TIMINGTRUTH.COM NEWSLETTER

2010-03-03

CURRENT SIGNAL TRENDS:

February saw the downward slide that began in January pause and begin what seems to be a retreat for most sectors.  The European-Pacific indexes are not showing the same recovery signs as the US or Emerging Markets.

NEWS:

Four more banks shut down this week in March bringing the total to twenty-six (26) bank failures this year in the US.  These four banks had 1.1 B$ in assets and 1 B$ in deposits.

LONG TERM  MARKET TRENDS:

This month's graph shows the relative performance of the key markets we follow. Green is SPY, the S&P 500 index; white is VWO, the Emerging Markets index; yellow is VEA, the European-Pacific index; salmon is VBR, the US Small Cap Value index.  If the apparent reversal of the Jan downturn holds then we  continue a long term upward trend for these indexes.

OUT STRATEGY INSIGHTS:

Just what is the impact of when you buy or sell a fund? Simple answer is "A lot"! For example, had you invested in the above funds 6 months ago you would have gained 3.5-17% depending on the fund.  However, if you invested 3 months ago you could have lost 6.5% on one fund and gained 7% on another.  So, only three months can make a big difference.  The reason for these different performances is simply "market volatility."  That's a fancy phrase which means the markets go up and down every day, all the time.  It's part of the way markets behave.  This market volatility is caused by virtually everything from the weather to the news.  Studies by universities have shown VERY few people can profit from these SHORT TERM movements.  But similar studies have shown that the LONG TERM trends of markets can be consistently profitable.  From the chart above you can see that money invested 12 months ago would gained between 60-100%.  The lesson is simple; Be invested during the LONG TERM upward market trends, sell your investments if the LONG TERM trend becomes downward, and ignore everything else.

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