Quarterly Survey of Public Pensions for 2013, Stocks, Bonds, Gov and More

TOTAL HOLDINGS AND INVESTMENTS OF MAJOR PUBLIC PENSION SYSTEMS REACH 

HIGHEST LEVEL EVER, PASSING THE 2007 PEAK2013 QUARTER 1

For the 100 largest public-employee retirement systems in the country, cash and security holdings totaled $2,930.3 billion in the first quarter of 2013, passing the 2007 fourth quarter peak of $2,928.9 billion, and reaching the highest level since this survey began collecting data in 1968.

Wall Street rallies on Fed meeting stimulus discussion

A day after U.S. stocks briefly topped four-year highs before fading and posting losses at the close, investors got what they wanted in the release of Federal Reserve minutes from a policy making meeting three weeks ago.

All American Investor

The minutes of the July 31-Aug. 1 meeting show many Fed officials speaking with increased urgency about the need to provide more help for a weak U.S. economy. Further support would be needed "fairly soon" unless the economy improved significantly, the minutes show, although they didn't detail what steps might be taken.
In late afternooon trading and after the release of the Fed minutes, the Dow Jones industrial average rebounded sharply although it is still below its opening level while rebounds in the Standard & Poor's 500 index and the Nasdaq composite index pushed them into positive territory.

Continue Reading Wall Street rallies on Fed meeting stimulus discussion

Thoughts on Investing from Absolute Returns

5 reasons to ignore top 10 stock lists

1. Folly of forecasting – The existence of these lists implies that the creator of the list has some ability to forecast excess returns for these securities over the next twelve months. The track record of forecasters is by all accounts terrible. Why should we expect markedly different results in this endeavor?

2. Ignoring risk- We talked a couple days ago about the importance of risk management, specifically the use of stop-loss orders for traders. Do these lists have explicit, actionable risk parameters attached to these ideas? The best case is that the list has an implicit time stop, i.e. one year, for each security.

3. Time frame mismatch – is not a fan of these lists either. Barry Ritholtz at the Big Picture writes: “I always hate these kind of stock picking cliches — and why do you have to commit to holding a stock regardless of what happens if conditions change?” In short, for many investors there is a definite mismatch in time frames.

4. Incomplete diversification – In today’s market ten securities is likely not enough to compose a diversified portfolio.
It definitely doesn’t hold if you plan to have a globally diversified portfolio.

5. Inflating the value of security selection – If nothing else the past few years have taught us the fact that security selection can take a back seat to larger economic/macro influences. The far bigger and more important decisions investors have to make have to do with risk tolerances, asset allocation, etc. Security selection is at best the last item on a financial plan.

The Closing Bell--Stocks are Fair Value but with lots of problems

Statistical Summary

Current Economic Forecast

2012

Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%

2013

Real Growth in Gross Domestic Product +1.0-+2.0
Inflation 2.0-2.5
Corporate Profits 0-7%

Stocks and Economy News 119

China Slices 2012 Growth Target to Eight-Year Low

Chinese Premier Wen Jiabao cut his nation's 2012 growth target to an eight-year low of 7.5 percent and made boosting consumer demand the year's first priority as Beijing looks to wean the economy off its reliance on external demand and foreign capital.
He lowered the target from a longstanding annual goal of 8 percent, a move investors anticipated so that Beijing has some economic leeway to rebalance the economy and defuse price pressures in the run up to a leadership change later this year.
Read more

All American Investor

@AllAmerinvest Stock Futures Down Early, Chart

U.S. stock-index futures are slipping after a meeting of euro-area finance chiefs finished without making progress on a debt-swap deal for Greece.

All American Investor

@AmerInvest, Stocks a Bit Lower on Euro, Chart

Stocks are a bit lower this morning on worries about the Euro

All American Investor

Watch VIX for Next Break Out

The VIX is caught in a pennant formation. ....

By Steve Cook
All American Investor

Historically when such a pattern occurs, when the stock/index breaks either the down trend resistance or the underlying support, it points to a continuation of price movement in the direction of the break.

Small Investors Flee Stock Market

From -- In Striking Shift, Small Investors Flee Stock Market.

Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market.

Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.

Steve Cook -- The Morning Call - July 23

By Steve Cook
Strategic Stock Investments

The Market

Technical

The Averages (DJIA 10322, S&P 1093) put in a great day yesterday busting through the upper boundary of the April to present down trend (9027-10226, 951-1080) authoritatively. In fact, yesterday’s move qualified this break based on distance. Given the extreme volatility of late, I would like at least one more day of time. In addition, while it is clearly a positive that stocks have made that higher low (than 9645, 1009), it would bring great comfort to have the Market make a higher high--which is not that far away (10413, 1099).

Steve Cook on Gold

From Steve Cook at

CJS Research

The price of gold (GLD) traded down last week, touched the lower boundary of an up trend dating from October 2008 and then bounced. It looks like it will open down modestly this morning. All our Portfolios will Add to their GLD position at the Market open. This will bring the size of this position to approximately 9% in each Portfolio.

Subscribe to All American Investor
Enter Your Email Address

S and P In Downside Range Expansion

The S and P 500 is in a pronounced downside range expansion.

The market continues to trade down below the area bounded by -2 standard deviations under the line.

The line is now dropping about ten points a day, and currently picking up momentum. Until the range expansion is "rubbed off" this pattern will continue.

Percentage of S and P 500 Stocks Above 50-Days Down to 4%

via Steve Cook

clipped from www.bespokeinvest.com The percentage of stocks in the S&P 500 now trading above their 50-day moving averages is down to 4%.  At the March 2009 lows, the reading only got down to 5%, so that gives investors a good idea of just how extreme this decline has gotten.

M2, Money Supply a Sobering View (Graph) -- A Look Beyond the Obvious

Sometimes you have to look beyond the obvious.

Dollar Index Flashing Yellow Flag (Chart)

Subscribe to All American Investor via Email

The Dollar Index is approaching its near term low of 78.34 made back in June, and 77.68 in December. This should bring a note of caution to stock traders.

Back in March, a breakdown in the DI signaled a big break in the stock market. Will history repeat itself?

The DI traded down to 70.69 in March.

Dollar Index Weekly Chart



Kindle: Amazon's 6" Wireless Reading Device

Fed Series M2, Money Supply Still Soaring (Chart)

Fed Data, M2, Money Stock, Chart



We wrote several months ago about how it takes 12-18 months for increases in money supply to effect interest rates and commodity prices. We are now in this window.

The dramatic increases in money supply, the Fed balance sheet, and the drop in the dollar are starting to weigh on investor confidence.

Stocks rarely rise when confidence dwindles. It now seems we are moving from what was growing confidence in the markets to growing uncertainty.

The risk of owning equities on a short term basis not outweighs the reward. The threat of rising interest rates has also risen dramatically. This weeks surge in Gold is another barometer of investor confidence.

Subscribe to All American Investor via Email

Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.Bob DeMarco, All American Investor, May 2009

Kindle: Amazon's Wireless Reading Device (Latest Generation)

Follow All American Investor on Twitter

S and P Under Pressure, Holds the Green (Chart)

June S and P Future, Bar, Chart

The S and P is banging off the green line, the first area of major support. Overnight, the market hit 875.40 which is the top of a major swing point in the market (865 - 875).

The market remains vulnerable, but the hold at this level brings into question which way next.

On the way back up, 895-900 is the critical level. On the way down, 865 is critical.

Short term it appears that the market will remain under pressure for the next two weeks. 

Technical resilance is dwindling and this could be signaling a change in trend to the downside.

The risk reward ratio is not currently favoring short term long positions.

Subscribe to All American Investor via Email

Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

More from All American Investor

Top Hedge Fund Managers Make Billions in 2008

Systemic Risk Defined--Too Big to Fail

Ray Dalio on the current state of affairs in the market

Roubini Predicts U.S. Losses May Reach $3.6 Trillion

Option ARM--The Toxic Mortgage

Warren Buffett's Annual Letter to Investors (Cliff Notes Version)

Follow All American Investor on Twitter

Retail Sales a Picture Worth a Thousand Words--UGH (Chart)

Retail sales dropped .4 percent for the month and are down 10.1 percent year over year. Retail sales account for two thirds of GDP. This report is bearish on the market.

There is a strong relationship between GDP and stocks. This report really puts pressure on relative valuations. The risk of owning stocks is mounting as we pointed out last week in our article --They called me crazy, S and P 900-1000 (Part Two)

A major retracement to the downside is likely, and is imminent.

The bottom line. The risks out weigh the rewards at this level.

The S and P was trading near 925 when we wrote that. Now down 4 percent.

We will update the S and P numbers shortly.

Subscribe to All American Investor via Email

Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

Follow All American Investor on Twitter

Fed Monetizing Debt -- How long before the Inflation Comes?

No matter how you cut or slice it, the FED is going to monetize debt. This means you want to be owning stocks and ETFs that benefit from an increase in inflation.

Over the next week, we will be putting up some of our ideas on how to take advantage of this scenario.

If you have been following the charts on All American Investor -- you noticed that I have been talking about rising rates in the ten and thirty year treasuries for a few weeks. If you are not paying close attention to this as in investor you are making a big mistake.

The bond vigilantes are coming back, and soon with a vengeance. Longer dated treasury interest rates are drifting up. This, in spite, of massive buying of treasuries by the FED -- we showed the balance sheet on Saturday.

Here is a snippet from the latest FOMC release:

As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.

Buy $300 billion of treasuries by Autumn?

The best way to think of the current scenario is like boiling water in a tea pot. Sooner or later, the whistle will blow.

Don't like the above? Remember, I am the same guy that predicted this really in stocks when I wrote:

• They call me crazy -- S and P 900-1000
• and, Stocks Don't Fight the Tape.

There is a lot of chicken on the hill. My guess here right now is: material stocks, commodity stocks, related ETFs and short the long bond.

Subscribe to All American Investor via Email

Insiders Selling into Rally

Is this a good or a bad thing? I know one thing it is never a good sign when insiders start selling. Insider selling is often a barometer of confidence.

Lack of confidence in their own company by insiders is often followed by negative reporting down the road.

Is it panic? Or, is the outlooks so dismal that insiders want to get out why the gettin is good.

If you own a stock, and the insiders are selling, it is usually a red flag.

Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market.

While the Standard & Poor’s 500 Index climbed 28 percent from a 12-year low on March 9, CEOs, directors and senior officers at U.S. companies sold $353 million of equities this month, or 8.3 times more than they bought, data compiled by Washington Service, a Bethesda, Maryland-based research firm, show. That’s a warning sign because insiders usually have more information about their companies’ prospects than anyone else, according to William Stone at PNC Financial Services Group Inc.

Do insiders know something you don't know?

Insider Selling Jumps to Highest Level Since 2007

Subscribe to All American Investor via Email

Follow All American Investor on Twitter