True Confessions

February 28, 2008

Hello,

One of the issues that has been throwing off my trading since the big sell off in March 2000 ,has been that I have been using the wrong historical comps in my analysis . I was looking to the 1930’s and comparing the 2000 NASDQ melt down to the DOW melt down of 1929,the 1930’s with their foolish policies ushered in the great depression and were the prelude to world war two .
The Elliot wave gave me a chart in 2000 that appeared to be signaling a war was coming and after 9/11, it’s seemed to be a pretty solid comparison. The one nagging problem was how could the US stock market under perform so much with such a booming economy, with a huge productivity growth rate low interest rates and low inflation.

The fact of the matter is that we were more like a 1960’s stock market virtually remaining flat from 1966 till 1982, this market seemed to giving a warning of the creeping red disease and the coming hang over that would be the 1970’s.

I have reengineered my methodology and there for I have introduced the Carter Era Portfolio in an effort take advantage of the low growth, high inflation atmosphere that we are moving ever closer to with each day.

Again:

ENERGY
GOLD
METALS AND MINING
AGRO

Utilities Under Pressure

Utilities one of my target sectors for my Carter Era Stock Portfolio are being pressured buy both increasing prices for coal and natural gas and eco friendly politicians looking to score points with there constituents . 80% of the world’s electricity is generated by coal and natural gas and most utilities bargain with local regulators to set prices to consumers.

Utilities in there quasi monopoly positions are becoming pressured by cost increases both fuel and eco compliance again I remind you we went thru this in the 1970’s with very adverse consequences, thus the weakness in utilities stock prices.

As we head more into a 1970’s state of mind it’s very important to keep reminding your self that 1970’s economic polices were disastrous, stupid and destructive so look out for more of the same and be prepared to profit off bigger government ,higher taxes ,higher energy prices, higher inflation ,weak business conditions and really stupid politics. And Yes you can profit from all these trends.

some basic rules for investing

So given the nature of the current market perhaps its time to re-chunk our focus . I am going to offer up some basic rules for investing:


1) Forget the lazy mans Buy and Hold , as Jim Crammer always says do your home work ! For every stock you own you have to know the reason you’re buying it and know the reason for selling it another words; Before you buy it you have to know when you’re going to sell. Some stocks are investments and some stocks are trades and some stocks can be both at different times. Do your home work! Again I refer to Jim Crammer who says for every stock you own it takes one hour a week of research every week! If you can’t do the time then hire a financial advisor like my self.

2) Forget the woulda, shoulda , coulda ,you only make money in the future not in the past ! Analyze your trades good or bad, try to learn something and get back on the horse. Don’t beat your self up and always keep in mind that the past is no indication of the present.

3) Forget “Hot Tips” ,tips are for waiters ,if its really a tip its called insider trading and your cell mate bubba is gonna make you his ,well you know what I mean .

4) And finally don’t put all your eggs in one basket, but beware of all the Wall Street diversification talk, know as “the talk”. In Bear markets 90% of all stocks go down and in Bull markets 80% of all stocks go up, so don’t take too much confidence in this non correlated asset class non sense of over diversifying yourself out of a return. Most Wall Street firms are pushing the fund manager full employment act. So to sit with gold stocks for 10 years before they ever move is a waste of money. If you want to truly diversify true non correlated assets are like cash, commodities, real-estate, small businesses, equities and bonds not different growth stocks in different markets.



James J Foytlin

Carter Era Portfolio

February 20, 2008

Hello,

Clients continue to ask, what era do compare the current market environment to ? I don’t think things are as dire as the 1930’s, and the politicians of today are just totally incompetent, they couldn’t screw things up that much as they did in the 30’s they just don’t have the skills. Nothing like 1987, the market has not moved adjusted for inflation in almost 7 years ,in 87 it have almost tripled from 1982 , To me this smacks of jimmy carters 1970s’ an era of dumb dumber and dumbest .Most of today’s politicians and pundits sound like the dopes form the 1970’s . And everyone is just going along for the ride with the big lie. I see almost no difference between Hillary Obama and McCain they sound like jimmy carter 2 to me. And this idea that if you challenge the Medias forgone conclusions you are an enemy of the people is also so very 1970’s, so break out the DISCO ball and look toward our old nemesis jimmy carter and “peak oil” for investment advise.

Therefore continue to focus on what I call a Carter Era Portfolio, sector focus is on:

Metals and Mining
Energy
Agro business
Utilities
Gold

the China Syndrome

Importing inflation from China ,as I have said before except for a few isolated markets most of the emerging markets are at major levels of over valuation .China looks like the bubble that no one is talking about.Everyone is in denile .Inflation is brewing; social unrest is fermenting, government sensors are clamping down. When the China bubble pops I think its going to catch a lot of market players by surprise.

Savior or the great bond swindle?

Buffet looks to take insured Muni portfolio off the hands of bond insures? Is it just me or am I the only one that knows that that’s not where the problem lies. Munis are only insured if they don’t need it. That’s what makes it such a great business. He is not touching the mortgages which are where the problem lies because to paraphrase “with the mortgages no one knows what the values are”, no sh*t isn’t that the whole problem to begin with? Looks like back to square one well maybe …

I know that separating the muni market from the mortgage market will decouple that market from the sub prime mess which should give investors confidence but It seems unlikely any solution is going to let the people who inject the capital walk away without taking any risk and leave the government or the market to swallow the toxic mortgage portfolio.

Odd Changes to the DOW Jones Industrial Index

I look at the new changes in the DOW with great trepidation ,adding another bank in the middle of a banking crisis and a significantly underperforming oil stock will do nothing to enhance the performance of the index. If you don’t know Dow Jones has dropped Honeywell and Altria from the Dow Jones Industrial and is adding back Chevron and also adding Bank Of America.

NASDQ nears key long term support level

(chart from amateur-investor .net)

The Nasdaq is at a key longer term support level that coincides with its 38.2% Retracement Level (calculated from the late 2002 low to the late 2007 high). It will be important for the Nasdaq to hold support near the 2200 level . If the Nasdaq were to move significantly below the 2200 level then its next potential area of longer term support would be at its 50% Retracement Level near 1985 ;Yikes!

Cell Phone Issues

We are currently experiencing a dispute with Sprint our cell phone provider. We are working diligently to rectify the problem. Sorry of the inconvenience service should be restored shortly.

James J Foytlin

Go Giants

The Super Bowl indicator justifies recent market action with Giants upset victory. When an old NFL team wins the super bowl 86% of the time the stock Market is up for that year. The Giants being one of the original NFL teams ,so maybe despite early indications the market will also surprise everyone and be up this year.

Learn the Laffer Curve

a tug of war between two long term market trends

There appears to be a tug of war between two long term market trends the first be the correlation between a decline in employment growth and the precipitous decline in the stock market .Research seems to indicate that it doesn’t take much of a decrease in job creation to cause a fairly significant decline in the stock market. The one thing in our favor is that much of the job creation in the last 7 years is through the hard to measure growth in technology, with basically a person sitting at their breakfast table with a lap top running some kind of a technology enterprise.

The second trend is the panicked FED syndrome, which as the tide of FED rate cuts quickens to catch up to a declining economy ,The lower rates force up the most beaten down and out stocks ,in our case a rally in banking, real-estate, retail ,and other financials . Its hard to fight the FED despite the strong evidence that the worst is far from over with the current banking crisis.

Its the mentality of the 1970's that is so dangerous

The mentality of the 1970’s has returned read below:

You're an ass. It's as simple as that.

Look how deregulation has ruined this country. Food, airlines, water.. you name it, it has been ruined by letting these greedy-ass corporations run wild.

Deregulation has accelerated the decay of the planet.

But as long as you can have your 12-seater SUV and your bottled water, that's ok with you. You could care less.

And the rich are never "soaked" because lawmakers only work for the rich.

How do you justify this cushy, privledged upscale suburban life you have been handed and still want more? How much is enough for people like you?

Take take take-- and fuck everyone else. You (and your rich neighbors) must be proud of yourselves.

Thanks for the comment ,By the way I drive a 2 seat sports car that gets 35 miles per gallon My life isnt cushy I work any where from 10 to 18 hours per day like most people how want to be successfull. As for taking I not the one looking to mooch off other peoples hard work such as your self.I don’t drink bottled water Ridgewood has well water . And as for greedy ass corporations they create jobs for millions what have you ever done for anyone ? As for destroying the planet apperantly you have never traveled because you would know that by far the most poluted places on earth can be found in old former soviet economies , corrupt dictatorships and other forms of closed ,non free over regulated economies . Oh and by the way most of my friends are first generation latino’s who work very hard,suport there families ,serve our country and yes they are very pround of themselves and I am pround of them also .

Counter Trend Rally or did we put in a frim bottom?

We will have to wait until next week to see if this weeks counter trend rally has run its course the Spider (SPY) looks like made its 50% entrancement to around 140.

Awful January markets are always except once met with future lower lows .

and the next President is...

Moratorium ,Interest rate freeze ,the government to the rescue ,class warfare ,soak the rich, more regulation ....