Trends: Should I Stay (Invested) or Should I Go?

Market technicians examining the trend of whether to buy stocks or bonds are presented with a rather clear cut technical landscape

A Blue outlined graph indicates Bond are trending higher.

A Dark Brown outlined graph indicates Stocks are trending higher.

Currently, the stocks uptrend remains intact.

This chart is not viewed as foolproof and intelligent people can debate the merits of technical analysis.  At the same time, many ascribe to technical-based investing and as such could be view as being bullish on stock momentum.  This aforementioned chart is based on simple moving averages stretching back to 1990 and continues to present.  The trend signal is rather impressive in its simplicity.

A Capital Gains Tax Hike: The Blow that toppled Japan in 1990?

C-Span Video Archives: For Good and Evil: The Impact of Taxes

Author Charles Adams suggests a hike in capital gains tax was the silver bullet that slew the mighty Japanese economy of the 1980s.  Many know our interest in analyzing today’s debt-laden economy to Japan circa 1989-1990.  Adams makes his remarks at 30:03 minutes on the embedded video.

Let those of us investors who files taxes in the United States pay particular attention to the capital gains tax rate come January 2011 when the Bush tax cuts expire. Adams claims to have taken two decades to research and write his book.  We will not be hasty to dismiss his capital gains tax warning.

Incidentally, his other remarks on Japan are fascinating for anyone who has not filed taxes in Japan. (26:23 to 30:29 minutes)

For anyone who consider the Tea Partiers of 2010 to be taking anti-government rhetoric to excessive levels,  have a listen to Adam’s recollection of the extent taken by the French populace to “express” their government dissatisfaction. (5:40 minutes)

And the winnah is…

We christen our upgraded site with commentary on a look at the winning investment strategy for the past decade: Market timing.

According to LeCompte’s analysis, the strategy bested buy-and-hold, rebalancing and one momentum strategy.

Click here for a concise overview of the different strategies’ returns and variation.

Fortunately, timing was near and dear to our efforts.   Yet while market timers everywhere congratulate each other, we behold a troubling bit of data.  And while it is true that the market performed with the same variation & records positive returns over half the time throughout the past six decades, the mean return for investors vanished in the past decade.  Some call this the market’s “lost decade” as investors have lost money since the turn of the century (-0.12% per mean monthly return) (ibid)

Our focus for the past six months and the foreseeable future is to concoct an approach for our client’s that will take advantage of our research.  Our goal is simply to post analysis at the dusk of the next market cycle claiming we fingered the winner of the next decade.