Whenever I have misfired on predicting market direction, I review the data I used in my analysis in formulating my erroneous investment thesis.  I do this for two reasons.  The first allows me to make a more accurate prognostication the next time we encounter a similar environment while the second yields clues on what will precipitate the inevitable turn for equities.  When managing the Beacon Worldwide Opportunities hedge fund last August, I got caught long as the S&P 500 sold off 8% because I disregarded a reliable oversold indicator that I track as well as ignored weak economic data that I argued was dirty, thanks to a variety of outside influences such as the expiration of the first time homebuyer tax credit, and did not reflect the true state of the recovery as global numbers were accelerating aggressively. 

After reevaluating my research, I concluded that since the sentiment statistic had trended to more neutral territory and valuations on stocks had ventured to a point cheap enough to entice institutional buyers, I felt comfortable adding to my long positions which allowed the fund to finish that quarter up a solid 7% Continue reading »

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Welcome back large institutional investors.  Why don’t you take your coat off and stay awhile.  We missed you.  After nearly a fortnight dominated by day traders punting E-Minis around and hedgies looking to jettison risk in the futures markets, large vanilla funds announced they had seen enough and started to put money to work aggressively.

I have written many times how I use the NYSE TICK figures Continue reading »

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Those who have read these market commentaries for the past several years know that I am a big soccer fan.  I was a member of the original Sam’s Army, the U.S. national team’s official supporters group, and made my wife pledge she will travel to the World Cup every four years before agreeing to marry me.  Although I gave her a free pass for the last few tournaments given the age of our children, I expect her to fulfill her spousal obligations in 2014 in Brazil.

Former German international superstar and now California resident Jurgen Klinsmann made waves this past week by accepting the head coaching position for the U.S. men’s squad.  He had performed a drawn out mating dance for the job during the past five years such that soccer federation officials effectively had told the former World Cup champion “whenever you are ready, we will be here for you.”  Perhaps with Mr. Klinsmann’s agreeing to the position with much fanfare, large institutional investors will follow his direction and discover a bit of temerity to insert themselves Continue reading »

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