NYT - They All Retired Before They Hit 40. Then This Happened

The New York Times outlines the impact of the COVID-19 market crash on FIRE plans. Most FIRE plans made assumptions about strong, consistent market returns each & every year.  Nearly none of the FIRE strategies model scenarios where the market falls 30% and does not recover for a significant period of time.  Due to this many FIRE "retirements" are now in the flusher as well as suffering from travel restrictions to low cost areas to live (“geographic arbitrage).

As stated earlier - "The primary failure of FIRE is that it does not plan for low, medium, and high scenarios in regards to market returns and inflation."

NYT - They All Retired Before They Hit 40. Then This Happened
https://www.nytimes.com/2020/04/02/style/fire-movement-stock-market-coronavirus.html

Pouring Ice on FIRE

Over the past couple years there has been endless promotion of FIRE (Financial Independence, Retiring Early).  Many of the advocates outline how saving hard while minimizing expenses will allow you to retire early - often while you are only in your 30s. YouTube videos and media provide all the basic math showing stock market investments over a decade followed by a 4% withdrawal rate.

There are many positive concepts promoted by the FIRE movement including notions of minimizing debt, not buying new cars, investing in 401Ks and being frugal.  Some of these are generic ideas which make common sense for every generation.  Many of these concepts are covered in my "So You Want To Be a Millionaire" article from 2008 -- well before the FIRE movement appeared.

The primary short-coming of FIRE is that it does not consider all the possible events and complex (and likely) future scenarios.  In other words it is a simple "answer" for a "complex" problem.

Most FIRE promotional material do not account for the following:

• Medical Insurance costs when no longer covered by your employer.
• Medical Costs for serious illness (even when you have insurance it can be expensive)
• Losing a partner (divorce or death)
• Having Children (cost over $300,000 to raise each)
• Marriage (many FIRE proposals assume you will forever be single)
• Location issues (not being happy about where you moved for a low-cost lifestyle)
• Social Security - not getting significant payments due to not working 35 years

There has been a slew of recent articles that covered some of the FIRE drawbacks (and benefits) including the question of what to do after "retiring". A few articles are provided below:

• These people left their jobs behind to retire early — then life got in the way. Here’s how they coped with FIRE plans gone wrong
• I followed the path to FIRE — and learned that early retirement is the wrong goal
• 5 Myths About FIRE And Early Retirement That Just Won't Die
• 5 Things To Take From The FIRE Movement (Even If You Don’t Want To Retire Early)

The real problem with FIRE is that it does not take into account all the possible future scenarios.  What happens if inflation greatly increases? (Most millennials have never experienced this). What is the consumer index on many core consumer  items goes up greatly?  What happens if the stock market greatly under-performs? 

Most FIRE articles assume that the stock market will continue to perform well over a decade period before you start withdrawing money.  What happens if the market sinks for a decade?  The primary failure of FIRE is that it does not plan for low, medium, and high scenarios in regards to market returns and inflation.  Most FIRE planning scenarios are too simplistic; at minimum you should create a spreadsheet with assumptions about market returns, savings rate, inflation, and your expenses.  This spreadsheet should be easily alterable so that you can plan a low, medium, and high scenario for review.  Plan across all possible scenarios.

Most FIRE scenarios assume a fixed 4% withdrawal rate.  Withdrawal rates are a complex problem without a single fixed answer.  Individuals must take a look at withdrawals in more detail.  One good source of information is - The Ultimate Guide to Safe Withdrawal Rates – Part 19: Equity Glidepaths in Retirement

One other item to note is that many FIRE plans promote saving with 401Ks and IRAs.  Using 401Ks is important to get an employer match (effectively free money). The one detail that FIRE articles fail to usually mention is that while 401Ks / IRAs are tax-protected -- there are significant penalties for early withdrawal. Usually you will not be able to withdraw this money (without penalties) until long after you retired early.

While I agree with many of the investing and savings concepts driving the FIRE movement, there is a need to pour some ICE on FIRE due to the lack of effective scenario planning and the failure to account for common life events.

The 401K Diversification Article You MUST Read Today

My earlier Portfolio Diversification – 401K article provides an in-depth example of designing a diversified portfolio. I would urge everyone to read this previous comprehensive article today. It covers:

• MPT (Modern Portfolio Theory)
• Typical funds in corporate 401K plans
• Hard truths about size
• Active funds vrs. index funds
• Fund selection
• Risk Tolerance
• Portfolios by Age and Risk Tolerance
• Re-balancing
• 401k and Diversification Resources

How has my 401K performed?

It has been over a decade since the 401K Portfolio Diversification post; in this time I have regularly re-balanced the 401k account and adjusted it as my age increased.   My 401K has performed in-line with the the market indexes and expectations. In areas where active funds were used rather than index funds; actively-managed Small Cap Funds (SSMVX and successors) have out performed the indexes. Actively-managed Bond Funds and Foreign Stock funds generally have under-performed their indexes.  The under-performance of Bond funds was impacted by the low interest rate environment.

I stuck with my 401K portfolio and am generally pleased with the results over time.

In Retrospective - 130/30 Funds

Back in 2007, 130/30 Funds were hyped as the next great thing in the market. As the market tumbled a dozen years ago the concept of a fund that would generate profits in both rising and falling markets was a sales pitch that hit appealed to the pain investors were encountering at this time.

Multiple mutual fund families immediately offered 130/30 Funds mirroring hedge funds. The mutual funds launched marketing campaigns in 2007 worked to draw in investors based on downside fear - many remembering the 2000/2001 decline. Some ads implied investors would profit greatly in both rising and falling markets.

As outlined earlier, 130/30 funds allow managers to short-sell up to 30% of their portfolios, and use the proceeds to buy an extra 30% long. The funds both use leverage and short-selling.

Now over a decade later - how have 130/30 Funds fared?   Back at that time I was very skeptical of 130/30 Funds. The results demonstrate I was quite right to question these 130/30 Funds as nothing more than a marketing gimmick with the intent of generating out sized fees for financial institutions.

Since 2008 the financial press has covered the decline of 130/30 Funds.   However now in 2019 as we seem to be approaching a market peak new 130/30 Funds are now again being offered.  One example is JPM and UBS unveil 130/30 funds.

A long list of media has demonstrated the gimmicks and decline of 130/30 Funds as they greatly under-performed the related index put forward by Andrew Lo of the Massachusetts Institute of Technology and Pankaj Patel of Credit Suisse and merely served as a payday for money managers.  A sampling of media 130/30 Fund articles include:

The decline, fall and afterlife of 130/30
https://www.ft.com/content/fdbf6284-b724-11e2-841e-00144feabdc0

130/30 Funds: 130% Gimmick/30% Good Idea
https://www.morningstar.com/articles/287506/13030-funds-130-gimmick30-good-ideak/30% Good Idea

130/30 Mutual Funds: Don’t Believe the Hype
https://investorsolutions.com/2012/09/28/13030-mutual-funds-dont-believe-the-hype-3/

A Hot Fund Design Turns Cold
https://www.wsj.com/articles/SB10001424052748704388504575419642095323262


Now that 130/30 Funds are being pushed by brokerages again, don't fall for the hype. Stick with your long term investment plan with proper diversification, low fees, and a long term view.

How to get Rich in the Stock Market

There has been all sorts of media, companies and individuals pushing methods of "getting rich in the stock market".  The proposed strategies range from stock picking to trading, all the way out to using esoteric long/short hedging strategies with options & futures.

The reality is that there is only one guaranteed method to get rich in the stock market. It involves time, diversification, low-cost funds, continuous investment, and patience.

1) Time
The first factor is time; you will need to be focused on the long term.  Success in the stock market is not based on the next quarter or year, but the expectation for results over long periods of time akin to decades.

2) Diversification
It is important to be properly diversified based on your investment objectives, accepted risk tolerance, and time frames.  You should be diversified across domestic stocks, international stocks, growth/income, and company size.  The is also need for a balance between stocks, bonds, and other investments based on your age and objectives. There are many articles available that discuss proper diversification including - Why Diversification Is Important in Investing.

My earlier thoughts on 401K diversification can be found here - https://www.gregboop.com/2007/02/portfolio-diversification-401k.html

3) Low-cost Funds
Investment costs such as mutual fund fees can eat into a good portion of your returns over time.  Funds with high fees don't offer better returns over time than index funds -- in fact many times their returns are worse than index funds.  It is best to find mutual funds that mirror indexes offered from funds families such an Vanguard, Fidelity, and Schwab. Mutual Fund marketing fees, front end load fees, back end load fee and other assorted fees merely make financial people rich -- they don't help you are all. 

4) Continuous Investment
The market goes through many cycles.  By investing regularly - for example adding money each paycheck to a 401K or IRA - you are riding the cycle.  When the market pulls back you are buying more at lower cost; when the market rises you are making solid returns on what you have purchased over time.   Continuous investment provides a safety cushion for market cycles; it is a much better strategy than simply purchasing funds at one point in time.   If you buy at the peak with all of your cash it is a harder climb to get solid investment returns.

5) Patience
Be willing to hold on an ride out market cycles.  Do not panic when the market goes down.  Do not take a lot of money out simply because the market is up (trying to time the market).  You need to have a long term view and be patient.  Getting "rich" in the stock market is a long term "play" not something that happens by next year.

Trimming Underperforming Stocks from your Portfolio

A majority of the stocks in my portfolio have done well over time. There are a few under-performers in the mix; I have admittedly been lax about trimming them and trading them out over the years.  There are the usual rash of rationalizations I make; they will come back or they represent a particular diversification that is desired.

One stock I failed to trim for over a decade now is Gannett Co., Inc. (GCI).  I purchased GCI in Dec 2007 at the upper 30s in price; now it is at a mere 6 bucks.

Gannett does represent a particular niche in my portfolio.  It is in a tax protected account with a diversified portfolio of stocks focused on strong dividend yield using stocks that allow dividend re-investment into more shares.

Gannett is in a tough industry that has been steadily declining; newspaper publishing.  Back in 2007 there was still a glimmer of hope that newspapers would adapt in a digital world and come back - not so much anymore a dozen years later.

Still GCI represents a diversification point in my portfolio; it is the only individual stock that covers paper-based media.   It still has a a strong dividend yield; with the stock price down at $5.97 the forward yield is an astounding 23.38% (based on $1.52 yield).  However even with this yield the drop in stock price over time nearly wipes out the yield returns - when calculating quarter by quarter.

On top of this back in mid-November shareholders of Gannett Co. Inc. (NYSE: GCI) signed off on a roughly $1.2 billion proposal for the McLean company to be acquired by the parent company of rival GateHouse Media.  I doubt that the new company will still offer very high dividend yield; this further drives the plan to bail out of paper media stock and rotate into another sector.

The time has come to trim GCI and a few other under performers that I have held onto for more than a decade. My New Year's resolution will be to do this in January... or is this just a way of procrastinating and putting this off for yet another month.

One interesting point will be to compare my portfolio of dividend focused stocks to a mutual fund (or index) that follows the same strategy and see how the performance compares over a decade.  Have I beat the indexes with my stock-picking or not -- this will be an upcoming subject next year when I finally rotate out of the under-performers.

Gummy Stuff Archive of Financial Spreadsheets and Tutorials

Gummy Stuff is a large number of financial spreadsheets and tutorials created by Peter Ponzo after he retired from the University of Waterloo.

An archive of the information he created can be found at - https://www.financialwisdomforum.org/gummy-stuff/gummy_stuff.htm
 
A modern version of his tutorial list can be found at - https://www.financialwisdomforum.org/gummy-stuff-tutorials/

Gummy Stuff is a great resource for financial information and valuable spreadsheet resource.  It is all free!  I urge people to check it out.

Cisco announces first dividend

Finally! It is great to see. I have been stating for years that Cisco needs to pay a dividend to increase institutional interest and drive the stock price up.

Cisco announces first dividend

Interesting Commentary from Andrew Lo

The link below goes to a video with Andrew Lo with some interesting commentary about how the current financial crisis altered the underpinnings of investment diversification. Andrew LO is an award winning MIT economist.

http://www.investmentnews.com/apps/pbcs.dll/section?category=wealthtrack

The Ascent of Money

Earlier this week, PBS ran a special two hour program "The Ascent of Money". The program is an excellent overview of current financial crisis placed in context of other historical events. The show includes some excellent commentary and interview clips.

It can be watched online at:
http://www.pbs.org/wnet/ascentofmoney/

Fannie and Freddie

Obviously the biggest news on Wall Street this week was the Federal Government seizing Fannie Mae and Freddie Mac before both of these mortgage giants failed in a catastrophic manner. These companies have been faltering for many months while looking for lines of credit to bail them out, the government went one step further and completely took over the firms while giving top executives the boot.

The entire situation is also another example of intervention not allowing proper capitalism to play out in the market. The term “moral hazard” comes to mind in which businesses do not take responsibility for their risky behavior; this only entices other businesses to take poor risks. Especially in an environment where it appears that “gains for privatized and losses are socialized”.

While the government takeover may have buffered the mortgage market in the short term and cheered up Wall Street on Monday, the long term picture is much less clear. The U.S. tax payer is going to be stuck with the tab. The question remains on just how big the tab will be – estimates range from $250 billion to $5 trillion. The actual cost is very dependent on how the housing market and associated credit recovers. One recent article outlined how the seizure of these mortgage giant is the taxpayer’s risk (If takeover tanks, we're holding bag).

Similar too many previous government interventions, this action with Freddie and Fannie may help alleviate the short term crisis, but the toll down the road will be much greater and more painful.

WaMu CEO given the Boot

Past HingeFire articles have outlined in detail the issues at Washington Mutual and urged banking customers to pull out funds over the FDIC limit. News today shows that Washington Mutual has ousted CEO Kerry Killinger. WM stock is down over 15% in mid-day trading.

It is also interesting that Washington Mutual agreed to further oversight by the Office of Thrift Supervision concerning aspects of its operations. This demonstrates the high level of concern regarding the solvency of the institution from a regulatory perspective.

Are Banks at a bottom?

A recent Motley Fool article asks if it “Is It Time to Buy the Banks?” The KBW banking index is down over 40% from the year before levels. The constant stream of news from the banking sector appears to be negative; more FDIC takeovers, increasing write-downs, and larger banks as take-over targets.

One point of view says the entire banking industry will be in trouble for the next 12 months with increasing failures and negative headline press. The other side of the coin outlined by Motley Fool states that banks offer a compelling value purchase situation and the KBW index may have seen its trough.

Investors can look at yield, P/E, book value, Justified P/BV, or other ratios. Using the math, it appears that banks may be near a historic valuation low and are due for rebound. At minimum, it is time to start investigating stronger individual stocks in this sector for purchase.

How to Screen for Strong Banks

Amidst all the carnage in the financial sector, how can you screen for the stronger banks and financial institutions that are likely go come out of the credit crunch as leaders.

The best starting point is creating a screen that searches for potential candidates. The key question is what criteria should be in this screen. Basically you need to hunt for financial institutions that display the following characteristics.

• The earnings are still positive.
• The yield is above 0.5%.
• The bank stocks trades at reasonable volume above a price of $2
• The bank stock price performance is exhibiting strength against both the S&P 500 and the bank stock index over the past 3 and 6 month periods.
• Technical the bank is exhibiting positive moving average trends in the short term and the rate of change is positive.

A basic bank screen that meets the points above can be created within HingeScreen. A user can go to create mode and add the following criteria. In this case, we are searching for financial institutions priced above $2 with volumes over 10K that have outperformed the S&P 500 and KBW bank index. The trailing dividend yield must be above 0.5% (forward yield can also be considered). Technically the rate of change (ROC) must be positive, while the recent 20 day moving average must be above the 50 day. These technical points will show a recent positive trend in stock pricing.

The screen is saved as BankScanOne.

The next step is to jump to Execute Mode and run the screen. The results align with expectations; it is a mix of stronger regional banks, REITs (primarily with a healthcare focus), and some financial service organizations.

The stronger banks in the results such Valley National Bancorp NJ (VLY), and Wilshire Bancorp (WIBC) are examples of regional institutions that avoided obscene mortgage lending and maintained their balance sheets in good order over the past few years.

The majority of the REITS that show up in the results such as Health Care Property (HCP), Health Care REIT (HCN), and Healthcare Realty Trust (HR) are examples of REITS that are focused on stronger market segments and have easily avoided the worse aspects of the real estate downturn.

A few financial service organizations such as Northern Trust (NTRS) and PNC Financial Serv. (PNC) also show up in the results. A number of players providing financial services have used the downturn to strengthen their offerings and market position.

Using HingeScreen it is easy to save the results to a spreadsheet for further evaluation. Simply press the button on the right that looks like a floppy disk and the results are saved to a spreadsheet format file that can be opened using Excel. By default the saved result files are placed in the C:\Program Files\HingeFire\Results directory.

HingeScreen is a powerful tool to find stocks that meet the performance and diversification needs for your portfolio. It is useful for identifying candidates that are likely to come out of a downturn as leaders in a sector. HingeFire provides an excellent video library outlining how to use the tool at: http://www.hingefire.com/Education/KnowledgeBase/HingeVideos.aspx

Ignore the Press, Hedge Funds are still a Viable Investment

The hue and cry from the press regarding Hedge Funds continues unabated. Obviously a good number of funds have blown up over the past year, causing a sizeable investor headache.

One recent article “4 Reasons Why Investors Should Avoid Hedge Funds at All Costs” outlines issues with oversight, managerial churn, investment concentration, and short life spans. These aspects should be concerns for many individual investors, but should not serve to rule out hedge funds as appropriate portfolio component for qualified investors. Despite the recent turmoil, Hedge Funds have a long history of serving the needs of qualified investors; one excellent summary of Hedge Funds can be found in the Knowledge Base section on the HingeFire website.

One financial industry issue is that everyone and their brother opened a Hedge Fund in the past few years. Most chased similar strategies involving credit spreads that all fell apart at the exact same time as the black swan came for a visit.

Most of these funds did not have a long track record and a number of the managers simply marched down the street and opened a new fund after the wheels fell off their previous effort. Investors need to differentiate between hedge funds with long track records, some spanning decades, and those opened within the past few years.

Hedge Funds should only be used by investors who understand the risks and expectations. During the past few years, the sales of Hedge Funds have gone down-market as the funds were sold to people who were marginally qualified, many times wrapped up by major brokerage firms as fund-of-funds (or a pyramid of fees). Certainly the unscrupulous account representatives made plenty on commissions but they were not selling a product that was appropriate for the customer. Many investors were convinced to place nearly their entire portfolios into Hedge Funds will the promise of huge returns, a good number of these individuals are now crying foul to regulators.

Hedge Funds are only appropriate for institutions and qualified investors who understand finance. These customers recognize the investment is long term and are using the funds as a diversification mechanism in context of a larger portfolio. Hedge Funds do have an appropriate place in the market. It would remain best that they are not regulated except for stronger restrictions on the qualifications of investors who can utilize these vehicles.

Before advent commodity ETFs and mutual funds, many well-heeled investors used funds requiring investor qualification for exposure to the commodity markets. Most of the funds were CTA/CPO run by individuals with Series 3 licensing. This was a very appropriate diversification method for investors with sizeable portfolios.

Hedge Funds are also in the forefront of offering products that are difficult to obtain exposure from using standard retail financial products; some examples include currency, private equity, and credit spreads. For qualified investors the Hedge Fund products serve as an important diversification tool.

Investors who meet the qualification requirements of Hedge Funds should not automatically rule out these investment vehicles due to all the recent bad press. An investor should evaluate the needs of their portfolio in regards to diversification, returns, and timeframe in order to make an informed decision about Hedge Fund investment. It is important to use on-line resources to properly investigate the returns, longevity, and track record of Hedge Funds rather than simply investing in a fund-of-funds pushed by major brokerage firms. Hedge Funds can serve an important role in your portfolio, and investors should approach these vehicles with an open mind, and more importantly with open eyes.

Wachovia Earnings Call

Wachovia held its earnings call Tuesday. As expected the news was bleak; headlined by an $8.9 Billion loss, a steep dividend cut, and 10,750 job cuts. However, the stock rallied on the news and earnings call. While the loss and job cuts are painful, it appears that Wachovia has a plan to turn its operations around and deal with the bank’s mortgage exposure.

The stock rally demonstrates the confidence that Wall Street has in new CEO Robert Steel. Some of the points in the turn-around plan were outlined in the conference call transcript. Wachovia will not be raising more capital or selling additional stock that would dilute current shareholders stake. The dividend cut to 5 cents per share will save $700 million per quarter, while the wholesale mortgage operation will be shut down. Analysts expect that the bank will remain an independent operation.

Wachovia: Turning the corner

The recent press headlines for Wachovia have been bleak recently; auction-rate security investigation raids, analyst downgrades, and sliding share prices. It seems that the bank can't catch a break from the negative media coverage. This is on top of all the earlier problems that led many to question the underlying integrity of the entire institution which in the past has joined telemarketers to scam it's own customers, and was fined $145 million from the Feds.

Despite all the difficult news there is a bright spot -- and his name is new CEO Robert Steel . Right from the initial conference call it appears that he is on the right track. He is going to first evaluate the "challenges" faced by the bank with particular focus on the residential mortgage portfolio and exposure to commercial real estate. Steel promises to outline his strategy on July 22, when the bank is slated to report its second quarter earnings. In a couple days we will be able to see how Wall Street reacts to the earnings and the vision of the new leadership.

Based on his reputation in both capital markets and government; Steel is likely to restore what is most important to Wachovia - a reputation for integrity.

Is Your Bank Next?

A slew of mainsteam press articles a month back stated that the credit crunch was over. Not so fast! As outlined in articles on HingeFire in May (see Is the Financial Crunch over?) the financial sector is ripe for continued turmoil.

The top headline news today outlined the shares of U.S. banks plummeting amid stability fears. Sizeable regional banks such as Wachovia, WaMu, and National City are near the top of the list that investors believe have the likelihood to fail.

‘"It's the cockroach theory. You don't just have one bank failure -- when you have a big bank go under, there's always more than one," said James Ellman, president of hedge fund Seacliff Capital, who is short some financial stocks.’

The failure of IndyMac in many ways was a standard run on a bank. Panicked depositors lined up outside the doors pulling out $100 million a day causing what regulators called the second-largest bank failure in U.S. history. It was clear to regulators, politicians, and investors that IndyMac was in trouble, leaving only the question of degree. This type on depositor driven panic could easily happen to other struggling regional-type banks.

'One woman leaned on the locked doors, pleading with an employee inside: "Please, please, I want to take out a portion." All she could do was read a two-page notice taped to the door.'

At some point the FDIC will not be able to handle the level of defaults. While the FDIC has staffed up expecting more failures, the federally sponsored insurance agency is primarily focused on merging banks in trouble. The FDIC does not have deep pockets to bail out a chain of sizeable cascading failures.

Regional banks are not the only concern. Fannie Mae and Freddie Mac are in deep trouble. To avoid total financial market panic, the White House administration has ask Congress this past weekend to approve a plan that would provide a credit line of some $300 billion to the troubled GSEs and buy their stock. The Fed passed measures to allow both Freddie Mac and Fannie Mae to borrow at its discount window. Clearly, the government's hand was forced by a $3 billion Freddie auction scheduled for today that would have revealed the extent of the disaster without government intervention.

Is your bank next?

Will you be lined up at the door of your local institution begging to get your money out while the door is slammed in your face?

This is a time to carefully evaluate the safety rating of your local bank where you have deposited your money. If the bank looks the least bit shaky then your should get your funds out before a wide-spread panic develops.

Hitting Top Returns in midst of Market Turmoil

What does it take to hit solid market returns even when market conditions are leaving the most experienced investors fearful? It comes down to proper stock selection and having the appropriate tools to find the best investments on both the long and short side of the market.

The FREE HingeFire stock screener is a powerful product that merges fundamental and technical indicators in a single tool. This helps put the market edge in the corner of investors.

GregB is now ranked 267 out of 18824 players in the Wall Street Survivor Contest (Traders Wanted - Play $50,000 Stock Trading Game). The evening before the contest, I ran the HingeBuy and HingeSell screens in the HingeScreen 1.5 product. These screens normally produce 30 to 50 results. HingeBuy provides a list of stocks that have the potential to out-perform the market; while HingeSell produces a list of stocks that are likely to under-perform.

It comes down to proper stock selection enabled by the HingeScreen product. I only had to pick a set of stocks once, at the very beginning of the contest to be successful. No need to churn the portfolio or trade.

A summary of the results to date are provided below. Note that all of the longs are still above water despite the violent downtrend in the market over the past few weeks. The balanced long and short portfolio is an excellent example of how to squeeze excess alpha out of the market. The overall return of the portfolio was +14.74% over a few weeks (72.68% on a yearly basis).

Longs
Symbol Return
------------------------
MOS +15.92%
XEC +0.86%
AXYS +0.46%
DAR +10.36%
BMI +0.06%

Shorts
Symbol Return
------------------------
FSNM +53.83%
GSAT +31.12%
CIX +22.65%
LYTS +19.54%
MEDX -5.19%


Disclosure: These stocks have been selected in a fantasy stock selection contest. They are not held in my real portfolio. Investing involves risk. Your results using software screening informational tools may vary. Proper portfolio diversification is important and any outlined investments may not be appropriate for your financial objectives or risk tolerance. This is not a solicitation to buy or sell securities.

The Gold prediction

A few months back we held a survey regarding the expected price of Gold on July 1st. The results were as follows:

Above $1100 24%
Between $1000 and $1100 24%
Between $900 and $1000 22%
Between $800 and $900 15%
Below $800 15%

The actual price of gold on July 1st was around $937. Congrats to the 22% of poll takers that correctly predicted the $900 to $1000 price range.

Since the start of July, gold has been looking bit toppy as if the momentum has disappeared in the market for this precious metal. It sunk to near $916 before staging a rebound in the past couple of days. This may be setting the stage for the next leg of the run up, however it is more likely a small bounce before further downward action. The next few weeks will be interesting to watch in this market.