Find the Common Denominator
Terry J. Atzen
Terry J. Atzen
With Crude Oil prices currently just below $60 per barrel, investors are well advised to keep an eye on its price.
This is the lowest price for Crude Oil since the summer of 2009.
Crude Oil is a critical component to our economy and of the economy of the world. It impacts energy costs such as gasoline and diesel fuel and it is the basic ingredient for the production of plastics, fertilizers, synthetic fibers, dyes, paint, detergent, photographic film, medicine, make-up and candles.
And, the impact lower Crude prices is also reflected in most stock indices as the large oil companies are major components of the Dow and the S&P 500.
To add to the importance of Crude Oil and why it is one of the major components of The Investment Compass™, there are the implications for the Russian ruble.
As can be seen on the point-and-figure chart seen below, Crude Oil has been in a free-fall since the beginning of November.more
Terry J. Atzen
Among the many stories in today’s news I came across the following headline: “Correction ahead? Investors exit stocks despite new records”
And, it has the below chart to illustrate its point.more
Everyone Agrees – So What?
Ever since the now infamous “Six Days of August” took place in the stock market, the press has been filled with reports that it was the long-awaited correction pundits have been expecting for quite some time now.
Yes, it was, by definition, a correction.
Here is the one version from Dorsey Wright’s Monthly Update:
“It’s official – the S&P 500 Index (SPX) has seen a 10% correction since the May peak. All told from the May peak to the low on Tuesday, August 25th, the S&P 500 experienced a 12.3% pullback. This is the first time the S&P 500 has pulled back by 10% since 2012, which took from April 2012 to June 2012 to complete. While this most recent pullback has been relatively swift, this is not an uncommon occurrence, especially in bull markets. “
OK, so with that “noise” out of the way, the real question is – So What?
What investors really need to determine is:
1. Is this a buying opportunity for another leg up in the bull market?
2. Or, is this the beginning of a bear market?
Ever wonder why the stock market or bonds or commodity prices move up and down?
Nearly everyone spends a lot of time looking to find a reason. And, if you look hard enough you will almost always find any number of reasons “why” it happens.
As Bigfork’s leading financial advisor, my favorite answer to the question, “Why?”, however, is the one an early mentor taught me.
“The answer to the ‘Why?’ question”, he would say,”deserves the cosmic booby prize – it doesn’t really matter why,” he went on to conclude, “it simply is.”
I understand that answer. However, lots of folks want something more definitive.
And, the good news is that in the case of why stock, bond and commodity prices moving up and down, there is an answer to the “Why?” question.
Actually, the price of anything, including stocks, bonds and commodities, moves up or down because of The Law of Supply and Demand.
Nothing more and nothing less!
When there are more buyers than sellers of a stock, the price has to move up. Conversely, when there are more sellers than buyers, the...more
The financial advisors at The Investment Compass are not in the business of making predictions, however, having been a close observer of both Gold and Silver for many years I thought I would comment on the current conditions of both of them.
Here is the current Point-and-Figure chart of Gold:more
Here at The Investment Compass, Mr. Atzen is one of America’s most innovative investment coaches. He can help you navigate the market with his 50 years of experience and insights as your guide. While nearly everyone could benefit from working with a professional financial planner, the cost is often prohibitive. There comes a time, however, when paying for financial advice becomes a solid investment in your future. How do you know when it’s time to hire a financial advisor?
In a perfect world, everyone would have financial advisors with whom we could check in once a month or call before making a big purchase or investment decision. While some people view financial advisors as expensive, it’s simply because advisors have to charge a certain amount to make a living doing what they do. As a result, the decision to hire a financial advisor requires a careful cost/benefit analysis. What does it cost, and what do you expect to get in return?
It varies, but most fee-only financial planners will charge between $1,000 and $2,000 for a comprehensive financial plan. Here at The...more
Terry J. Atzen
Remember high school physics and learning about Newton’s Law of Motion?
Mr. Richardson, my high school physics teacher, would be very proud of me for remembering after all these years, despite my seemingly unrelated career of providing investment advice in Bigfork, Montana.
Well, Newton’s First Law of Motion (sometimes called the Law of Inertia) states that an object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.
It is my observation that the same principal generally applies to the motion and direction of investments whether they are stocks, bonds, gold, currencies, real estate and other market investment vehicles, it works the same way.
In the case of investments it is either the buyers or the sellers that act as the “unbalanced force”.
When there are more buyers than sellers, the “unbalanced force” creates an uptrend (motion) in the price of whatever the investment vehicle is.
When there are more sellers than buyers, the “unbalanced force”...more
At the Compass Investment, we’re empower investors helping you take control of your finances and future. While you’ve probably read that it’s smart to manage your own finances, it’s actually a good idea to consider getting some help. You hire an attorney when going through a divorce because you don’t have the skills to handle it yourself – so why not hire a financial advisor if you don’t have the skills to totally handle your money?
Today we’re going to take a look at some of the questions you need to ask any prospective financial advisor you’re looking to hire.
Who will be managing your investments? If they’re a genuine financial advisor, they’ll keep your funds in a discretionary account and will conduct transactions without your trade-by-trade approval. Be wary of investors who claim to manage your money but really just act as middlemen between you and another financial advisor who is actually doing all the work.
What is the financial advisor’s track record? Ask for a copy of their Form ADV. This will disclose any possible conflicts that are arising from...more
One of the longest-lasting strategies taught yet today is the practice to Buy and Hold investments.
As an illustration of my beliefs on the subject, take a look below and observe the price history for the last decade and a half, of General Electric. GE is not only a component of the Dow Industrial Average, it is also in the S&P 500 Index.
It also happens to be a favorite amongst the Buy and Hold crowd.
It is true, I could have chosen a different company, however, GE allows me to make my point that it does “depends on what you buy and hold” which is what I’d like to emphasis in this article.
As you can see, the price of GE has had several major price swings.more
Terry J. Atzen
At The Investment Compass we are all about The Law of Supply and Demand. There is no other concept an investor needs to know in order to become a successful investor.
The reason for our commitment to this Law is because supply and demand are the only economic forces that affect the price of anything.
The price of homes, automobiles, groceries – anything – and that includes stocks, bonds, commodities, mutual funds and any other investment vehicle is determined by the prevalence of either buyers or sellers. Nothing else matters.
Many would argue that the matter of pricing is way more complicated. They would prefer to believe that fundamental factors such as corporate earnings, company sales, PE ratios or even which political party is in power are the factors that determine prices. All of those factors are categorized as “noise” here at The Investment Compass.
Buyers and sellers determine prices – it is as simple as that. Furthermore, we don’t even have to know why they are buying or selling. we are only interested in the prevalence of one or the other – if...more
Terry J. Atzen
Once again, stocks are at a critical level and investors need to be aware of where the stock market is and pay attention to their stock portfolios.
As you can see from the chart below of the S&P 500 Index, stocks made an amazing recovery from the 1820 level (twice this year) and ultimately reached the previous high made last year (at 2110).
Currently, the chart below of shows that prices are once again at a critical level as buyers and sellers continue their daily trading.more
OK, here is what I see.more
Terry J. Atzen
Weighing-In on Gold and Silver……..What’s the Real Truth
In the past few weeks, I have been amazed by the extreme range of predictions on the price of Gold and Silver (Harry Dent [www.economyandmarkets.com] says $750 and Jim Rickards [www.silverdoctors.com/Jim-Rickards] says $10,000), so I decided to weigh-in on the subject (without the predictions!).
Let me say first, that this is a great example of why I wrote my book and why I do the work that I do.
Pundits can, and do oftentimes confuse investors. This creates doubt and causes investors to ask, “Who do I believe? Who is correct? “What is the Truth?”, and as the result, end up doing nothing when their personal instincts say otherwise.
My work is about “What Is” – logical, simple and easy to understand.
As usual, my analysis begins with an index, in this case, the Index for each of the metals, then the respective ETFs as well as the Inverse ETFs for verification.
And, at the end of this...more