Dorsey, Wright Client Sentiment Survey - 3/2/12

March 2, 2012

Here we have the next round of the Dorsey, Wright Sentiment Survey, the first third-party sentiment poll. Participate to learn more about our Dorsey, Wright Polo Shirt raffle! Just follow the instructions after taking the poll, and we’ll enter you in the contest. Thanks to all our participants from last round.

As you know, when individuals self-report, they are always taller and more beautiful than when outside observers report their perceptions! Instead of asking individual investors to self-report whether they are bullish or bearish, we’d like financial advisors to weigh in and report on the actual behavior of clients. It’s two simple questions and will take no more than 20 seconds of your time. We’ll construct indicators from the data and report the results regularly on our blog–but we need your help to get a large statistical sample!

Click here to take Dorsey, Wright’s Client Sentiment Survey.

Contribute to the greater good! It’s painless, we promise.

Leave a Comment » | Investor Behavior, Markets, Sentiment | Permalink

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Why Tactical Asset Allocation

March 2, 2012

Mark Hulbert at Marketwatch summarizes some of the biggest busts in recent history:

1) The Nasdaq Composite is still more than 40% below its all-time high set in March 2000. That was 12 years ago.

2) It took the Dow Jones Industrial Average 25 years to surpass its 1929 pre-crash level.

3) After reaching 1,000 in January 1966, the Dow Jones Industrial Average wouldn’t see that level again until October 1982. That is a 16-year period with no gain.

4) The Nikkei Stock Average peaked at the 40,000 level in 1989 and despite the passage of more than two decades, it languishes today at only a quarter of its 1989 peak.

Of course, it would be a huge mistake to only focus on the negative. Global markets have also offered tremendous opportunities to build wealth over the past century.

However, any investor who adopted a buy-and-hold strategy that consisted of allocating a large portion of their portfolio to any of the above markets before their peaks suffered financial disaster. I believe that this is one of the biggest reasons that Global Tactical Asset Allocation has gained such traction. Investors are demanding the ability to adapt. With the dramatic growth of the ETF industry, retail investors can easily access global equity, fixed income, and real estate markets, and a broad range of currencies and commodities. Having the ability to diminish exposure to asset classes that are in extended bear markets (and increase exposure to those in extended bull markets) offers much greater peace of mind to investors.

Click here to view a video on our “go-anywhere” strategy—Global Macro.

Click here and here for disclosures. Past performance is no guarantee of future returns.

2 Comments | Markets, Tactical Asset Alloc | Permalink

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More Beanbag Economics

March 2, 2012

Money tends to migrate to where it is treated best. And when you tax it, it tends to disappear. This gives rise to the saying “whatever you tax, you get less of.” In the case of a wealth tax in England, this happened literally. Last year, the UK increased its tax rate on the highest earners from 40% to 50%. Can you guess what happened? From AdvisorOne:

Britain’s Telegraph newspaper reported that the U.K. Treasury–in the first test of the wealth tax policy introduced last year–received 509 million pounds less for January than the same month in 2011. The Treasury had projected that monthly revenues would actually increase by more than 1 billion pounds.

The projection was for significantly increased revenues to the Treasury, but revenues fell instead. Now, it is doubtful that the money actually disappeared. More likely than not, it just changed forms, from income to something else that was taxed at a different rate.

Markets all over the world operate and interact in this same way. I’ve described it before as beanbag economics—when you smush in one part of the beanbag, it just poofs out somewhere else. Relative strength is a simple and effective way to see where trends are underway.

2 Comments | Markets, Tactical Asset Alloc, Thought Process | Permalink

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What High IQ Investors Do Differently

March 2, 2012

This is the title of a New York Times article that looks at investing habits by IQ. You can read the whole article here, but it boils down to two things:

  1. High IQ investors diversify more.
  2. High IQ investors buy more stocks.

Both of those things sound pretty smart.

Leave a Comment » | Investor Behavior, Markets | Permalink

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Sector and Capitalization Performance

March 2, 2012

The chart below shows performance of US sectors and capitalizations over the trailing 12, 6, and 1 month(s). Performance updated through 3/1/2012.

Leave a Comment » | Markets | Permalink

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