Tuesday, March 31, 2015

The Morning Call---China appears ready to ease further

The Morning Call


The Market

The indices (DJIA 17976, S&P 2086) had a strong follow through from Friday’s up day.  In the process, they soared above their 100 day moving averages, the lower boundaries of their very short term uptrends and their 50 day moving averages.  Clearly, their 100 day moving averages once again offered enough support to halt a downtrend.  However, this move was assisted by quarter end portfolio window dressing.  The Averages remained well within their uptrends across all timeframes: short term (16870-19647, 1971-2952), intermediate term (16965-22116, 1785-2543 and long term (5369-18860, 797-2122).   Resistance exists at the last highs (18193/2114); and if that gets taken out then the next stop is the upper boundaries of their long term uptrends.

Volume fell; breadth improved. The VIX declined, finishing within its short term trading range, its intermediate term downtrend, its long term trading range, back below its 50 day moving average and within a developing pennant formation.  I continue to think that it remains a reasonably priced hedge. 

Update on NYSE margin debt (short):

The long Treasury was off, but closed within its short term trading range, intermediate and long term uptrends and above its 50 day moving average. 

GLD’s price dropped, closing within its short and intermediate term trading ranges, its long term downtrend and below its 50 day moving average.  GLD has a number of tough resistance levels yet to overcome before we can assume that the worst is over.

Bottom line: the Averages had a great day, assisted by quarter end portfolio window dressing.  Related buying momentum will likely influence today’s pin action.  This move was marked by a bounce off their 100 day moving averages---which I have noted before has offered significant support over the last year.  So our attention shifts back to the overhead resistance levels: the prior high and the upper boundaries of the indices long term uptrend.  I continue to believe that the latter will prove too formidable for a break away to the upside.

            It was a pretty active Monday, US economic data wise.  The results were basically mixed: February personal income was better than expected, personal spending was worse and the PCE deflator was in line; in addition, February pending home sales were much better than estimates while the March Dallas Fed manufacturing index was much worse.

            Overseas, Chinese banking officials made a statement suggesting that they could lower interest rates again.  While it was later denied, investors seemed to grasp at it like a drowning sailor to a life buoy. 

            ***overnight, the March EU price deflator improved from -0.3% in February to -0.1% and unemployment went from 11.4% in February to 11.3% in March.

Bottom line: this holiday shortened week started with mixed US economic data and a shot in the arm for the speculator/yield chaser/carry trader hoping and praying for more QEInfinity.   And what better place to get it than from a really big player (i.e. a central bank that has the ability to really get the presses humming) like China.

The geopolitical events that held the headlines last week stayed below the radar yesterday, though none (Greek bail out; NATO/Russia face off; escalating war in the Middle East) have been resolved.  Out of sight, out of mind.

The key issues remain a deteriorating US economy, a weak global economy, slowing corporate profit growth, a death wish among central bankers as they relentlessly pursue competitive currency devaluation and a stock market that is a short hair away from all-time high valuations. 

Update on the Buffett valuation indicator (short):

I can’t emphasize strongly enough that I believe that the key investment strategy today is to take advantage of the current high prices to sell any stock that has been a disappointment or no longer fits your investment criteria and to trim the holding of any stock that has doubled or more in price.

Bear in mind, this is not a recommendation to run for the hills.  Our Portfolios are still 55-60% invested and their cash position is a function of individual stocks either hitting their Sell Half Prices or their underlying company failing to meet the requisite minimum financial criteria needed for inclusion in our Universe.

            The importance of liquidity tomorrow (medium):

       Investing for Survival

            The greatest danger to your portfolio (medium):
      Company Highlight

AT&T is one of the world’s largest telecommunications companies.  The company has grown its dividend at a 5% pace over the past ten years (profits have been flat) earning approximately 10-15% return on equity.  T went through a rough period (2008-2011) as the growth of its traditional wireline business slowed and margins came under pressure.  Looking forward profits should regain momentum as a result of:

(1)    providing fastest internet speeds,

(2)          investing heavily in enhancing spectrum and networking capabilities as well as building out is fiber network,

(3)          acquisitions,

(4)          share repurchases.


(1)  intense competition,

(2) losses in wireline business,

(3) highly regulated industry.

T is rated A++ by Value Line, carries a 41% debt to equity ratio and its stock yields 5.7%.

  Statistical Summary

                 Stock      Dividend         Payout      # Increases  
               Yield      Growth Rate     Ratio        Since 2005

T                5.7%           4%               68               10
Ind Ave      3.5              6*                59              NA 

                Debt/                        EPS Down       Net        Value Line
                Equity         ROE      Since 2005      Margin       Rating

T               41%            15%             3                10%           A++
Ind Ave     46               12              NA               8              NA

*many companies in T industry do not pay a dividend


            Note: T stock made good progress off the October 2008 surpassing the downtrend off the May 2008 high (straight red line) and the November 2008 trading high (green line).  Long term, it is in an uptrend (blue lines).  Intermediate term, it is in an uptrend (purple lines).  Short term, it is in a trading range (brown lines).  The wiggly red line is the 50 day moving average.  The High Yield Portfolio owns a 75% position in T.  The upper boundary of its Buy Value Range is $31; the lower boundary its Sell Half Range is $48.

      News on Stocks in Our Portfolios

   This Week’s Data

            The March Dallas Fed manufacturing index was reported at -17.4 versus expectations of -9.0.

            February pending home sales rose 3.1% versus estimates of up 0.3%.




  International War Against Radical Islam

            Iraq just keeps getting from chaotic (medium):

Monday, March 30, 2015

Monday Morning Chartology

The Morning Call


The Market

       Monday Morning Chartology

            The S&P rose Friday, enough to close above its 100 day moving average but not enough to end above the lower boundary of its very short term uptrend; thereby negating that trend.  It remains within uptrends across all timeframes.  To keep the near term technical picture muddled, the Dow closed right on the lower boundary of its very short term uptrend, erasing the break and leaving within that trend.  However, it could not regain its 100 day moving average.

            The long Treasury rallied on Friday, but not enough to regain the lower boundary of a very short term uptrend; thus, negating that trend. The good news is that Wednesday’s high was higher than the previous bounce which seems to indicate that the decline off the January high is over.   It remained within a short term trading range, intermediate and long term uptrends and above its 100 day moving average.

            GLD was down on Friday, remaining within short and intermediate term trading ranges.  Notice it touched and then retreated from its 100 day moving average.  GLD still has a lot of work to do before its chart gets healthy.

            The VIX fell Friday, but ended within a short term trading range, an intermediate term downtrend, below its 50 day moving average and within a developing pennant formation.  I still think it cheap insurance for traders.

            Update from Greece (medium):

            ***overnight ,a rumor suggested that the Bank of China was prepared to lower interest rates again---you know, because the first two times were so successful.  Later the rumor was denied.

       Investing for Survival

            Memories shape your reaction to the Market (medium):

      News on Stocks in Our Portfolios

   This Week’s Data

            February personal income rose 0.4% versus expectations of up 0.3%; personal spending increased by 0.1% versus estimates of +0.2%; the PCE deflator was +0.1%, in line.


            Signs of improvement in Europe (short):




            What price an Iran deal?  Another example of our failing foreign policy (medium):

Saturday, March 28, 2015

The Closing Bell

The Closing Bell


Statistical Summary

   Current Economic Forecast


Real Growth in Gross Domestic Product:                    +1.0-+2.0
                        Inflation (revised):                                                           1.5-2.5
Growth in Corporate Profits:                                            0-7%

            2014 estimates

                        Real Growth in Gross Domestic Product                   +1.5-+2.5
                        Inflation (revised)                                                          1.5-2.5
                        Corporate Profits                                                            5-10%

            2015 estimates

Real Growth in Gross Domestic Product (revised)      0-+2%
                        Inflation (revised)                                                          1.0-2.0
                        Corporate Profits (revised)                                            -5-+5%

   Current Market Forecast
            Dow Jones Industrial Average

                                    Current Trend (revised):  
                                    Short Term Uptrend                                 16858-19635
Intermediate Term Uptrend                      16946-22097
Long Term Uptrend                                  5369-18960
                        2014    Year End Fair Value                             11800-12000                                          
                        2015    Year End Fair Value                                   12200-12400

            Standard & Poor’s 500

                                    Current Trend (revised):
                                    Short Term Uptrend                                     1969-2950

                                    Intermediate Term Uptrend                       1783-2541
                                    Long Term Uptrend                                    797-2116
                        2014   Year End Fair Value                                     1470-1490

                        2015   Year End Fair Value                                      1515-1535        

Percentage Cash in Our Portfolios

Dividend Growth Portfolio                          49%
            High Yield Portfolio                                     54%
            Aggressive Growth Portfolio                        53%

The economy is a neutral for Your Money.   The US economic data this week was more mixed than it has been of late though the primary indicators were largely negative: positives---month to date retail chain store sales, weekly jobless claims, February new home sales, weekly mortgage and purchase applications, March consumer sentiment and the March Markit manufacturing and services flash PMI’s; negatives---February existing home sales, the February Chicago National Activity index, February durable goods orders, the March Richmond and Kansas City Fed manufacturing indices, fourth quarter corporate profits and February CPI ex food and energy CPI; neutral---February CPI, fourth quarter revised GDP.

The important data points this week were new home sales (+), existing home sales (-), the March Markit flash manufacturing and services PMI’s (+), the Chicago National Activity index (-), fourth quarter GDP (0) and corporate profits (-) and February durable goods (-).  So the negatives clearly outweigh the positives.  Furthermore, existing home sales (a negative) are roughly ten times the size of new home sales (a plus); and though fourth quarter GDP was in line, corporate profit growth slowed further.  Adding insult to injury, the Atlanta Fed reduced its first quarter GDP estimate again (0.2%) and S&P cut its expectations for first quarter earnings. 

So overall, I rate this week’s economic data as negative.  That said, having just downgraded our forecast, I don’t want to appear to be minimizing the positive news that we received.  They were a hopeful sign especially after weeks on nothing but negatives.  But still two primary positives in a week of eight negatives is just barely hopeful, if at all.  Plus, at the moment they are just outliers and will only matter if the numbers we get in coming weeks also show improvement.

There were few international stats and they were mostly negative: one upbeat datapoint was the EU March Markit flash composite PMI which came in near a 46 month high; but the China March manufacturing index showed contraction, global trade was at its lowest level since Lehman and Japanese inflation was zero.  In addition, we learned that the large Chinese banks are cutting their dividends due to increasing bad debts and the second largest bank replaced its chairman accusing him of taking too much risk.
In addition, a Greek bailout is anything but assured.  To be sure, the parties are still talking.  But some of the most knowledgeable experts are giving 50/50 odds of a Grexit to which there are bound to be unintended consequences.  While the direct economic fallout is likely not all that great to the EU or global economy, I would like to   know those unintended consequences before dismissing this as a minor nuisance.

Our forecast:

 ‘a below average secular rate of recovery, exacerbated by a declining cyclical pattern of growth,  resulting from too much government spending, too much government debt to service, too much government regulation, a financial system with an impaired balance sheet, and a business community hesitant to hire and invest because the aforementioned, the weakening in the global economic outlook, along with...... the historic inability of the Fed to properly time the reversal of a vastly over expansive monetary policy.’
        The pluses:

(1)   our improving energy picture.  Oil supplies remain abundant and that is a significant geopolitical plus.  Furthermore, lower prices should be constructive when viewed as either a cost of production or cost of living.  However, none of pricing positives have yet shown up in the macroeconomic stats.  Indeed, as I have been pointing out, that data only gets worse the further oil prices fall. 

That said, the price of oil was up meaningfully in the last six days of trading.  Were it to continue, the question becomes, since lower oil prices led to lousy economic data will higher oil prices lead to an improvement?

The problem that I am concerned about is the impact lower oil prices [employment, rig count, cash flow] have had on the subprime debt from the oil industry on bank balance sheets and the likelihood of a default. 

       The negatives:

(1)   a vulnerable global banking system.  This week, the stories were:

(a)    more financial gimmickry from the too big to fail banks [see link below].  By the way, this is the same ruse they used in 2008 to hide the loses in their mortgage portfolios and remain ‘solvent’ on a GAAP basis---the magnitude about which, I might add, neither we nor the regulators still have a clue.

(b)   trouble in China as banks cut their dividends and officers are being replaced as a result of a significant rise in bad debts.

(c)    that failed Austrian bank we have been following potentially claims another victim (medium):

‘My concern here.....that: [a] investors ultimately lose confidence in our financial institutions and refuse to invest in America and [b] the recent scandals are simply signs that our banks are not as sound and well managed as we have been led to believe and, hence, are highly vulnerable to future shocks, particularly a collapse of the EU financial system.’

(2)   fiscal policy.  Miracle of miracles, congress actually passed a budget; and even better, it is being touted as reducing spending by $5 trillion over the next ten years. I have yet to see its exact provisions or any evaluation of the probability of those provisions really cutting spending. So for the moment, I am withholding judgment but with a positive attitude.

In making that judgment, there are a couple of things to remember: (1) cutting spending is not the same thing as reducing the budget; that is, if spending was expected to rise by $20 trillion, then a $5 trillion cut, while a start, is not as impressive, (2) one of the most popular accounting gimmicks of the political class when they trumpet spending cuts is to make the majority of those reductions in the out years; in this case in other words, there may be very little reduced spending in the current year but a lot in year 10---which usually gets altered by the then sitting congress, (3) it is easy to project lower spending or increased revenues that have little probability of occurring, and (4) perhaps even more important, it is easy to legislate spending cuts that you know Obama will veto.

I don’t want to give the impression of being dismissive of this development.  It seems a worthy start towards spending, tax and regulatory reform.  However, I would like to see the accounting in the bill and it signed before getting too jiggy.

(3)   the potential negative impact of central bank money printing:  The key point here is that [a] the Fed has inflated bank reserves far beyond any comparable level in history and [b] while this hasn’t been an economic problem to date, {i} it still has to withdraw all those reserves from the system without creating any disruptions---a task that I regularly point out it has proven inept at in the past and {ii} it has created or is creating asset bubbles in the stock market as well as in the auto, student and mortgage loan markets. 

We actually made it through a whole week without some central bank driving for the competitive devaluation hoop---which in no way negates the risk of economic dislocations that have historically accompanied multi country beggar thy neighbor policies.

It is also not to say that there was no news on QE or its effects.  In Japan, February inflation was reported at zero.  Which begs the question, Mr. Abe how is that money printing working out for you?   Clearly another solid piece of evidence that QE hasn’t and isn’t working.

Meanwhile in China the aforementioned dividend cuts and firings reveal yet another negative consequence of cheap money and easy credit.

And here is yet another---capex declining while stock prices rise (short):

Finally on Friday afternoon, Yellen gave a speech in which she sounded more upbeat on the economy (i.e. more hawkish on an interest rate increase) than the statement and the press conference following the last FOMC meeting.  While somewhat confusing on the surface, I think that this was just smoke to hide the fact that she knows that the economy is slowing (she said as much after the FOMC meeting) but doesn’t want to emphasize that too much for fear that concerns over a potential recession and falling corporate profits will spook the Markets---which after all has been the Fed’s primary focus for six years.

Forget the federally mandated dual objectives of employment and inflation.  Those goal posts have been moved around several times since 2008 just to accommodate QE.  The one thing the Fed has lived in mortal fear of is crushing the asset bubble that it has created.  When the economy was improving, the Fed was dovish on raising interest rates so that Markets wouldn’t be concerned about higher interest rates (a higher discount factor/lower PE); now the economy is slipping, it wants investors to believe that it is so strong that a rate hike is around the corner so the Markets won’t be worried about a recession (declining corporate profits).

Yellen lifts her skirt (short):

In short, QE is not working anywhere including the US despite its implementation on an intergalactic scale.

(4)   geopolitical risks.  The saber rattling continued in Ukraine and has now moved to the stage of troop movements and naval exercises.  I continue to believe that no one in NATO or the White House has the balls to stare down Putin.  The risk is stupidity.

The Middle East is heating up, most notably in Yemen where the Saudis and Egyptians [Sunni] are now actively fighting the Houthis rebels [Shi’a]---creating the potential of a regional Sunni/Shi’a military conflict.  I have said before that we just ought to wall the region off and let them the destroy each other.  Which I think is a better alternative than our current inept management of Middle East policy [at odds with our best ally, fighting Sunnis in Iraq and Shi’a in Yemen].  I don’t see any upside to present policy.  On the other hand, the downside to that is what happens to all the oil fields---though the question is, can they be saved under any circumstance if all-out war breaks out.  One final thought, the Russians and Chinese haven’t chosen sides yet---though Russia is becoming increasingly involved.

In addition, …I am…concerned about the lack of appreciation by our leadership of radical Islam’s intent to bring the war to our home.  My fear is that it will take a major catastrophe [like burning people alive and mass beheadings aren’t enough] to make Our Glorious Leader realize how irresponsible, unsound, dangerous and intellectually vacuous our current ‘local law enforcement’,’ jobs for jihadists’ strategy [?] is. 

(5)    economic difficulties, overly indebted sovereigns and overleveraged banks in Europe and around the globe.  There were few global economic stats this week; and while most were negative, we did get one bright spot [EU composite PMI].  Coupled with the mixed report two weeks ago, some might argue that we may be seeing a slowdown in the rate of deterioration.  I don’t think so; and even if we give this notion the benefit of the doubt, it is still too soon to know.

Not helping matters is the uncertainty surrounding the Greek bail out.  Granted, the negotiations continue and the Greeks are expressing the desire to reach terms agreeable to the Troika.  But we have seen this routine before only to be followed by distinctly combative rhetoric out of the Greeks.  In addition, individuals that I consider knowledgeable are giving the odds of a Greek exit at 50/50.  Were it to occur, I am less worried about its impact on the global economy and more about the effect on the EU financial system as well as unintended consequences.  I am not saying that there is a huge price to pay.  I am saying I don’t know and I don’t think anyone else does either.

And:  Greeks prepared for ‘riff’ (medium):

‘Muddling through’ remains the assumption in our Economic Model; but I believe that time is running out, particularly on the economic policies of the EU.  This remains the biggest risk to forecast.

Bottom line:  the US economic news was lousy for a ninth straight week.  Estimates are being lowered for economic and profit growth, though no one has yet uttered the ‘r’ word.  However, I am feeling more comfortable with our downwardly revised forecast.

The global economy may have reached a stage where it is no longer deteriorating; but it is too soon to know.  The central banks continue to print money as fast as they can run the presses with no evidence that it is working as assumed.  The only good news is that no one upped the rate cut ante this week.

My immediate concern is that these actions add fuel to the currency devaluation race---the history of trade wars generally suggest that they don’t end well. Further, I believe that the ultimate price for the largest expansion in global monetary supply in history will be paid by those assets whose prices have been grossly distorted, not the least of which are US equity prices.

Geopolitical events took center stage this week as (1) the Greeks and the Troika attempt to come to terms on a bailout plan, (2) the shouting war between NATO and Russia has moved up a notch as troop movements and naval exercises have been launched and (3) the Middle East is inching closer to Sunni/Shi’a civil war which almost certainly won’t leave oil supplies unscathed.

This week’s data:

(1)                                  housing: February existing home sales were up one half of estimates while new home sales rose twice that anticipated; weekly mortgage and purchase applications were up,

(2)                                  consumer:  month to date retail chain store sales were up slightly; weekly jobless claims declined more than consensus, March consumer sentiment was above expectations,

(3)                                  industry: the February Chicago National Activity index was very disappointing as was February durable goods orders; both the March Markit manufacturing and services flash PMI’s was better than estimates; the March Richmond and Kansas City Fed manufacturing indices were well below forecasts ,

(4)                                  macroeconomic: February CPI was in line though ex food and energy it was a bit hotter than consensus; final revised fourth quarter GDP was unchanged but below expectations, the price deflator was in line and corporate profits were up 2.9% versus 5.1% in the third quarter.

The Market-Disciplined Investing

            The indices (DJIA 17712, S&P 2061) closed Friday on an up note in a down week.  They remained well within their uptrends across all timeframes: short term (16858-19635, 1969-2950), intermediate term (16946-22097, 1783-2541 and long term (5369-18860, 797-2116). 

During the week, both successfully challenged their 50 day moving averages; and (1) the Dow also broke its 100 day moving average but the S&P did not and (2) the S&P broke the lower boundary of its very short term uptrend but the Dow did not.

Volume fell on Friday; breadth improved. The VIX was down, closing within its short term trading range, its intermediate term downtrend, its long term trading range, below its 50 day moving average and within a developing pennant formation.  I continue to think that, at these prices, it represents cheap insurance for the trader.

The long Treasury rose, but not enough to regain the lower boundary of its very short term uptrend, negating that trend.  However, the good news is that its recent advance firmly broke the initial sell off from the high.  It finished within its short term trading range, intermediate and long term uptrends and above its 100 day moving average. The failure to recapture its very short term uptrend notwithstanding, it still appears more and more like its chart has stabilized.

GLD’s price fell Friday, wrapping up a generally positive week.  However, it still closed within its short and intermediate term trading ranges, its long term downtrend and below its 50 day moving average.  The bright spot is that it is no longer in a very short term downtrend.  That said, GLD still has a lot of work to do before its chart gets healthy.

Bottom line: the indices ended the week with a confusing short term technical picture as both were battling their 100 day moving averages and the lower boundaries of very short term uptrends.  However, longer term, they remain firmly in uptrends across all timeframes---and there is nothing confusing about that. 

Fundamental-A Dividend Growth Investment Strategy

The DJIA (17712) finished this week about 48.0% above Fair Value (11966) while the S&P (2061) closed 38.6% overvalued (1487).  Incorporated in that ‘Fair Value’ judgment is some sort of half assed attempt at getting fiscal policy under control, a botched Fed transition from easy to tight money, a historically low long term secular growth rate of the economy and a ‘muddle through’ scenario in Europe, Japan and China.

This week’s US economic numbers were mostly negative side, though there were a couple of upbeat reports.  However, the Atlanta Fed lowered its first quarter GDP forecast again (now +0.2%) and S&P earnings growth estimates for the same period are dropping towards zero.  In sum, nothing here to make me second guess last week’s revised forecast.  Therefore, nothing that would alter our Valuation Model.

The global economic news was also negative save for one upbeat stat.  Perhaps more important, the geopolitical environment worsened noticeably:  (1) odds of a Greek exit of the EU have gone to 50/50 by some informed observers, (2) the standoff between Russian and NATO over Ukraine continues to go downhill, and (3) the Middle East is turning into internecine Islamic food fight, only the projectiles are new potatoes.  Foreign policy isn’t my long suit; so I am unsure how to score the true likelihood of a major economic/political dislocation arising from any of the foregoing.  But I suspect the odds aren’t zero.  Hence, the risks remain to the global economy and securities markets.

In addition, I have no clue how to quantify the aforementioned geopolitical risks’  impact on our Models even if I could place decent odds of their outcome because: (1) the outcomes are mostly binary, i.e. Greece either exists the EU or doesn’t and (2) they all most likely incorporate potential unintended consequences, which by definition are unknowable.  Better to just say these are potential risks with conceivably significant costs and then wait to see if we ‘muddle through’ or have to deal with those costs.  The important investment takeaway, I believe, is to be sure that your portfolio had at least some protection in the downside.

The global central bankers were relatively quiet this week with no one raising the ante on easy money/lower rates.  Which is probably irrelevant anyway since (1) the aforementioned developments in Japan and China again confirm the ineffectiveness of QE and (2) the current imbalances in the financial markets are so enormous that the ultimate unwinding of QEInfinity will be painful enough without more of the same.   As for our own Fed, it has once again failed to manage the transition from easy to normal monetary policy properly.  How badly the economy and financial markets will pay for this high priced incompetence is yet to be known.  But I believe that this malpractice will prove to be very expensive.

As you know, I have adjusted our Economic Model to account for economic issues discussed above; and, as you also know, they will have little to no impact on our Valuation Model since it uses long term moving averages for these inputs. On the other hand, if I am correct and economic and corporate growth estimates start coming down on the Street, that will almost assuredly generate heartburn for many whose valuation models are tied to forward looking data---and that will undoubtedly have an impact of security prices.

Bottom line: the assumptions in our Economic Model have changed.  While they will have no effect on our Valuation Model, if I am correct they will almost assuredly result in changes in Street models which will have to bring their consensus Fair Value down. 

The assumptions in our Valuation Model have not changed either; though there are scenarios listed above that could lower Fair Value.  That said, our Model’s current calculated Fair Values are so far below current valuation that any downward revisions by the Street will only bring their estimates more in line with our own.

Our Portfolios maintain their above average cash position.  Any move to higher levels would encourage more trimming of their equity positions.

I can’t emphasize strongly enough that I believe that the key investment strategy today is to take advantage of the current high prices to sell any stock that has been a disappointment or no longer fits your investment criteria and to trim the holding of any stock that has doubled or more in price.

Bear in mind, this is not a recommendation to run for the hills.  Our Portfolios are still 55-60% invested and their cash position is a function of individual stocks either hitting their Sell Half Prices or their underlying company failing to meet the requisite minimum financial criteria needed for inclusion in our Universe.
            Explaining the stock and bond markets (medium):
DJIA                                                   S&P

Current 2015 Year End Fair Value*              12300                                                  1525
Fair Value as of 3/31/15                                  12003                                                  1491
Close this week                                               17712                                                  2061   

Over Valuation vs. 2/28 Close
              5% overvalued                                12603                                                    1565
            10% overvalued                                13203                                                   1640 
            15% overvalued                                13803                                                    1714
            20% overvalued                                14403                                                    1789   
            25% overvalued                                  15003                                                  1863   
            30% overvalued                                  15603                                                  1938
            35% overvalued                                  16204                                                  2012
            40% overvalued                                  16804                                                  2087
            45%overvalued                                   17404                                                  2161
            50%overvalued                                   18004                                                  2236
            55% overvalued                                  18604                                                  2311

Under Valuation vs. 2/28 Close
            5% undervalued                             11402                                                      1416
10%undervalued                            10802                                                       1341   
15%undervalued                            10202                                                  1267

* Just a reminder that the Year End Fair Value number is based on the long term secular growth of the earning power of productive capacity of the US economy not the near term   cyclical influences.  The model is now accounting for somewhat below average secular growth for the next 3 to 5 years with somewhat higher inflation. 

The Portfolios and Buy Lists are up to date.

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973.  His 40 years of investment experience includes institutional portfolio management at Scudder. Stevens and Clark and Bear Stearns, managing a risk arbitrage hedge fund and an investment banking boutique specializing in funding second stage private companies.  Through his involvement with Strategic Stock Investments, Steve hopes that his experience can help other investors build their wealth while avoiding tough lessons that he learned the hard way.