Market Talk / Nov. 26 - Dec. 2

[weatherweenie]

Checked my work email, and found the same email. Thanks for the heads up.

G.W. has altered the way Locality Pay is paid out.

This message just hit my inbox:
+++++++++++++++++++++++

(From OPM)

Under current law, General Schedule employees will receive a 1.7 percent across-the-board pay increase effective the first pay period beginning on or after January 1, 2007.

On November 30, 2006, the President issued a plan setting locality pay rates for 2007. The President’s plan provides an additional 0.5 percent of payroll for locality pay increases, bringing the total overall average pay increase to 2.2 percent.

The President’s locality pay plan is on the Internet at http://www.whitehouse.gov/news/releases/2006/11/20061130-17.html. We expect the President will issue an Executive Order to implement the new rates later in the month.

 

[ATCJeff]

Everyone have a great weekend and rest up for what is sure to be an exciting week ahead. I for one am starting the holiday season as soon as I get off from work this evening.

See ya Monday morning.....

 

[ou81200]

Hello All---

The market rebounded pretty good this afternoon. There's strength in it. Bulls are talking about rate cuts. Any input???

 

[Birchtree]

March'07 if not sooner - mom's calling for dinner - bye.

 

[robo]

Following The Trend

Market timers following trends generate great returns over time because their buy and sell decisions are based on the one piece of information that counts the most. Price.

We are barraged with fundamental analysis, price earnings ratios, economic projections, news events, and a steady stream of TV and news analysts who tell us where they think the market is going.

But the simple truth is... no one knows where the market is going next.

The only absolute truth... is price. If prices are trending higher, the market is going higher. Lower, and we are trending lower.

Two Kinds Of Traders

News events especially cause traders to make incorrect decisions, because they play on emotions. The urge to follow the crowd is normal. It is comforting. And in a strong bull market, it may just be correct.

But in most circumstances, letting emotions push you into making trading decisions costs traders money. "...price... the one thing that is guaranteed to make you a successful market timer or trader."


There are two kinds of traders.

1. Those who make emotional decisions based on any of the above.

2. And those who make money off of those who make emotional decisions.

Price Is Always Right

It is hard to accept that one aspect of the markets, price, could be the one thing that is guaranteed to make you a successful market timer or trader.

There are so many indicators, so much available analysis, but "price" is always right. It is "never" wrong.

The thousands of investors and traders who owned Enron at $90 felt confident in their positions. Many "averaged down" when the price started dropping. But we wonder, after all the billions of dollars were lost in the Enron collapse, how many felt that way when shares hit 50 cents.

Trend trading market timers "may" have bought shares at $90. But they were short most of the way down because they made their trading decisions based on "price."

When the price started to drop, they reversed their small losses and changed to short positions. Many made huge profits as they rode this stock down.

Losses, such as the billions lost by investors who held shares in Enron, are always reported by the media. But have you ever heard the media mention the other side of those losses?

All those losses went into someone's pockets!

How about the 80% decline in the Nasdaq in the 2000-2002 bear market? The losses were all over the financial press. But were the gains on the other side of those losses mentioned. Our Bull & Bear Timer was up close to 70% during that bear market.

Losses are news, gains apparently are not.

Market timers following price trends profited during these declines. They were windfalls. But you will never read about it in the press.

Following Price

Price is objective. You can faithfully follow prices and make timing decisions based on them. You are able to determine trend changes, and most importantly, to exit those positions if the trend was a false one.
"...when the trends take off, the profits are made."

And false trends "always" occur. Usually at market tops and market bottoms. But the losses in "trendless" markets are kept small by those who use "price" to establish trading strategies.

And when the trends do take off, the profits are made.

Market analysis is always subjective. It can not be trusted in trading decisions. Indicators work some of the time, but also can fail miserably. The financial news media is not even worth mentioning.

Only price can be trusted. Only price is always right. Only using price to determine trends can lead you to profitable timing and a successful investing future.

Conclusion

Market timers must follow the trading strategies faithfully. Every sell signal must be followed immediately, and every buy signal as well. Small losses are part of the game, but then large gains are also part of it.

Guessing how far a trend will go is useless. No one knows. Price makes the trend.

Discipline is the name of this game. Those who stand the test of time and make the trades, will over time, beat the markets, and will be investing winners.


http://timing.typepad.com/timer/

 

[Birchtree]

Robo,

That read was very instructive - I currently have my next price target set in the C fund where I'll move another 2% into the G fund. Baby steps, I don't want to give up too much but I will peel off on the way up.

 

[Propstrike]

Good info on the I fund in the thread below the link. I'll be watching those supports.

 

[Birchtree]

ou81200,

See bull pen #391 for information about interest rates and equity activity.

 

[ATCJeff]

A great read...

http://www.iht.com/articles/1996/03/09/contro.t.php

And now the info....

Paraphrase from a subscription I receive....

The dollar has exceeded the support area. With this week’s Economist cover Paul Montgomery’s Magazine Cover Indicator is now in play. The indicator actually has a month or so leeway between the time it is published and the time the market in question actually exhausts its trend and reverses. Which would play into a normal weak dollar in the month of December. This indicator has a very good track record.

 

[Wheels]

Does each paycheck go down since our salary is divided by 27 instead of 26?

The 27 pay periods happens about every 12 years. Leap year has next to nothing to do with it. It happens because there are 365 (or 366) days a year but only 364 days in 26 pay periods. Your hourly wage is adjusted ever so slightly to adjust for this. If you multiply your hourly wage by 80 hours, you should get a slightly lower amount than if you divide your annual salary by 26 pay periods. At first glance it looks as though they are cheating you. But you get it back every 12 years when you get an extra pay check.

In the FAA we have a 10 day delay before you get paid for a pay period(every 2 weeks). This year our first pay date is Jan 2 for time between Dec 10 through Dec 23.

Because we get paid on the 2nd, the IRS treats this as income for 2007.

In the FAA, we were "scheduled" to have our 27 pp year in 2008. However, January 1st 2008 would have been our 1st pay check. Since that is a holiday, and will be paid on December 31st of 2007, the 27 pp's fell to 2007.

This, I'm sure, is way more than most of you cared to know about the 27th pay period.

 

[ou81200]

ou81200,

See bull pen #391 for information about interest rates and equity activity.

Birchtree---

Thanks for the info.

Judging by the graphs you provided, I would think that the I fund should do especialy well, considering the falling dollar.

 

[nnuut]

The 27 pay periods happens about every 12 years. Leap year has next to nothing to do with it. It happens because there are 365 (or 366) days a year but only 364 days in 26 pay periods. Your hourly wage is adjusted ever so slightly to adjust for this. If you multiply your hourly wage by 80 hours, you should get a slightly lower amount than if you divide your annual salary by 26 pay periods. At first glance it looks as though they are cheating you. But you get it back every 12 years when you get an extra pay check.



In the FAA, we were "scheduled" to have our 27 pp year in 2008. However, January 1st 2008 would have been our 1st pay check. Since that is a holiday, and will be paid on December 31st of 2007, the 27 pp's fell to 2007.

This, I'm sure, is way more than most of you cared to know about the 27th pay period.

May help my high three if I retire in 2008! Every little bit helps!

 

[Wheels]

May help my high three if I retire in 2008! Every little bit helps!

It can't help your high three. High three is actually calculated by months and not years if I am not mistaken.
Nice thought though.

 

[Spaf]

Will be closing this weekly thread and starting a new one!
Thanks for the posts and views.
Spaf