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by Thomas MulloolyTelling you when to BUY, and when to SELL, too.
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First, legal disclosures…then the blog
16/01/2007
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window.document.getElementById('post-3').parentNode.className += ' adhesive_post';Beating the Market
25/09/2007
One of the best tools we have at our disposal is something called "relative strength." Look, you can't beat the market, unless the investments you own ARE beating the market. In other words, hanging onto something "just because" will always drag down your overall performance. We should not get "married" to a stock. Relative strength "signals" are long-term in nature -- they often last two years or more on average. Relative strength "buy" signals: these investments tend to go up FASTER than the rest of the market -- and when the market is in trouble, they often go down slower than the rest of the market. Relative strength "sell" signals: tend to go up SLOWER than the rest of the market -- but when the market gets shaky, these investments often go down faster than the rest of the market. In fact, they usually crash -- badly. So when we're on defense (like we have been recently), we dropped all stocks or mutual funds with relative strength sell signals. The stocks and mutual funds that we've held onto lately (while on defense) have been the stocks with the best relative strength. Yes, they can (and often do) go down -- but they tend to go down slower than the rest of the overall market. Tom Thomas Mullooly Mullooly Asset Management LLC Our Only Business Is Fee-Only Investment Advice www.mullooly.net support@mullooly.net
Wall Street Brokers
16/09/2007
The big reason why the market fell apart this summer was because the financial stocks -- the brokerage firms in particular -- really struggled. Were just learning these firms held a LOT of mortgage loans in their portfolio. And theres really no accurate way to value these assets. There have been reports where these mortgage loans are being marked down in value from 20% to 50%. There are few buyers for these types of investments, so there really is no support line, or "bottom," for the price of these assets. Theyre all simply guessing what these assets are truly worth. This coming week, well get third-quarter earnings from Goldman Sachs, Morgan Stanley, Lehman Brothers and Bear Stearns. Later on, well get earnings from Merrill Lynch. Every single one of these firms has significant exposure to the mortgage market. So well finally learn how much exposure each of these firms has to these near-worthless assets. It could be huge. We continue to see improvement in the overall market. But keep in mind that the big cog in the wheel, the financial sector, may upset the markets this week. Additionally, we have a Federal Reserve meeting on Tuesday. And if The Fed doesn't say exactly what the markets expect, there could be additional turmoil. If you have any questions whatsoever please do not hesitate to call the office at 732-223-9000. Please understand, I'm becoming more optimistic on the markets, but I prefer to take a slow approach and see how things unfold. Tom Thomas Mullooly Mullooly Asset Management LLC Our Only Business Is Fee-Only Investment Advice www.mullooly.net support@mullooly.net
We Have Inside Information?
09/09/2007
Let's talk about inside information and the stock market. At some point we have to come to this realization: were never going to have complete information -- EVER -- when it comes to a particular stock or investment. There will always -- I repeat, always -- be someone around who has more (better) information than you and I. That could be inside information, or someone who just has their ear or a little closer to the ground than we do. I keep telling everyone: getting your ideas about stocks (and the market) from the media, is a really bad plan. See, we need to make decisions TODAY, because waiting to get all of the facts will always cost us money. Always. So, how do we make decisions without all the details? Well, the point and figure charts that we use to manage your money tell us what's happening -- right now. When a stock (or a mutual fund, or a commodity) is in demand, the chart moves up in a column of Xs. See, the charts don't wait for the news, or the headlines, to be released. They tell us, without emotion, whats in demand and whats in supply. Anything with too much demand will see its price rise. If there's too much supply -- prices WILL be falling. If the premise of supply and demand works for stuff like Cabbage Patch Dolls and Talking Elmo, why wouldn't supply and demand work for the stock market? For some reason, most people in my line of work like to make things much more complicated than they need to be. Don't forget that! Tom Thomas Mullooly Mullooly Asset Management LLC Our Only Business Is Fee-Only Investment Advice www.mullooly.net support@mullooly.net
Waiting For News
05/09/2007
In my previous column, I mentioned that getting your investment ideas from financial channels and the business section of newspapers and magazines is really a painful path to follow in the money game. There's a great example occurring right now. Check out the front cover of most financial magazines, business newspapers -- and even the promotional bits for the financial news channels. Everyone's talking about the mortgage mess/the subprime meltdown. It's certainly a hot topic today. But the charts of the mortgage companies were melting in the fourth quarter of 2006 in the first quarter of this year. Back then, those charts were screaming "get out now!" We had very clear signals -- but what we did NOT have was news. And nine and 10 months ago, not too many people had an inkling that some of these mortgage companies would be filing bankruptcy before the end of 2007. But that's indeed what happened. And if you waited for the news before making your decision, you got wiped out. By the way, we welcome comments, and invite you to respond with your thoughts about this on our blog. Tom Thomas Mullooly Mullooly Asset Management LLC Our Only Business Is Fee-Only Investment Advice www.mullooly.net support@mullooly.net
