Wednesday, August 5, 2009

ALERT 08/05/09: Is This the Start of a Market Wane?

Doug Fabian's
Making Money Alert | Wednesday, August 05, 2009
In This Issue:

» NEW! Video Alert
» Is This the Start of a Market Wane?
» Thoughts on Personal Responsibility for Ms. Thompson
» The Obama Impact on Your Money
» ETF Talk: Why I Love Exchange-Traded Funds
» The Wisdom of Albert Jay Nock
By: Doug Fabian | Editor, Successful Investing | President, Fabian Wealth Strategies
Is This the Start of a Market Wane?

Today's market pullback could be the start of a wane in the recent bear market rally. I say could be, because it's way too early to tell if the steam has run out on Wall Street's summer bash. I think one thing we can say about this market is that it is ripe for a pullback.

Take a look at the chart below of the S&P 500 Index. As you can see, stocks have shot higher nearly unabated since coming off of their March lows.

This kind of run up is highly unsustainable, which means the chances for a pullback are pretty good. What's more, if we look at the RSI figure (Relative Strength Index), we see that it is 72.22. Any RSI of more than 70 means that a given index or equity is heavily overbought. It also often signals an imminent reversal of fortune for that given equity or index.

Sponsored Content
Learn How to Cheat the System...

And DOUBLE your gold investment profits!

A tiny group of investors have figured out how to double their gold profits. In other words, they're hauling in a 2% gain every time gold goes up 1%... 10% every time gold goes up 5%... 50% every time gold goes up 25%... and so on.

We've finally cracked their secret to gold's "doubling effect." Click here to learn all about it.

Now, I am not saying that we necessarily will see a big pullback here. However, if we do see a sharp move to the downside, is your portfolio prepared?

If you've been invested in equities since March, you've likely made a lot of money. My advice to you is not to let that money slip through your fingers. I strongly recommend that you place stop losses on all of your invested positions. By doing so, you will ensure that you don't give back the ground you've made up so far in 2009.

Right now, subscribers to my Successful Investing , High Monthly Income and ETF Trader advisory services have stop losses on all of their invested positions. If you don't have stops in place to protect your hard-earned wealth, then I invite you to explore each of these services.

Remember, the key to building serious wealth is capital preservation, and a corollary to that key is never to let your profits evaporate. That's why setting stop losses is so crucial.

Thoughts on Personal Responsibility for Ms. Thompson

I'm a big advocate of taking personal responsibility for the things that go wrong in your life. Usually, what you achieve and what you fail to achieve is directly related to how much effort you've put into a given endeavor. I know there are always circumstances beyond one's control, but the key to leading a successful life is to dodge those unforeseen obstacles and to find a creative way either to work around them, or to turn them into opportunities.

This is a lesson that one Trina Thompson has failed to learn.

Who is Trina Thompson, you ask? She's the woman who's sued her college for the $70,000 she spent on tuition because her new bachelor's degree in information technology hasn't yet landed her a job.

Well, Trina, I have a news flash for you. If you can't find a job, maybe the problem has more to do with you than with your college education. Perhaps that thought hasn't entered your mind, but it should. You see, judging by the steps you've taken to foist the blame for your lack of achievement on your college, I can deduce that you need to take a good hard look at yourself in the mirror. And if you look closely, I suspect you'll see a veil of victimhood shrouding you like a brilliant aura.

Now I don't mean to get too personal, Ms. Thompson, as I only know you via your absurd lawsuit, but what I can say to you is this. Nobody is guaranteed a job in this world. I am quite certain your college's career center didn't guarantee you employment just because you managed to pass the school's course work. There are plenty of people out there with similar degrees that are under employed in this tough economic environment.

Sponsored Content
Little-Known Strategy Turns $10,000 into $442,000 in Months

I'm here to tell you that you CAN make big money in today's markets. In fact, I'm going to show you how you could make $442,000 over the next 7 months while keeping your risk tightly controlled.

This little-known strategy has delivered amazing profit potential year after year, month after month. And now I'd like to share it with you and show you how to add nearly a half million dollars to your net worth in the coming months.

Board the Bullet Train to Financial Freedom Today

The difference between you and the majority of under-employed Americans is that they aren't going to the legal system to redress their grievances. Rather, I suspect that many professionals out there who have been laid off or downsized are trying to either learn new skills that can make them competitive, or they are waiting patiently until the job market begins to improve.

If I may be so bold, let me just say that rather than taking your college to court, you'd be much better off undertaking a concerted effort to make yourself a more valuable asset to employers. As an employer I know first hand that good help is hard to find, and when you do find good people, you cherish them.

If you do this, you just might find out how good it feels not to be a victim.

The Obama Impact on Your Money

The 44th president has been in office now for nearly six months, and so far his rather ambitious agenda has me very concerned. Regardless of which side of the political aisle you sit, there's no denying that the president's goals are increased government involvement in the economy. This increased involvement includes more stimulus spending, more deficit financing, more environmental regulation, more involvement in the health care industry, more financial market regulation and, of course, higher taxes -- particularly on the so-called "rich."

If you're a Democrat, you may think that the Obama agenda is a good thing. If you're a Republican, you likely think the president is on the wrong track. But regardless of which side you come down on, there's no denying the fact that the president's plans will have a profound effect on the economy, the financial markets and your money. That's why it is up to you to manage your money accordingly.

Now, I must say up front that in my opinion, the policies and legislation being thrust upon us by the president and a sympathetic Congress are not conducive to the economy, and they will not fundamentally help right our economic ship.

In fact, it is my opinion that the unprecedented intrusion in economic affairs proposed by the president will likely do much more harm than good in the years ahead, and that is what you, the well-informed investor, must prepare for now.

Let me turn now to a few key statistics that should put a big fright into the fiscal centers of your gray matter.
  • Our annual interest payment on the national debt is $26 billion per month, or $300 billion per year.
  • Our deficit so far through the first seven months of 2009 is nearly $1 trillion.
  • Projections on the president's budget place annual interest payments at $800 billion by 2019.
  • State budgets are $500 billion out of balance this year.
  • Government statistics show a national unemployment rate of 9.5%, and the general consensus is that double-digit unemployment is right around the corner.
Given these alarming statistics, one is forced to conclude five things about our future. First, taxes are going to go up. Second, credit likely is going to become very expensive and/or unavailable. Third, we are going to experience little or no economic growth, and in fact, we could see another serious recession starting as early as next year. Fourth, we could see another wave of falling stock and real estate prices, otherwise known as asset price deflation. And finally, we have the potential for a dollar crisis.

Now, each of these five prognostications is worrisome, but taken together, they add up to one ginormous problem for investors.

So, what now? What do can you do to protect yourself from the Obama impact on your money?

The answers to these questions can be found in my FREE audio special report, appropriately titled, The Obama Impact on Your Money. This one-hour audio presentation includes a complimentary work sheet to help you follow the key points presented.

I strongly encourage you to check out this FREE audio special report today by clicking here.

NOTE: Fabian Wealth Strategies is an SEC registered investment adviser, and is not affiliated with Eagle Publishing.

ETF Talk: Why I Love Exchange-Traded Funds

Subscribers to my investment newsletters and trading services know about my passion for exchange-traded funds (ETFs). During the past several months, I have provided you with features relevant to investors who are looking to improve their portfolios with a variety of funds that are both diversified and cost efficient. Now, I want to get back to the basics of ETF investing with today's write-up, "Why I love Exchange-Traded Funds."

Sponsored Content
What Financial Advisors Won't Tell You

Sometime in the near future, advisors are going to tell you it's time to get back into stocks and mutual funds. Some may even be telling you that right now. But be wary of what the "experts" are telling you. The fact is, investors lost nearly $3.7 trillion in mutual funds in 2008. And with the S&P down 5% for 2009, are you willing to lose more money this year?

Now, there is a better path. It's a proven path where I guide you step by step to rebuilding and protecting your wealth.

Today's ETF Talk feature was inspired by a presentation I made in May at the 20th Annual Money Show in Las Vegas. This presentation, which I titled, ETF Strategies in a Difficult Market, highlighted why I love ETFs.

One of the top reasons I love ETFs is their modest cost. ETFs offer low expense ratios, and the annual expenses typically are deducted from dividends. ETFs also produce fewer capital gains and are more tax efficient than mutual funds.

In addition, ETFs offer diversification that reduces risk. The funds typically track indexes that are made up of a basket of stocks. Investors can find ETFs that cover every major index, asset class, and sector. Whether you favor commodities, healthcare, technology or real estate, there is a diversified ETF available to you.

ETFs also are transparent, since they are required to disclose their exact holdings and the percentage of each asset that a fund owns. Because ETFs are traded on exchanges just like stocks, the funds provide liquidity to investors who want to buy and sell them in the open market. But remember to be sure a fund's trading volumes are adequate to provide liquidity. While not a strict rule of mine, I generally do not recommend ETFs that have an average volume of less than 100,000 shares a day.

Finally, I love the simplicity and variety of ETFs. You usually can find a bull market someplace, no matter what markets elsewhere are doing. The challenge is choosing the sector or the region that investors will begin to favor next.

In my advisory services, I analyze the moving averages of sectors and different stock markets to help determine the best places to invest. It is a system that has served three generations of the Fabian family well. Once you combine our trend-following approach with the instant diversification offered by ETFs, you gain the dual benefits of a proven strategy and one of the most attractive investment instruments to be introduced in years.

For those of you who want specific advice about which ETFs to buy and sell, check out my ETF Trader service by clicking here . As usual, I am happy to answer any of your questions about ETFs. To send me your questions, please click here. It may spark an idea for a future ETF Talk.

The Wisdom of Albert Jay Nock

"...the most significant thing about [a man] is what he thinks; and significant also is how he came to think it, why he continued to think it, or, if he did not continue, what the influences were which caused him to change his mind."

--Albert Jay Nock, Memoirs of a Superfluous Man

You are what you think, and that truism has never been so elegantly put as it is here by the great Albert Jay Nock. Nock was an exquisite defender of classical liberal ideas, and he was a staunch advocate of free markets and private property. He also harbored a strong distrust of power. If you want to treat yourself to an intellectually filling meal, then sit down and devour the works of Albert Jay Nock.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you'd like me to share with your fellow Alert readers, send it to me, along with any comments, questions and suggestions you have about my radio show, newsletters, seminars or anything else. Click here to Ask Doug.

On the Radio:
Making Money with Doug Fabian Doug Fabian's Wealth Strategies airs live Saturday morning 10 a.m. Pacific Time on KRLA News Talk 870 AM, and in Phoenix, AZ, at 11:00 a.m. Mountain Time on KFNN 1510 AM. During these times you can listen to the show live from anywhere in the world and you can listen to archived shows at any time.

Now you can view Doug's daily market update, guest interviews and excerpts of his radio show at our new Video Archive.

Subscribe to the FREE podcast

This email was sent to because this address is signed up to receive Doug Fabian's MakingMoney Alert. Please do not reply to this email as the email box is unattended. If you have any questions please send an email to To unsubscribe or to update your email delivery preferences, click to edit your account settings.

To advertise in our e-letters or email list, please click here.

Doug Fabian's Making Money Alert
Eagle Publishing, Inc.
One Massachusetts Ave., NW
Washington, DC 20001

Legal Disclaimer: Any and all communications from Eagle Publishing employees should not be construed as personal advice on investments. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation.

You were added to the system August 3, 2009.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.