANN=5.49%) - SP-CP=99.65% (ANN=4.47%) - FDRXX=84.21% (ANN=3.94%) !!!!!!!!! DON'T LOSE MONEY !!!!!!!!!
A FRIGHTENING DECADE SO FAR FOR MANY INVESTORS - LET'S CALL IT LIKE IT IS
Since the wonderful decade of the nineties ended this has been a very unrewarding time for a large number of investors, but hopefully not for the very fortunate few of us that use FastTools and FastTrack's database to manage their own
portfolios. That decade owes its prosperity largely to the birth and worldwide development of the Internet. It ushered in a new paradigm for business just as the industrial revolution did over a hundred years ago. I still remember the mind boggling occasion one day at Lockheed, just before I retired, when a colleague, using a Lockheed computer, demonstrated the power of the DARPA network (the mother of the Internet). I was blown away by its capability but it has far exceeded anyone's expectations. What a financial bubble that produced between 1998 and 2000. What will be the next great advancement. Will it be "Green Energy"?
Click here for: A speech that Richard Fisher, President and CEO of the Federal Reserve Bank of Dallas
gave to the Commonwealth Club in San Francisco on May 28th. 2008.
Click here to read a May 20th. 2008 copy of Michael Price's - On Track Report - Adobe's Acrobat reader required. Receiving award from Admiral Mitchell for 30 year's service on US Navy's Fleet Ballistic Missile System 4/22/1992 Copyright © 1997 - 2008, Investors FastTrack Last Updated: 11/10/2008
These four indicators have a huge and time consuming rebuilding to do before market health can be considered acceptable enough to warrant investing. For investors, they need to start turning upwards and showing a pattern of
higher highs and higher lows. Traders are a different story altogether and I wouldn't begin to offer them any advice.
If the S&P 500 barely beat a money market fund over the previous 16 years is it likely that the next 16 will be that much better especially in the aftermath of the devastating Housing Bubble and the fact that another Bubble like the Hi-Tech/Internet one of 1998 - 2000 is not even on the horizon. Maybe it will happen when our manufacturing jobs start coming back from China and we have full employment with high paying jobs once again. Don't bet on it though. It looks to me like the next major milestone is the October 2002 level of the Dow which was 7286. Read any financial magazine and you will find that they are still pushing Buy and Hold, mainly because the average investor knows next to nothing about investing and doesn't have the tools available that you do. Buy and Hold is devasting to your retirement when you run into a decade such as this one, particularly if you retired early in the decade. I feel sorry for all of the investors that have bought into the Buy and Hold philosophy. I tell my acquaintences, with pride, that I don't follow the crowd and that I am a Market Timer and have the tools and data at my disposal to do a good job at it. Fidelity and other such companies are still, of course, pushing Buy and Hold - they make their money by charging a 1% or higher management fee for equity funds in the $1.57 trillion they have under management. On the other hand they only charge a 0.18% fee for money in their institutional money market fund, so obviously they want you to stay fully invested all of the time. In this current financial crisis they have recently announced a layoff of close to 10% of their 47,000 employees because of the drop in their management revenues as money has finally started leaving equity funds in large amounts as investors can't stand the pain any more.
TOTAL GAINS over 16 years since 12/28/92 were:-
From 10/22/07 through 10/22/08, a period of 12 months the market averages have declined as follows:
FDRXX ......... +3.51%
MUNIS ......... -5.09%
JUNKB ....... -22.14%
DJ-30 .......... -35.83%
WIL-5 ......... -40.00%
SP-CP ......... -40.47%
OTC-C ........ -41.33%
NYC-N ........ -42.36%
NDX-X ........ -42.66%
REALTY ..... -45.54%
Even the small gains from being in a MMF far outweigh the damage done to a portfolio by a 40% loss. That portfolio will now need a 66.6% gain just to recover from its 40% loss, and 66.6% annual gains don't come along that frequently, once
in a lifetime in my case, and that was the unique "Tech Bubble". So much for the self serving Buy and Hold nonsense constantly espoused by almost everyone in the financial industry. The damage done to the investments of those without
FastTrack and the tools, intelligence and knowledge needed to make their own decisions will have a lasting detrimental effect upon the lives of millions of families. I am sure you have heard the same stories I have of people that took no
interest in managing their money and are now devastated when they learn what has happened to their investments. A positive return of around 5% must look good to these poor folk now. In my opinion America and its version of Capitalism
will never be the same after this calamity.
The famous capitalists of old served us well and built great corporations like Ford, GM, GE, Chrysler, IBM, US Steel, JP Morgan, Standard Oil and many others but greed finally won out
and produced the greatest crisis since the Great Depression. Unfortunately the crisis is now a global one and the cure is far from being clear at this time. Why couldn't the modern capitalists have had the vision of Andrew Carnegie, the
creator of US Steel. Carnegie was the son of a weaver that emigrated from Scotland in 1848. After selling his steel company to JP Morgan, he kept enough money to buy a castle in Scotland and gave the rest away ($4.3B in 2005 dollars) to
a wide variety of wonderful philanthropic causes that still exist today. Other examples of great capitalists that have had a huge impact upon where I live in Silicon Valley have been Leland Stanford, the railroad baron, and Bill Hewlett and
Dave Packard that founded their great company in a small garage in Palo Alto. Leland Stanford originally approached Harvard and asked them how much it would cost to have a new building named after him. When they told him the amount
he realized he could go back home and build his own university. That university has produced so many incredible companies, INTEL, GOOGLE and Charles Schwab being three of the most well known, as well as famous people such as
Herbert Hoover and quite a few Supreme Court justices.
When FastTools was for sale my website always stressed the mantra that Don Beasley (Former President of Atlanta based "Personal Mutual Fund Management") was very fond of repeating in his talk at the FastTrack conference in
Scottsdale Arizona in 1997.
I have lost my trust in the stockmarket and am apalled at the recent turn of events. Just as in a marriage, once one's TRUST has been broken there is nothing worth saving. The stockmarket has become nothing more than a Casino for the
benefit of high rolling gamblers consisting of the traders at companies like Bear Stearns, Lehman Brothers, and huge Hedge funds. They created very sophisticated derivatives, swaps, and bundles of auction rated securities that only they
really understood, and peddled them worldwide to unsuspecting victims that had faith in the sellers' reputations. Many very greedy banks, insurers, and mortgage giants also got into the act that has caused havoc around the world. Names
include AIG, Fannie Mae, Freddie Mac, Countrywide Mortgage, Washington Mutual, Wachovia Bank, Indymac Bank and others too numerous to mention. To say that there was a lack of government regulation is a gross understatement.
Who are the losers? As usual they are the little people that are too busy working to manage their own investments, or don't understand finance, or lack the ability to read and understand the fine print in financial documents. These are the
hardworking people whose 401Ks and IRAs have been totally devastated, and the people whose homes have been foreclosed upon, and whose jobs have disappeared. Meanwhile the CEOs accepted their golden handshakes and options
packages and disappeared into the night, each with tens of millions of dollars while many of their laid off employees walk out the front door carrying a cardboard box full of their personal belongings.
At age 74 and having done very well indeed with my investments since I retired I am all through with the stockmarket, including mutual funds.
Right now I have our IRA accounts fully invested in a nice selection of high yielding (4.05% - 5.15%), tax deferred, FDIC insured CDs. In an IRA account the insurance limit per bank is $250K for principal and interest. Thus if you buy a CD with
semiannual interest payments make sure that the CD value plus six month's interest is less than $250K.
Fidelity's Tax exempt MMF (FTEXX) is yielding 0.87% which is of no use whatsoever to man or beast. Thus in our taxable Trust account I have constructed my own muni bond fund consisting of 43 high yielding (average yield to maturity is 4.835%), municipal bond issues, rated AAA to AA- by S&P, and free of Federal and AMT taxes. I plan on holding all my CDs and all of my municipal bonds to maturity to ensure no loss of principal. If you sell a bond don't expect to get a good price for it, there is a spread of approx. 2.3% between the Buy and Sell prices. Fidelity has many CDs to choose from but new issues of high quality municipal bonds at attractive prices and yields are few in number, the best ones get snapped up very quickly indeed, and the price may often end up being much higher than par when the offering closes. Of course you can decline the offer if necessary once the final price is announced. Fidelity sends an Alert to my Fidelity Active Trader Pro software immediately a new muni bond issue becomes available. Purchases of CDs and new issues of municipal bonds are free of all commissions whereas in the secondary market there is a commission of $1/bond, plus you have to purchase any accrued interest (which of course you get back with the next interest payment). The big advantage of the secondary market is that you know exactly what you are getting when you click on "Submit Order". The average drawdown for my subset of the BD-MUNI family has been -9.5% over the last 12 months which is why I am buying individual bonds and holding them to maturity, something that is impossible when you buy a muni bond fund. Also, why pay a mutual fund an annual fee of around 1% for doing what you can do yourself by holding individual muni bonds and CDs to maturity. At this time in my life, 1% equates to a very large chunk of change. Most investors never calculate how much they pay their fund managers over a year. The mutual fund companies keep it hidden away in the daily NAV prices so that it is not obvious to their investors. I wrote a very small program to keep track of my municipal bonds and to be able to calculate any statistics on the fund. It makes me feel a little bit like a fund manager with the one big exception - I don't have to deal with daily inflows and outflows which must be a huge headache at times. If you are in a high tax bracket (and I am because of our IRA MRDs) there is something very appealing about receiving an average 5% in interest, free of all Federal taxes and AMT, and then getting your principal back when you hold to maturity. This is equivalent to a return of over 7% if it were taxable interest. Of course if you pay over par for a bond you will only get par at maturity so beware of paying too much for any bond. If you pay less than the $100 par value (my average price was $98.95) then you will even have a capital gain at maturity, in this case it is 1.05%. Since it has taken eight years to get us into this gigantic mess it will likely take many years to dig ourselves out of it. Many experts say that the current recession will last four years. Meanwhile our capital is protected, our portfolio continues to grow very nicely indeed, our income taxes will be as low as possible, and we can maintain the lifestyle that keeps us both very relaxed, stress free, and happy for many years to come with very little work involved. An interesting fact is that the size of the US Bond market was $27 trillion while the size of the US Stock market was $15.6 trillion as of August 2008.
One of the most informative programs on world affairs, politics, and the economy is called GPS, it airs on CNN from 10-11am. on Sundays and is hosted by Fareed Zakaria, a brilliant, 39 year old, Indian born intellectual, with a PhD from
Harvard, many honorary degrees, and the editor of Newsweek International. His guests are all top notch and acclaimed individuals in their particular field and I learn a lot from watching it, as well as having it recorded on our Comcast DVR (which I really love) in case I am not around..
If you are interested in municipal bonds here is a very good website that you are sure to find invaluable. Click here for: MSRB - Municipal Securities Rulemaking Board.
This site also contains a link to an area where you can check on the most recent trades for a municipal bond providing you have its CUSIP No. You can also read the offering prospectus for a municipal bond. There are a lot of new things to
learn about bonds before you start buying them so you should definitely take the time to research all the terminology involved and learn what it means. It also helps to get some advice from a representative at the institution where you
conduct your business, particularly when buying a new issue. At Fidelity I have a "Private Access" team that are always accessible and will take all the time I need to explain things for which I need more clarification. My local team is only
a few miles away but if they are busy I get rerouted to a call center in either Dallas, Salt Lake City, Cincinatti, Merrimac NH, or Boston. It's rare for the call not to be answered immediately.
As an ex software developer and engineer, the volume of data that is collected, stored, and processed every day by a large company such as Fidelity just boggles my mind. They must have a huge building somewhere that is crammed full of
computer servers and the people needed to keep them running smoothly. It makes me wonder how it all got done by accountants in the days before the Internet.
The significant consequences to FastTools users of the July 11th. database conversion are as follows:
The current FTF15.DAT database has been replaced by four databases, (Funds for Retail investors, Funds for Advisers, Indexes, and ETF's). Since FastTools is a 13 year old DOS program that is only able to access 640K of the memory on
your computer it has far too little memory to work with four fund databases let alone the two stock databases, as can FT4WIN and other 3rd. party programs that are "Windows" or "C" based. The advantage of modern programming
languages is that they have a system built into them called "Virtual Memory". Virtual Memory is able to use all of the memory on your computer by swapping data back and forth as needed between your memory and your hard drive
without any instructions from the computer programmer. FastTools has only enough memory available to work with ONE database, and even that memory is insufficient for many modules that require a lot of data arrays that contain
thousands of market days of data for dozens of calculated quantities for a very large number of symbols. FastTools will access the FTF61.DAT, the one that contains the 4420 funds primarily used by Retail investors like myself and the
majority of users, plus only the market indexes used by some of the FastTools modules. FTF61.DAT also contains only 172 of the 701 ETF funds and 0 of the 333 CLOSED funds.
With the addition of 5 more years to the database and the near doubling of the memory required for holding dividends and other distributions, many FastTools modules will no longer compile in the, now obsolete, Microsoft QBasic language
environment and cannot be made into .EXE files.
My only solution has been to remove all modules that will not compile and strive to keep the remaining ones working until 9/1/2013 when the database will need further expansion. At that time FastTools will be retired. I have also given ALL
of the FastTools source code to FastTrack, free of charge, to use in any way they see fit. They have plans to rewrite some modules in PowerBasic for Windows but I am not privy to the details.
The remaining modules should continue operating until 2013 but many of the ones that have been removed are popular ones that will be sorely missed. Because the B-1 module (NAV) and the R-1 module (NYNAS) each performed
two separate tasks I was able to keep them running by splitting them each into two modules. With some re-programming I was also able to keep the Family Editor running and it is now in better shape than it was before because FTF61.DAT
contains only about half of the symbols that are in FTF15.DAT. The BEANS module is not a memory hog so it was likewise saved as were most of the signal file generation modules. Gone are the Beasley History, Momentum, Best Value
series, Cycle series, SPI, MOM and some other ranking modules.
FT4WIN has a spreadsheet capability that duplicates the functions of some of the ranking modules in FastTools and is a capability that is well worth learning how to use. The two, very professional, training DVD's that FastTrack has
available are very thorough and offer an excellent way, and in my opinion, the very best way of all, to become fluent in the use of FT4WIN, which will be necessary after the demise of FT4DOS that will also take place.
When I first released FastTools in 1995 there were less than 1500 funds in the database and less than 8 years of data, and memory was not a problem. Now there are almost 9000 funds and by 2013 there will 25 years of data. It is only by
using a modular architecture that FastTools has survived this long. It's understandable that back when the DOS operating system was developed for PC's by Bill Gates, and used by Microsoft between 1981 and 1995 that they thought that
640K of memory was more than enough, especially when you consider that all of the main frame IBM, Univac, Control Data and Cray computers that I used during my Lockheed career only had 32K or 64K of available memory and somehow
we managed back in those early days to design aircraft, missiles, and space vehicles that were among the best in the world. Of course, after I retired, and Virtual Memory was widely available, the size and complexity of the analyses
expanded enormously.
The majority of investors that don't actively manage their own portfolios do not have much to show for the last 8 1/2 years, from 3/24/2000 to 11/12/2008. This is particularly true when you consider that over a lengthy period most investors and most fund managers do not even beat the S&P 500 index. Some elderly non FastTools investors that I talk to are in denial but are eternally optimistic and hoping that the market will soon recover. It will but it will be too late to undo the serious damage done to their investments. I don't share their optimism, just as I am completely confident that the Nasdaq composite will never exceed its 3/10/2000 high of 5048.62 in my lifetime. Today it is at 1499.21. At the height of the Tech Bubble one customer told me that he had discovered a very simple secret to great wealth - all you had to do was to put everything into a leveraged index fund such as UOPIX that followed the Nasdaq 100 (The top 100 companies on the Nasdaq) - it has lost 98.64% of its value since 3/10/2000. I hope he bailed out soon after our conversation. This is how "get rich quick" people get burned by investment bubbles unless they are very smart - the housing one is no different. A good lesson is to never get euphoric about any investment.
3/24/2000 to 11/12/2008
BEANS ----- My Portfolio ---------------- Made 96.36%
VUSTX ----- Long Term Treasury ------ Made 87.76%
FDRXX ----- Money Market fund ------- Made 31.81%
DJ-30 ------- Dow Jones Industrials ----- Lost 24.71%
WIL-5 ------ Wilshire 5000 stocks ------- Lost 41.03%
SP-CP ------ S&P 500 --------------------- Lost 44.20% ---- Now it needs a 79.2% return just to get even.
OTC-C ----- Nasdaq Composite --------- Lost 69.79% ---- Now it needs a 331.0% return just to get even - so much for Buy and Hold - Buy and Hold is Dumb, Stupid, and only for morons!
NDX-X ----- Nasdaq 100 ------------------ Lost 75.16% ---- Now it needs a 402.6% return just to get even.
Since 7/5/2001 Fiscal irresponsibility by the government in power has caused the dollar to lose 30.2% against a basket of foreign currencies DXY-Z. Oil trades in dollars!
We have gone from the greatest budget surplus in US history in 2000 to the greatest budget deficit in US history in 2008 - that is absolutely pathetic and speaks volumes about our politicians!
If I had managed our money the way our government has managed theirs my wife and I would be homeless transients by now since unlike the government I can't print dollar bills.
It makes me wonder what "The full faith and credit of the Government of the United States" is really worth these days when the national debt is $10.2 Trillion dollars and growing by $1.8 Billion dollars every day..
These statistics do not bode well for those that are planning on retiring in the near future, or worse yet for the many thousands of workers that have lost their jobs and even their homes in many cases. I wish I could see a clear path that
this country could take to dig itself out of the gigantic mess that it is in and find a way back to the prosperity of the previous decade. I think the most important change that America will be forced to make is to undertake a Manhatten
Project to greatly lessen its dependence upon OIL, and not just foreign oil. The substitute for much of our current oil usage has to be Electricity. Since WWII, most residential construction has been centered around the population moving
out to the suburbs. Quite unlike, Europe and many other countries, this has created a huge dependence upon the automobile. This was all wonderful in the times of cheap gasoline and when the population encouraged the production of
large, luxurious, gas guzzling cars. Do you remember Gas Wars and when Gas Stations gave out all manner of free gifts, cleaned your windshield and checked your tires? Do you remember when gas stayed around 29.9c/gallon for years?
The percentage of our oil consumption that we produce ourself has been dropping drastically for many decades. In 1970 we imported 20% of our needs, now we import 70% of our needs and the percentage is climbing fast.
As Oilman T. Boone Pickens says, the greatest transfer of wealth in human history is taking place as America sends $700 billion dollars per year to foreign oil producers and it is devasting to our economy. Everything was great while it
lasted. Unfortunately there is now nowhere near enough oil to satisfy the world appetite - now that the third world countries, many with exploding birth rates, started giving up their bicycles for scooters and then their scooters for
automobiles. America's wealth has been leaving our shores in record amounts to maintain our appetite for oil and the cheaper goods that are manufactured in countries with low labor rates and poor working conditions. That money has
gone into Sovereign wealth funds that have enabled OPEC countries to buy up American companies and valuable commercial properties such as the Chrysler Building and the GM Building in New York. Today the world population is
6.5 Billion, by mid century it will be 9 Billion. Here's the kicker - If the whole world achieved their goal of consuming like the first world countries of Europe, America, Japan and Australia the world population would be the equivalent of 72
Billion.
We obviously aren't going to make drastic changes to our lifestyle so we have to find alternative energy sources and get much more fuel efficient cars. Some people think that eliminating the gas tax will help a lot - it won't - it will just take
valuable money away from highway construction and highway bridge maintenance. Solar and Wind, are never going to be sufficient to completely replace oil. We will always need oil for manufacturing plastics and chemicals. We will
always need oil to power many large industrial vehicles. The goal should be not to eliminate oil, just to cut way back on our usage of it, especially the oil we import. We have areas in the midwest of the USA that are perfect for Wind farms
and other areas in the Sunbelt that are perfect for Solar farms. We already have a countrywide electrical grid so these two nice, clean, green, non Carbon, power sources have to be exploited to the fullest. Oil is the energy source we
found in the 19th. century and it served us well until the developing countries started buying it in huge quantities thereby bidding up the price. Now it's time for the country that invented the Internet and put the first man on the moon to use
its superior technology and make the transition into multiple clean, green, renewably energy sources & super efficient automobiles, and start cutting back on our use of foreign oil in particular.
The other nice thing about electricity is that it stays at home, you can't sell it to other countries very easily. We also need to prioritize the fuel economy of cars, this could be the largest and most expedient oil saver of all. We have recently
been made painfully aware of the results of converting valuable farmland to ethanol production. "Safe Nuclear Power" is an additional source of electricity that can also be used. We haven't had a problem powering our Trident submarines
and giant aircraft carries with nuclear reactors. It is estimated that there is at least a 100 year supply of Uranium ore available in Canada, Australia and America, the three countries with the largest deposits. France has 56 Nuclear power
stations which provide 76% of its electrical energy needs. The combination of natural gas, nuclear power, solar, wind and geothermal can provide massive amounts of electrical energy that can be easily distributed to power ultra fuel
efficient hybrid cars that can be recharged every night when the load on the electrical grid is low. The spent fuel rods from nuclear reactors can also be safely buried in Yucca Mountain, Nevada. The capital cost of this conversion, including
the transition to cars that use less oil is enormous and the time it will take is at least ten years if we start now. In the meantime I see a lot of hardship for the less fortunate in our country. Add in the costs of simultaneously providing some
sort of healthcare for all Americans, improving our K-12 educational system, putting Medicare and Social Security on a sound financial footing, upgrading our aging infrastructure of bridges, dams, levees, railways, and underground
utilities, and the challenges we face are daunting and monumental. As a nation, the longer we bicker and procrastinate and keep putting off the inevitable, and coming up with laughable band-aid approaches such as gas tax holidays, and
oil drilling in the ANWR, the more painful things will eventually become. As we hopefully start using less and less oil from OPEC etc. they will naturally lower production in order to keep the price per barrel as high as they can - remember
OIL is all they have and they want to get as much for it as they possibly can, for as long as it lasts. Even GM after a $14.6B loss in the 2nd. quarter has finally got the message and is laying off white collar workers, giving the remainder a 20%
pay cut, eliminating healthcare benefits for future retirees, switching lots of its truck production into efficient car production, and eliminating some of its brands. GM's stock is at a 58 year low and it needs to raise $15B by the end of next
year to stave of bankruptcy. GM is now building more vehicles in Canada than in the USA because a worker's healthcare costs run $120/unit in Canada and $1,500/unit in the USA.
Another huge looming worldwide problem is Global Warming. We are seeing the effects already with records being set for the numbers of tornadoes, the severity of floods and ruination of crops, the large numbers of forest fires caused by
lightning strikes, and the prediction that even the polar icecap will disappear in summertime. Only an uninformed idiot can deny the existence of Global warming, even our current president has finally become convinced. The fact that global
warming is tied directly to carbon emissions means that by saving our lifestyle and our economy by cutting way back on our oil usage will make a substantial contribution to lowering carbon emissions and the effects of global warming.
It will also transfer power from OPEC back to the USA. It's really serendipitous that these two problems are so linked together. It makes cutting way back on the use of foreign oil a "No Brainer". America has actually been handed the
wonderful opportunity of doing something that benefits us greatly economically by creating huge numbers of new jobs in green industries, drastically lowering the flow of dollars overseas, improving the quality of our air and climate, and
setting a great example to the world in countering the effects of global warming. What an opportunity! It reminds me of JFK's visionary speech when he set a nationwide goal for putting an American on the moon. I think everyone is
in agreement what a great vision that turned out to be. I hope we don't allow this great opportunity to go to waste.
If the American lifestyle that we know and love is to survive for future generations then the time to start this transformation is NOW. There are NO quick fixes. Unfortunately our political system with its four year election cycle and
excessively long election campaigns doesn't lend itself to the type of concerted and cooperative action that is required. We are actually already in an economic war for the survival of our way of life but most people haven't realized it yet.
The last critical situation of this magnitude took a "Depression" followed by a "Pearl Harbor event" to galvanize America into action and to act with a united voice, I wonder what it will take this time - maybe a flare up of violence in the
Persian Gulf that causes a massive interruption of our oil supply, sends the price of oil through the roof, produces massive lines for gas, and brings our faltering economy to a standstill. When I read articles about the possibilty of an Israeli
attack on Iran's nuclear facilities it raises a nightmare scenario that I hope never happens. Maybe it will be a run on the banks, as their mortgage portfolios continue to drop in value and the FDIC have to step in as they have done already
with IndyMac Bank at a cost of between $4B and $8B. Even government sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac are getting much needed help from the Federal Reserve Bank. Let's not forget that 9,000 banks
failed during the 1930's. Even the FDIC with its $52B reserve fund can't cope with failures anywhere close to that magnitude. Personally an FDIC insured CD or a MMF from a long standing Mutual Fund company that is invested in
obligations of a few months duration would seem far safer than most banks that are heavily invested in very long term mortgages, often with additional equity lines of credit, many of which are now under water compared with the
collateral backing them when they were originated. From Fidelity's website you can peruse available CDs or download a PDF file containing the latest monthly holdings of any of their MMFs.
If you are as concerned as I am about the financial future of the USA you owe it to yourself to read the text of this speech and the "Frightful Storm" that lies ahead.
The unfunded future liabilities of Social Security and Medicare present a growing deficit of incredible size for which this member of the FOMC sees no possible solution. Sadly, this country's out of control spending will leave this legacy for
future generations. You and I have to live within our means but our government does not.
OTR Newsletter
The only mutual fund advisory letter that makes extensive use of the statistical RISK parameters UI, UPI and MDD that are in FastTools is Michael Price's "On Track Report" (OTR) . He also provides hedging strategies and money
management services for aggressive investors. It is quite expensive at $1200/year for a weekly e-mail copy of the report and recommended funds list, but if you are managing a very large portfolio it could turn out to be quite a bargain.
Michael can be reached at 850-934-6300. In return for providing extra FastTools support I do receive a complimentary copy of OTR but receive no financial compensation of any kind for recommending his service. Michael is a long time
FastTracker, a retired Navy Captain, a money manager, a hedge fund manager, has many connections, is totally trustworthy. I used to find his list of recommended funds to be particularly useful but these days they are primarily ETF's
which I no longer use. He does not maintain sample portfolios.
OTM Newsletter
A newsletter that shares my views and that I find very useful is Dennis Slothower's "On The Money". OTM is one of only 13 newsletters ranked by Hulbert that has not lost money in 2008. Dennis has lots of contacts and sources of good information and puts together a daily e-mail containing a detailed and comprehensive technical evaluation of the day's market action along with specific Buy/Sell recommendations for six sample portfolios, which are categorized as :
Conservative -------------- 100% in MMF since 1/7/08
Core Holdings ------------- 100% in MMF since 1/7/08
Moderate ------------------ 100% in MMF since 1/7/08
Aggressive ------------------ 80% in MMF, 10% in UCPIX, 10% in UVPIX since 3/28/08
Diversified Sectors ------- 100% in MMF since 1/7/08
ETF -------------------------- 75% in MMF, 10% in EUM, 10% in RWM, 5% in FXP since 3/28/08
Enhanced Index Funds ----- 80% in MMF, 10% in UCPIX, 10% in UVPIX since 3/28/08
As you can see the portfolios have been substantially out of the market for most of the year.
Dennis also provides information about the economy that you may miss unless you spend a lot of time on the Internet.
Four of Dennis's portfolios have been tracked by Mark Hulbert since 1995, their performance is shown on the On the Money website.
This newsletter is $198 for a one year subscription. Dennis has been a longtime user of FastTools and provides me with a complimentary subscription. I do not however follow any of his portfolios.
For a free 60 day trial, mention my name in your e-mail to: Dennis@OnTheMoney.com
Click here for: The On the Money Website
Contact:
webmgr@fasttrack.net