The Average Investor's Blog

A software developer view on the markets

The Weekly Update

Posted by The Average Investor on Jan 16, 2011

The markets continue their march up, getting more and more out of touch with the underlying economy in my opinion. One wonders, what’s going on? My two cents are that this is the result of the massive money printing going on around the world. It starts to look more and more like the 2008 financial crisis that just passed, but instead of interconnected institutions, now we have interconnected governments. Before arguing, just consider the last week’s announcement by BOJ to buy European debt. I can’t help it but wonder, why are they so convinced that the domino is not going to start falling apart. Ah yes, because it has never happened before. And if it does happen, printing is likely not being able to help us. Then what?

Enough rumblings. Here is the state of our positions:

Asset Symbol Position Date In Gain
Nasdaq 100 ^NDX Long 2010-09-03 24.23%
Emerging Markets EEM Long 2010-07-23 16.48%
S&P 500 ^GSPC Long 2010-09-30 13.33%
US REIT VNQ Long 2010-07-23 11.47%

Notice the strong gains in the most recent position in the S&P 500, surpassing this week the US REIT position.

Last week my contrarian system indicated opening a short position in Gold. While this position looked as a clear winner for the first few days, it was closed on Friday’s close for a loss. Using DGP and considering trading at the close, the loss is 1.46% ((39.68 – 39.10)/39.68).

This came after two/three heavy down days for Gold. As a result Gold is entering oversold territory yet again, and it’s likely that we will get another signal this week.


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