Transports warning sign…

A money manager from upstate New York sees some signs that suggest caution..

Something is not right—The Dow Jones Transports are hardly above where they were 5 yrs ago! The Dow and Transport ALWAYS prosper or suffer together as one makes the products and the other transports them to markets.  The Dow has soared much higher over the past 5 years although both are flat to down since January–many computer programs and Foreign money- center on the Dow stocks and remember the Dow is constantly replacing it’s components through the years taking out old line companies like Eastman Kodak and Sears, AT&T and GE with newer faster growing companies like Apple and Walmart so it keeps the Dow moving otherwise it would be a disastrous chart having gone nowhere for decades.

. Keynesian Economics espouses growth by printing money with nothing backing it while history has shown paper currencies ALWAYS returns to their intrinsic value which is usually nothing!  All this cheap money has to go somewhere so it has gone into the Big names even if many are vastly overvalued as well as into Highly priced Real Estate and Art etc.

What is the value of a Dollar today???   Only what it can buy—it’s no longer a store of value! and if you read the article I sent yesterday on Inflation you can understand how companies are shrinking the amounts of goods they sell while slightly raising prices to fool the buyer.

The markets are an attractive investment because they are highly liquid and we can search for growth areas and try to buy when there is a market correction but let’s not fool ourselves thinking that there are risk-less investments to be found in  a world where debt and money creation is rampant-Bonds and CD’s may be a good resting place during market concern but they are no longer stores of long-term value—savings bonds are a long-term disaster.

I have been working on models that take the market direction and Industry group strength into the algorithms to improve our odds of success and have back-tested some with terrific results .  more than ever we need an emotion free aide to help guide our investments—will keep you appraised of our testing results —