Sunday Morning Coffee

A Facebook friend posted a status update that really intrigued me. It was a small news item that I was able to find via Google as follows; RICHARDTON, N.D. (AP) – A Roman Catholic monastery in North Dakota is putting its ranching operation out to pasture because it lacks monks with cowboy skills. Abbot Brian Wangler tells The Dickinson Press that ranching has been a part of Assumption Abbey since 1893, when it was in Devil’s Lake. He says raising cattle helped make the monastery self-sufficient. He says two monks now care for 260 cows at the Richardton abbey, but only one has the skills to do it by himself… Wangler says the abbey will rent its pastures to other ranchers. Monastic cowboys? On some level, but I’m not sure which one, I find this fascinating. It strikes me not only as multidimensional but dimensions that are radically different from each other. During the spring I mentioned my involvement with the Prescott Basin Ops Group which does the planning for the big inter-agency training that is conducted every March (this is a Fire Department thing). One of the guys also involved in the Planning Group is a retired law enforcement officer and current volunteer (very actively involved) with another department in the area. A couple of weeks ago we went into town to hear/see the local steel drum band (kind of a big deal here) and there was my colleague from the Planning Group having at it on the steel drums. Turns out he and his wife (more his wife) founded the group. Retired sheriff and steel drum enthusiast...

Sunday Morning Coffee

A Facebook friend posted a status update that really intrigued me. It was a small news item that I was able to find via Google as follows; RICHARDTON, N.D. (AP) – A Roman Catholic monastery in North Dakota is putting its ranching operation out to pasture because it lacks monks with cowboy skills. Abbot Brian Wangler tells The Dickinson Press that ranching has been a part of Assumption Abbey since 1893, when it was in Devil’s Lake. He says raising cattle helped make the monastery self-sufficient. He says two monks now care for 260 cows at the Richardton abbey, but only one has the skills to do it by himself… Wangler says the abbey will rent its pastures to other ranchers. Monastic cowboys? On some level, but I’m not sure which one, I find this fascinating. It strikes me not only as multidimensional but dimensions that are radically different from each other. During the spring I mentioned my involvement with the Prescott Basin Ops Group which does the planning for the big inter-agency training that is conducted every March (this is a Fire Department thing). One of the guys also involved in the Planning Group is a retired law enforcement officer and current volunteer (very actively involved) with another department in the area. A couple of weeks ago we went into town to hear/see the local steel drum band (kind of a big deal here) and there was my colleague from the Planning Group having at it on the steel drums. Turns out he and his wife (more his wife) founded the group. Retired sheriff and steel drum enthusiast...

The Big Picture for the Week of July 31, 2011

A reader asks; Looks like the 3 consecutive months of average 2% declines is upon us…yield curve looks OK, but 200 day MA in play…new bear market or not? First things first, the 200 DMA is my preferred catalyst for defensive action. I don’t really think it matters which trigger is used as no single trigger can be the best for all times but they can be effective which is the priority as I see it. Here effective is simply defined as avoiding the full brunt of a large decline. Aside from my belief in its effectiveness, the 200 DMA is simple to explain and understand. As far as 2% declines for three months in a row (I know this as originating with Ken Fisher, feel free to comment if you know otherwise), this is reliable insomuch as true bear markets start slowly giving many months to get out as was the case in both 2000 and late 2007 into 2008. Fast declines, or panics typically retrace quickly and are better bought than sold for someone who is a trader. On April 1st the SPX was at 1363, May 1st 1345, June 1st 1320, July 1st 1300 and now it is at 1292. By my math that does not literally invoke the 2% rule but it is clear sign of a slow rollover. Anything can happen of course but it looks like a rollover which I would use as more of a confirmation of the 200 DMA. In practice this could mean selling two stocks to get started with defensive action instead of one. As far as the yield...

The Big Picture for the Week of July 31, 2011

A reader asks; Looks like the 3 consecutive months of average 2% declines is upon us…yield curve looks OK, but 200 day MA in play…new bear market or not? First things first, the 200 DMA is my preferred catalyst for defensive action. I don’t really think it matters which trigger is used as no single trigger can be the best for all times but they can be effective which is the priority as I see it. Here effective is simply defined as avoiding the full brunt of a large decline. Aside from my belief in its effectiveness, the 200 DMA is simple to explain and understand. As far as 2% declines for three months in a row (I know this as originating with Ken Fisher, feel free to comment if you know otherwise), this is reliable insomuch as true bear markets start slowly giving many months to get out as was the case in both 2000 and late 2007 into 2008. Fast declines, or panics typically retrace quickly and are better bought than sold for someone who is a trader. On April 1st the SPX was at 1363, May 1st 1345, June 1st 1320, July 1st 1300 and now it is at 1292. By my math that does not literally invoke the 2% rule but it is clear sign of a slow rollover. Anything can happen of course but it looks like a rollover which I would use as more of a confirmation of the 200 DMA. In practice this could mean selling two stocks to get started with defensive action instead of one. As far as the yield...

Implosion or Erosion?

To hear Nouriel Roubini and Stephen Roach tell it, China is getting apprehensive about it’s treasury holdings because of the rampant dysfunction manifesting in the US political system as our “leaders” try to cater to what they think are the interests of their constituents which of course potentially serves their own interests of being reelected. One point not getting enough attention is the role that the US plays in the world order as a consumer, as a military defender of many other countries (regardless of anyone’s opinion on that) and as the world reserve currency (for now anyway). To repeat from past posts (both mine and from other people), this means that the world has a huge vested stake in the US not imploding in a blaze of glory. The world’s vested stake does not spare the US, as an investment destination, from eroding slowly however. I’ve been making the point that a slow erosion has been going on for years and unfortunately will continue. To that end David Rosenberg (via Barry Ritholtz) has some ideas about how to structure a portfolio into current events; 1) “High-quality corporates” plus companies with “A-type” balance sheets and “BB-like yields.” 2) Reliable dividend paying Stocks (including preferreds). 3) Low debt-to-equity ratios, high liquid asset ratios, good balance sheets, no heavy debt. 4) Hard assets: Oil and gas royalties, REITs – focus on income stream. 5) Sectors / companies with “low fixed costs, high variable costs, high barriers to entry/some sort of oligopolistic features, a relatively high level of demand inelasticity.” This includes utilities, consumer staples + health care. 6) Alternative assets that...