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EXCLUSIVE WEBINAR: The Shemitah and Your investments

Everyone is talking about the Shemitah. Rabbi Cahn in his book The Mystery of the Shemitah covers the Biblical aspects of the Shemitah as well as the market and economic implications. In this webinar, I take his work and go a step further. As far as I know, this is research that no one has connected. In this webinar I go over the following:

  • I cover past Shemitah years dating back to the 1920’s.
  • I tie in this current Shemitah with longer term cycles and current patterns of the market.  The Dow Jones is repeating an identical pattern from the 60’s and the 7 year cycle (the Shemitah) ties into both patterns.
  • I talk about how the 49 year (7x7) cycle that proceeds the year of Jubilee ties into this particular Shemitah year and our markets.
  • I give you the roadmap to watch to determine what is unfolding.  You can watch for the warning signs versus just assuming that they will occur.
  • Most importantly, I give you resources that you can implement in your own portfolio creating a plan B.

Bottom line – Most predictions and forecasts are of economic collapse.  THERE CAN ALSO BE A POSITIVE TURNING POINT HERE.

Listen and get informed so that you can draw your own conclusions

 
Should You Get Out of the Market?

 

By Bob Brooks

August 31, 2015

 

After the big moves in August, I am getting this question a lot.  Many are wondering should I stay invested or get out?  There is a lot of fear in the air when it comes to the stock market.  In fact, I don’t think that I have experienced a time when there was this much fear following as small of a decline.   Having said that, it is important to get control of your emotions.  Emotional decision making is a recipe for a bad decision. 

So, let’s take a look at your options. 

Get completely out of the Market

Of course, this is always an option.  The downside of getting out is getting back in.  For most investors, they are very hesitant in getting back into the market forcing them to just stay in a money market.  I tis important to have a re-entry game plan.  The mutual fund industry would argue that you can’t time the market and you might miss out.  I am less concerned with that reasoning and more concerned with the first downside mentioned above.   

Adjust your risk level

This is a relatively easy way to look at investments.  First, determine how much you have invested in stocks and or stock funds.  Let’s say that you have 80% invested in stocks or stock funds.  Said another way, you are taking 80% of the risk of the stock market.  Maybe you are not comfortable with that high of a percentage.  If not, than lower it to a percentage that is more of a fit with your comfort level. The rest of course would be invested in high quality short-term bonds or guaranteed type investments.  Keep in mind that you have to be careful with bonds as well.  Considering them a safe investment is not wise.  They have their own set of risks.  With bonds, remember high quality and short-term. 

Clean up your portfolio

Go through and take inventory of your investments.  For each investment, ask a simple question.  Why am I hanging onto this investments?  What is the compelling reason to stay invested?  What is the upside or the downside?  Sometimes we treat our investments like the clothes in our closets that never get worn.  We know we won’t wear them.  Yet, we don’t get rid of them.  If you did an honest assessment, you might find that you would completely go another direction. 

Use Lower Beta Funds

Beta measures the risk of a mutual fund.  A beta of 1 means that mutual fund is taking 100% of the stock market.  A beta of.5 means that fund is taking ½ of the risk of the stock market.  A beta of 1.5% means that fund is taking 150% of the risk of the stock market.  You can lower your risk level simply by going with lower beta funds.  My research on lower beta funds shows that they recover quicker from loss.  (past performance is not guaranteed to repeat in the future)  You can research your funds at www.morningstar.com

Make room for Alternative Mutual Funds

A good alternative mutual funds is as its’ name suggests.  They offer an alternative way to invest.  A true alternative mutual fund will invest to be non-correlated to the stock market. Said another way, it is invested to perform opposite of the stock market.  Although this category of funds can offer a good solution, you have to be careful for a few reasons.  First, not every alternative fund truly works that way.  I have found many alternative funds that have no business being classified in that category.  Second, there are some alternative funds you can buy and hold.  However, most of them have to be managed. 

Delegate the Management to an Active Money Manager

Get out of the buy and hold game and let someone actively manage the money for risk and growth. Having someone who has experience with alternative funds and risk management can be a real advantage.  If you want more information about this option, please email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

The above are just some ideas beyond taking the nuclear option of just getting completely out of the market.  You can mix and match any of the above ideas in a portfolio strategy.  It goes without saying none of the above is intended to be taken as advice!

 

 
Correction or Bear Market? A Look at the S&P 500

Earlier this week I wrote about the patter that was occuring in the Dow Jones Industrial Average. How about the S&P 500? Yes this index is also in a negative pattern at the moment. The key to interpreting risk is to answer the all-important question. Are we in a correction where the market declines 10 to 20% and then recovers or are we in a bear market where the market losses over -20% over a period of time. Corrections are actually healthy for a bull market. Bear markets are of course bad for investments. As a review, the S&P 500 is in a pattern that the 5 worst bear markets have started from. That doesn’t guarantee it will happen. It just is a warning of caution.

2007 to 2009

Rather than going through all 5 bear markets, we will just take a look at the last one.

The pattern occurs where the market goes back and forth over a period of time and then starts a decline. You can see it in the above chart. The market is going back and forth between the two lines. Those two lines form a channel. Then the market falls out of the channel. This is the S&P 500. The Dow Jones Industrial average is in the same pattern as well as a 15 year megaphone pattern. You can read about that here. (ask me where to link it)

Let’s take a look at the current chart of the S&P 500. This was what happened on Monday of this week when the S&P 500 fell out of the pattern.

You can see how the S&P 500 decisively fell out of that pattern.

Let’s take a closer look at 2007.

That orange line shows how the S&P 500 fell out of that channel and then rebounded back up. This is what it looked like in a bigger picture.

Now this is what it looks like today.

It is tracing out a very similar pattern to 2007. The key is to keep a close eye on this chart. The best case scenario is that the market will recover back into that channel than rise out of it. The worst case scenario is a bear market. I will keep everyone posted in real time on this blog.

As a reminder, if you are concerned that you are not taking the right type of risk in your portfolio, I am always happy to review what you are doing. It doesn’t take very long at all. You can email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call my office 972-386-0384.

 
Crash or Correction or Bear Market?

Considering what is happening in the markets, I wanted to share with you a letter that I sent out to my clients this morning.

As a review, let’s take a look at what is happening in real time. First the S&P 500. We have been watching this channel as the market has gone back and forth between the two blue lines since last November. As I stated in past letters, the S&P 500 should break out of that channel with vengeance. It has done so to the downside. Keep in mind, the last two bull markets have ended in this same pattern. 5 of 5 of the worst bear markets in history have been preceded by some variation of this pattern.

Now the Dow Jones Industrial Average

As written about, the Dow is in a 13 year megaphone pattern. You can see on the chart it is going through the same pattern as in the 70’s. We would be at point 5 if this continues to play out. Point 5 in 1973 produced a -45% decline. 1973 just like today was a Shemitah year. The reaction in point 5 is telling. Thus far, the market has started a big decline at point 5.

 

 

Crash or Correction or Bear Market?

The Dow Jones opened this morning down over a 1,000 points. Typically, when the market opens with that much loss it recovers throughout the day. The key is what happens in the afternoon. If the selling returns, it could get out of hand quickly. As I write, the market is trying to recover. Keep an eye on it.  

A normal correction in a bull market is a loss of 10 to 20%. A loss greater than 20% is a bear market. It is way too early to tell what we are dealing with. However, the following should point to caution.

  1. Psychology – Investors are not accustomed to normal losses. A 5% loss will feel like a 10% loss. The media is already blowing this way out of proportion. Investors are also more risk adverse than ever before. Year to date, investors have liquidated 78 billion dollars of mutual funds. I don’t think that today’s investor is going to stick around.

  2. Mutual Fund Cash – Mutual fund money managers have the lowest amount of cash on hand in history. Thus, if investors are selling their mutual funds, mutual fund money managers have to sell their stocks to create cash. This adds to the domino effect.

  3. Margin Debt – Investors have foolishly borrowed against their investment accounts to purchase more stocks. We have more margin debt than any time in history. AS stocks decline, brokerage companies will issue margin calls requiring investors to pay down their debt. That also adds to the selling

So, I don’t want to get too far ahead of myself forecasting what is to come. We just need to take it day by day. This first 30 days of selling will tell us a great deal. The losses in the Chinese stock market during the first 30 days were as great as the losses during the first 30 days of the 1929 US bear market crash. We are witnessing deflation playing out. It hit the gold market. Then it hit the oil market. It hit China’s stock market with a vengeance. Now it appears to be hitting our stock market. It was only a matter of time.

If the deflationary waive stays consistent, the losses in the stock market could be deep and could occur quickly defying what anyone would think could happen. Then again, we could be off to new highs before you know it. This market has been very unpredictable!

 
UPDATE: Stock Market Pattern Signaling Trouble Ahead

A few weeks ago, I wrote about a troubling pattern that has been developing over the past 13 years in the Dow Jones Industrial Average.   I wanted to give you an update. As a review, the stock market moves in patterns. On occasions, you will see these patterns repeat themselves. Below you will what is called a Megaphone Pattern. It is called that way because the pattern is in the shape of a megaphone.

You can see below, that this pattern developed over a long period between 1966 and 1976.

 

As you can see, there are 6 main points. Point 5 to point 6 is the more significant decline of the pattern. The exact same pattern is playing out today. This pattern is much bigger. Think of it in terms of the development of a hurricane. Hurricanes develop in certain patterns. The environment has to be just right for the development to occur. Some develop into big hurricanes and some fizzle out. This pattern has been developing now for 15 years.

 

Just like in the 60’s and 70’s, there have been distinctive points. Today it looks like we are at point 5. If so, point 5 to point 6 would be a very large decline. During the 70’s, the drop from point 5 to point 6 was -45%.

 

What are the signs to look for to confirm the suspicion?

 

You want to look at how the market reacts when it gets to those points. This is what it looks like at potential point 5 today.

 

The stock market will get to that point and either successfully rise above it and nullify the pattern or struggle and start a decline. Unfortunately, the latter is happening right now. This definitely bears watching. I don’t write this to over sensationalize the current weakness in the stock market. I write this so that you can get a better view of what risk looks like. At any given time, the Dow Jones could nullify this pattern and strengthen again.

 

Next week, I will be rolling out a very detailed webinar on what this looks like and how this also potentially ties into the Shemitah year. There are some very interesting similarities.

If you are concerned about the risk you are taking, I am happy to evaluate your risk level by taking this survey as well as give you an opinion on your investments.  You can either all my office at 972-386-0384 or email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

 

 

 

 
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