ALL MARKET INDICATORS ARE NEGATIVE.

ALL INDICATORS ARE NEGATIVE.
MAJOR MARKET INDICATORS NEGATIVE.

As of today’s close, ALL of the indicators the Author follows are negative. And as of this point this year, all major stock market indices are year-to-date negative.

In the September 29th post, the Author shared his defensive portfolio with you. It is now almost fully implemented. It is reprinted below for your benefit and includes some updated information in brackets[].

Author’s Target Portfolio:

20% Gold. This is new territory for the Author. He has never owned gold or a gold fund. And the Author is not sure that gold will continue its run, but the technical charts look good and the Precious Metal Sector has good relative strength. With this investment the author is following one of the key tenets of his investment philosophy. “Never argue with the tape (or chart)”, ala Jesse Livermore.

The Author’s gold holding is IAU, a Comex Gold Index Exchange-Traded Fund. The fund tracks gold prices and, as an ETF, trades on the AMEX exchange.

20% Value Stock. These could be held as individual stocks or through a value stock mutual fund. Avoid value stock ETFs right now. In these markets, you need a fund manager with good value stock picking skills. [The Author holds First Eagle Global Value Fund. Its YTD return is 9.71%. Unfortunately, it is closed to new investors, but watch for it to reopen.]

10% Rydex S&P 500 Inverse Fund. This particular fund is 200% inverse to the S&P 500, so in effect 20% of the portfolio is “shorting” the S&P 500.

10% Rydex NASDAQ 100 Inverse Fund. This particular fund is 200% inverse to the NASDAQ, so this “shorts” the index as 20% of the portfolio.

30 to 40% cash. This component could also include some foreign exposure. [Three ETFs the author tracks, the Latin American 40 ETF (ILF), the EAFA Emerging Markets Index (EEM), and the EAFA Foreign Index (EFA) are falling back. The Author will watch these ETS and will consider buying on pullbacks.]

As always, these are suggestions, not recommendations. Your investments should be based upon your individual needs and analysis. This proposed portfolio is offered only for your study.

THE DESERT OF THE REAL IS LITTERED WITH THE BONES OF “BUY AND HOLD” INVESTORS.

IMPORANT DISCLAIMER: This newsletter is offered for informational purposes only. Sources of information provided are believed to be reliable, but are not guaranteed to be complete or without error. Opinions and suggestions are provided with the understanding that readers acting on information contained herein assume all risks involved. The Author may or may not buy or sell securities discussed in this newsletter.