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Buy -- Sell -- Ponder -- January 2018

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  • edited January 2018
    Hello.

    Here is the weekly barometer report for the week and month ending January 26, 2018. I close each month on the last Friday of the month.

    The S&P 500 Index has gained (year-to-date) about 7.5%. And, with this ... the barometer closed the week and month with a reading of 127. (The lower range mark has been expanded on the scale and ends at 120 while the higher range now ends at 180 with 150 being the midpoint). It opened the year with a reading of 138. The S&P 500 Index moved from the low range of overvalued (138) on the barometer's scale to the high range of overbought (127) with some saying (now) extremely overbought. Generally, a higher barometer reading indicates there is more investment value in the Index over a lower reading. In checking the short interest for the month it has moved from 1.7 days to cover to 1.9 days. Seems some investors are increasing their short positions.

    In following the S&P 500 Index sector compass the current lead pack consist of XLE (energy), XLK (technology) and XLY (consumer discreationary) which is also the lead and my spiff hound.

    In following the global compass the current lead pack consist of EWJ (Japan), EEM (emerging markets) and GSP (commodities) which is also the lead and my spiff hound.

    I'm thinking with stocks at their current overbought valuation February just might be the month that a pullback developes as prices are out pacing earnings growth. Enjoy the ride before the train starts down the mountain. My spiff positions can get converted to cash real quickly before my profit in them gets vaporized should their be a pullback and they start to falter. Once the trains reaches a valley ... Well, I'll be back into those spiffs (special investment positions). Selling out of the spiffs would raise cash within my portfolio by about 2% to 3%. This will incease as I grow these spiff positions upward to about 5% of the portfolio.

    Thanks for stopping by and reading.

    I wish all "Good Investing."

    Old_Skeet
  • What keeps running through my mind is that the market, with all the extra slush and perceived future slush, has reset it's baseline on value. I am picturing a sort of forward leading inflation that will lead to domestic inflation corrections. People have always talked about "just inflate our way out of it".
  • edited January 2018
    Anna said:

    What keeps running through my mind is that the market, with all the extra slush and perceived future slush, has reset it's baseline on value. I am picturing a sort of forward leading inflation that will lead to domestic inflation corrections. People have always talked about "just inflate our way out of it".

    Yup - Beginning to look like the days of worrying about deflation are ending. Those of us who recall shopping in the 70s may remember the stock-boys in groceries busily marking-up the prices on bread, ketchup or beer while we shopped. Bread might be 29-cents when you walked in the door and 33-cents by the time you walked out.

    The tip off is the slumping dollar. Translates into higher prices for consumers.

    Here’s a blurb re rising lumber prices. http://missoulian.com/news/local/lumber-prices-have-timber-mills-cheering-but-home-builders-passing/article_9eae1c30-1a8e-541e-bc4d-a5e9f2011339.html
    I think Bloomberg reported a 24-year high in lumber on Friday - but I’m unable to confirm that.

    Anybody altering their investment approach in response to this potential sea change?

  • I wouldn't worry to much about the dollar @Hank . Sounds Like the president has a handle on the direction he would like to steer it. And I can guarantee you one of his thoughts will be correct.

    In 2017:
    President-elect Donald Trump told the Wall Street Journal in a story published this week that the dollar was "too strong."
    and in 2018:
    “... and ultimately I want to see a strong dollar,”
  • @catch22; How many board feet of softwood lumber are you buying, selling, or pondering ?
  • Not sure about Catch22 but a lot for those of us in the home building and remodeling business Ted.
  • edited January 2018
    Hi @Ted and @Mark
    Baby remodeling here and there.............but, do'in the math for all of the soft lumber material in the house + new build cost which = "how much more can I sell the house for today and in the near future based upon the inflation rate of "soft timber products", including oriented strand board, etc.
    'Course the other side of the equation is that baby boomers and their parents are and will be dying away = more homes on the market which may affect prices downward and that interest rates may climb enough more to ding mortgage rates and presto-magico, the affordability index moves against new buyers. Keep in mind, only we older ones here and in the house marketplace remember how high mortgage rates can be.....
    Current house buying generation will pee their pants if mortgage rates move above 5%.
    My 2 cents worth.
    Take care,
    Catch
  • @MFO Members: Why did I bother to ask !
    Regards,
    Ted
  • My "retirement" job is putting in gardens for people retiring in their homes but are no longer able to do some of the work. A lot of what I do is building raised beds to help ease the bending and lifting discomfort. The price of cedar this spring is up 27% this winter over the end of summer, and sustainable redwood is up 36%. For some, who have gardened for 50-60 years as a labor of love without putting a dollar amount to their time, the costs of a raised bed or rototilling has them visibly stepping back. This cost increase is going to make getting work harder. For several years retirement communities with budgets kept me comfortably going, but even they have balked at this year's cost estimates for spring work.
  • edited January 2018
    Mark said:

    Not sure about Catch22 but a lot for those of us in the home building and remodeling business Ted.

    I’m s*** deep in a kitchen remodel. Never again.:(

  • Yup Hank, kitchen and/or bath remodels, two of the biggest nightmares on the planet. I tell my clients up front to expect that most everything that can go wrong will. Beats apologizing or explaining later.
  • edited January 2018
    Mark said:

    Yup Hank, kitchen and/or bath remodels, two of the biggest nightmares on the planet. I tell my clients up front to expect that most everything that can go wrong will. Beats apologizing or explaining later.

    @Mark,

    If your dark grout ever turns white (minerals in the wash water) try some QuickCrete “Wet Look” on it. Tedious - but does wonders!:)
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