John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (14038)	4/17/2013 9:15:41 AM
From: robert b furman	1 Recommendation Read Replies (2) of 33421

Hi John, The spread between the 2 and 10 year has admittedly been manipulated by the Fed. This is shown as a reduction in spread (right side of chart lower than left side of chart for the charts $yc2yr). A corresponding rise in SPX has been associated with the spread reduction. This makes good sense as the hunt for yield and assured return of capital has been driven out of the market. Remember the credit crisis of 2008 and high spreads blew up as credit and commercial paper froze ! The net result is a" risk on" embracement that now begins the chase of blue chip stocks that pay a regular dividend - hopefully pay a regularly increasing dividend. That chase has just begun. These things end badly ,but only after everyone knows "stocks are the only way to protect your wealth". We are at the very beginning of that - I leave low volume accross the indexes as proof. When the volume does explode it will be when the little guy starts buying the stock that the big wall street guys create through short sales - this is a historical event of all stock distributions ie 2000 and yes it has been long enough for the strong hands to have once again regained strong accumulation in many stocks. "The only way to protect your wealth" has been the curse of all asset classes - gold droping 15 % over 2 days perhaps proves the validity of that more than many ever expected. When you watch TV and every other ad told us fiat money was going to take away our wealth and buy gold is the safe haven - well let's just say it was a very crowded trade by Joe 6 pack. In between we have central banks assuring low spreads and don't fight the fed stills rings of good advice especially when we see central banks working in concert in a way never seen before in a historical sense. I say go with the flow. Asset allocation sounds prudent - but to make money one must be nimble enough to never be in the "The only sure way to protect your wealth sector". Real estate got killed in 2008 and is rebounding - many have made great buys of late.There is now a permanent rentor class established - so to is there a land owner class. Bonds are at the end of a thirty year bull.You want trapped money - give it a year. I'm thinking I should go out and buy a 69 camaro <smile> Nah, give me the future cash flow of a company that, has no debt and makes a product that will be in demand into the future and pays a dividend while retaining enough cash to fund acquisitions and maintain R&D such that its expertise acts as a moat to fend off competition and you should sleep well at night. That is until every body knows that stocks "Are the only way to protect your wealth. I'm sleeping lighter these days,but I think we truly are in the very beginning stages. Always good to hear your views. Bob

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