20. August 2009 by Dan Walkow, CFA, CMT.

 It is a good time to short the U.S. dollar versus the Canadian currency, given its ties to oil prices that have moved back toward the top of a recent trading range, Goldman Sachs said on Thursday.”This U.S. dollar view could have been expressed against a number of currencies but the Canadian dollar looks particularly attractive given its strong exposure to oil,” Goldman Sachs wrote in a note. “Combined with our underlying bullish oil view linked to supply fundamentals, the risks are likely skewed towards CAD outperformance.”

Read full story here.

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20. August 2009 by Dan Walkow, CFA, CMT.

As the fasted growing economy in the world China is important but one must keep some perspective. China accounts for only 1.48% of FTSE All World Index, a measure of global stock market capitalization. The United States is still the 100 pound gorilla accounting for 41% and the rest of the world ex China and the US 57.52%.

The other thing to keep in mind on the Chinese stock market is that it, for all intensive purposes, is closed to the rest of the world. Domestic trading fuels the Chinese market giving a casino like atmosphere where high volatility is the order of the day.

So does China matter. Sure but if China sneezes it does not mean the rest of the world will catch a cold.

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19. August 2009 by Dan Walkow, CFA, CMT.

Not that long ago I posted a blog here entitled “They Can See You Coming”. They are sharp minded wall street players who use behavioural science along with super fast computer programs to exploit human weaknesses.

Paul Farrel over at CBS Marketwatch penned a piece which I think every investors should read which follows on the point of my last blog that most investors face a system that is stacked against them. To beat the pros you have to think like one as it truly is a “battle for investment survival.”

He calls the great unwashed nudgees. Here are 25 habits of predictably irrational ‘nudgees’

Posted in Investor Psychology | No Comments »

19. August 2009 by Dan Walkow, CFA, CMT.

Why are stock market analysts so wrong so much of the time?

Aug. 18 (Bloomberg) — Anyone who did what Wall Street analysts advised last March has only losses after the biggest stock market rally in seven decades.

Citigroup Inc., Bank of America Corp. and more than a dozen other firms told clients to purchase European energy producers and U.S. drugmakers while selling banks and retailers, according to combined rankings compiled by Bloomberg. An investor who used $10,000 to buy companies in the highest-rated industries and bet on declines in the lowest since the advance began on March 9 lost everything and would owe as much as $6,000 to cover bearish trades, the data show.

The recommendations didn’t work because companies with the worst earnings led the 46 percent gain in the Standard & Poor’s 500 Index since it fell to a 12-year low five months ago. Securities firms that failed to foresee that the hardest-hit stocks last year would recover fastest steered investors to drug and energy producers, which have trailed the MSCI World Index by more than 24 percentage points, the data show.

“Analysts are attached to fundamentals,” said Romain Boscher, who helps oversee $18.5 billion as head of equities at Groupama Asset Management in Paris. “This is a technical rally, a rally of sentiment. Analysts were too defensive. There was an inflection point and they didn’t see it.” See full story here.

By the time stock market analysts research and write up a report the news is already discounted  in the stock. As a fundamental analyst you are often constrained by a risk oversight committee that filters, caps or modifies your research.

Having a technical analyst on the other hand, such as a Chartered Market Technician (CMT) who studies things like trend turns, volume characteristics, relative strength, can help tell you what is happening not what has happened.

Posted in Technical Analysis | No Comments »

16. August 2009 by Dan Walkow, CFA, CMT.

September 23, 2009 is the date a US person can come forward to the IRS and declare offshore holdings under the current amnesty program.

The IRS long has had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. Drug dealers and money launderers need not apply. But if the money was earned legally, tax evaders can usually avoid criminal prosecution.

If the IRS finds you before you find them prepare to spend some time in the crowbar hotel.

Offshore tax havens are under severe pressure to disclose client lists and many jurisdictions are signing cooperation aggreements with the USA and other countries around the world. You can run but you cannot hide…anymore.

Read more on CNBC. Also see a recent piece at WSJ.

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16. August 2009 by Dan Walkow, CFA, CMT.

Protectionist measures between Mexico, Canada and the USA are heating up. Last month the United States banned Mexican truckers from bringing goods into the United States. Mexico retaliates by slapping heavy import tariffs on 90 American made products.

Canadian truckers and exporters are apprehensive when they hear statements from the likes of U.S. Homeland Security Secretary Janet Napolitano  who said this week that Canada shouldn’t get different treatment when it comes to border issues.

This all started with the Obama administration’s Buy America Policy and is gaining momentum as we get into an ugly tit for tat trade war. Everybody is a loser in this game.

Consider:

The Mexican government carefully selected the products it raised tariffs on to create the maximum political impact. Members of Congress who supported the ban on Mexican trucks find that exporters in their states being directly targeted.

Canadian businesses are still at risk of being locked out by state and municipal procurement contracts because of protectionist provisions in stimulus spending packages.

On the immigration front, Canada now requires any Mexicans who want to come to Canada to have a visa. This blindsided the Mexican government and you can bet they are not overly pleased with Canada’s unilateral actions. What now, are Canadians going to have to get a visa to holiday in Mexico?

The North American Free Trade Agreement (NAFTA) appears to doomed as this trade war heats up. It is ironic that while the rest of the world is opening borders and promoting international free trade North America seems to be backsliding into the protectionist abyss.

For more see Tightening border alarms Ottawa, exporters at the Toronto Star.

Posted in Economics | No Comments »

14. August 2009 by Dan Walkow, CFA, CMT.

Barton Biggs is well know as one of the deans in the investment management business. He is not right all the time but his comments and thoughts are well worth taking into account.

For a rundown on what Barton thinks regarding the investment scene check out this interview at Time here.

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13. August 2009 by Dan Walkow, CFA, CMT.

Whats this? A mere few months ago prevaling opinion was that every auto company would go broke and nobody was ever going to buy a North American made car again. Ford  has certainly navigated the downturn well and even GM is talking about increasing production. Guess the depression, anticipated by so many, will have to wait awhile!

See the good news story here.

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12. August 2009 by Dan Walkow, CFA, CMT.

As reported today in the New York Times Britain and Liechtenstein signed an accord that would allow British holders of assets in secrect accounts to declare their holdings voluntarily in exchange for a reduced penalty fee or face closure of their accounts.

It would not be unreasonable to expect similar type of tax cooperation aggreements to be put in to force by Canada and the United States in the near future.

If you have offshore accounts that you have not declared or paid taxes on seek counsel as, in my opinion, it is not a matter of weather Canada and the USA will implement such programs it is a matter of when…

See the full story here.

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11. August 2009 by Dan Walkow, CFA, CMT.

The Washington D.C.-based National Association of Realtors says 23.6% of all international homebuyers in the United States last year were Canadian, up from 11% in 2007. It’s no wonder. During the same period, the median price of U.S. vacation homes fell to US$150,000, for a 23.1% drop in price.

Canadians acclerate their US Real Estate buying. Recently I met and chatted with Ozzie Jurock who has a very good website regarding real estate. Check it out at www.jurock.com.

See the Financial Post on Canadians buying real estate in the United States here.

Posted in Real Estate | No Comments »