Chartist

My biggest take away from the Chartist newsletter is the section about what people are predicting the market to do. I can't help but wonder why at times where so many people predict the market to go up is the time it tends to stagnate. I suppose it is because it can only go up for so long before it starts to turn, because it is a cycle.

I also found it interesting how even with the research on the side of a possible downturn after all the optimism, the authors of the newsletter predict a continuing bull market. They cited a few times in the past where even in spite of huge optimism, the market lived up to expectations. They used their own natural instincts and the other market signs to give their recommendation to stay fully invested. 

It reminds me of parenting advice, not all books agree, and though it is good to do research and see what the experts recommend, at the end of the day, instincts and your own personal experience, plus the wealth of knowledge out there decides what choices to make.

My other big take away from the newsletter was an interest in the biotechnology stock ibb. Biotechnology is the future, and investing in it seems wise.

Isreal

Kiplinger's recent issue spotlighted Israel. The article states that despite its small size, it does above average by all of the metrics that define a successful economy. Stocks/ funds mentioned positively in the article: isra, cste, cgen, ormp, silc, ADHD, rdwr, teva (inspite of poor past, should do better in the future), and isl.

Wisdom from Millionaire Next Door

Honestly, I didn't read this book cover to cover, but I read the section titles and then any section I found interesting.

Much of it was already information I knew just from my family. It didn't surprise me at all to learn that many millionaires are stealthy about their wealth instead of flaunting it. I knew that the way to wealth is to save and invest your money.

The biggest thing that I found surprising was that the majority of them were self employed.

This caused Blake and I to have the shortest lived dream ever. We came up with a whole plan to open a gym with some elements of Jenny Craig combined. For the whole two days that it lasted, it was a very real thought and consideration for our future.

But last night we were talking, and came to an important realization about life and specifically our future. We could do all the steps to open a small business or Blake become a pharmacist or any number of different futures and we might be wealthier that way...but would we be happier? Probably not.
A small business like that and the steps to get there would mean years of stressful, full, unhappy times. At this point, and probably in the future, the bottom line of sacrificing family time for a more comfortable life far in the future isn't worth it.

Anyways, the chapter itself said that while first generation millionaires were self employed, most of them don't wish that for their kids. Second generations are encouraged towards stable careers which might not ever make it big, but will have a steady, secure income like doctors, lawyers, or educators among others.

The last big take away was that receiving economic outpatient care from parents as an adult is actually detrimental to future wealth.

Investing in innovation

Kiplinger had an article that nicely corresponds with the Economist's article about technology replacing people as time progresses.

It said that one of the best things investors can do is look at which companies are the most likely to innovate and design something that will be the next big thing.

Some of the companies that they see doing this and recommend are Apple, Google, General Electric, Amazon, and Illumina.

But since individual stocks are riskier, my biggest take away from this article was their recommendation of Fidelity New Millennium. It is a mix of sometimes volatile, high growth companies balanced with steadier, bargain priced fair. It includes a couple of the big stocks from the article- Google and illumima. The manager has a good track record too- from July 2006 to the end of 2013 it has returned 9.6% annualized, beating the S and P by more than 2%.

For what it's worth, I think this fund would be a good investment. Common sense says that technology and innovation are the future, The Economist and Kiplinger agree on that point, and the fund cuts the risk of the individual stocks while betting on their success. Plus the fund follows the rule of a manager with at least a solid 5 year track record. At the very least, it appears to be a fund to look at more closely.

China Shoppers

According to the latest Economist issue, China is a country to watch. Apparently, there are many Chinese with cash to burn, and from 2011 to 2013 China contributed more than any other country to the growth in global consumption.

International companies have noticed, and are working hard to benefit from all of this spending. It used to be that western brands would sell better just because it was a western brand, but now the Chinese consumers are more discerning.

Just like producers make sure to keep China in mind as they make their films, other companies are planning advertising and products to cater to this population. The article predicts that future consumer markets everywhere are going to look more Chinese and be cosmopolitan, luxury minded and online.

February Kiplinger items of interest

There was an article on hedge funds, which suggested to keep five to ten percent of your portfolio in investments that don't move with the market. Pakistan is one of their recommendations for bonds as their bonds that mature in five years are yielding 12.3%, 11 percentage points more than the US. The same article sited the best no load mutual fund as PREMX with its portfolio including Ukraine, Venezuela and the Philippines. It yields 5.5%.

Another hedge fund suggested is UGA, which is gasoline futures, stating that as the price goes up at the pump, you can at least know your investments are happy. However, another article I read today online said that people are driving cars less in the US these days, and consistently have been undershooting government predictions. The driving decrease is partly from our aging population, the unemployment, and the younger generation either being green (biking or public transportation) or living somewhere that they don't need to drive often.

Another article was on eight low price, highly speculative, but promising stocks. The two that sounded the most interesting to me were CERS, which cleans platelets and plasma and later blood cells and CRY, which has a bioglue and a product to control bleeding during surgery.

I liked the sound of the Eventide Gilead fund, as it chooses companies that align with Christian principles, and has earned 17.5% annualized, and beating the average midsize fund by 8 percentage points a year.

Recommendation for how to spot an upcoming superfund- promising manager with five years of solid track record, a sound strategy and a willingness to close the fund if assets get too big.

Those were the things that stuck out to me in the magazine for the month.

Balance

A big key concept I have gotten from multiple sources is the big need for balance when it comes to the field of economics.

For example, the housing market. Some sources are positive about the rising house prices due to the low supply. Some are pessimistic that as the prices raise, it will reach a point that it effects people's willingness to buy a house and the market will be hurt again.

Optimal for growth is a balance, where the house sellers are benefitting from the sale, and house buyers are still willing to buy.

The movie market also needs to find a balance, which is apparently tough to do. Big budget pieces usually do well, and low budget ones don't need to make a ton, so they do okay, but a medium budget movie doesn't usually do well. Plus, they need to do certain things to appeal to the Chinese market, but too many concessions that way can hurt them with American viewers. Even the plot walks a fine line. An original idea, if good, can do better than a remake. But the remakes or based off book movies usually come with a sizable group of people who want to see the movie, and so feel more secure to the movie producers.

The government has to find a balance between the diametrically opposed Republicans and Democrats to accomplish anything. Their inability to do that at times is why we had the government shut down, and apparently also had huge cuts from budgets on both sides because they couldn't agree. This, to me, is ridiculous. Grown men should be able to find compromises without having to shut down the government first.

I know none of this really relates to investing, but more a sign of my increasing understanding of the world that the market operates in.