Market Technicians Are Getting Grumpy

A client with a technical eye recently sent me a chart of the S&P 500, wondering what I thought about the classic triple top pattern that had formed through September and October. So it was perfect timing when the guys at the Stock Trader’s Almanac (who produce great work) wrote about this pattern in their latest piece. They believe it’s an ominous sign for the markets, especially as we enter 2013, and this seems to be a popular opinion among technicians.

Searching for a Performance Tail-Wind

For the past three years our insistence on maintaining a globally diversified portfolio has not been especially helpful in outperforming our blended benchmark on a consistent basis. If we use the EAFE Index (the MSCI Europe Australasia Far East Index) as a proxy for international markets, the returns versus the S&P 500 Index (the stock index in our benchmark) look unattractive:

Tax loss harvesting

Playing the Odds with the Alternative Minimum Tax

The almost annual decision regarding the Alternative Minimum Tax (AMT) is back. In December 2010, Congress and the current Administration gave us a two year extension on the “AMT Patch,” but that only included tax years 2010 and 2011. The Tax Policy Center estimates that without intervention, the number of American households impacted by the Alternative Minimum Tax will leap from 5 million in 2011 to nearly 30 million in 2012.

Pinnacle’s Employment Model

Some of the most widely followed measures of U.S. employment, such as jobless claims and payrolls, can be particularly volatile from one month to the next. Some of the volatility is due to seasonal effects and can be smoothed out through seasonal adjustments. However, these adjustments require one to make assumptions that can be somewhat arbitrary and are therefore often the subject of criticism. Throw into the mix the fact that we’re less than a month away from the presidential election and things can really get confusing.

Water Cooler Conversations

The investment team members at Pinnacle are connoisseurs of investment research.  We read a vast variety of analysts and money managers, each having their own opinion about the economic cycle or their particular area of expertise.  We have spent a decade finding those analysts who are clear in presenting their point of view, are well-known in the buy-side investment community, and are (hopefully) smarter than we are.  However, as we have opined on many occasions, it is simply not possible to be in the business of venturing opinions about the financial markets without being wrong at one time or another.  For that reason, most analysts make certain they caveat their thoughts about financial issues and at least make an effort to present the opposing view, if for no other reason that they don’t want to make a devastating mistake that could upset their reputation and their business.  Everyone involved knows how to play this game.  For Pinnacle, as the consumer who is willing to pay for the privilege of reading an analyst opinion, we subscribe to analysts and research firms that give the clearest possible forecast.  We know how to sift through all of these opinions and add them to our own internal research as part of the “weight of the evidence” we use to formulate Pinnacle’s own investment view.  If the analyst or research house we follow is too vague they inevitably get dropped from our research.  And if they are clear and concise we applaud them, but also require that they are right more than they are wrong.

Protecting Yourself Against Financial Email Fraud

Email fraud is on the rise in the financial world. We’ve noticed the phenomenon ourselves: Over the past several months we’ve seen an increase in computer hackers targeting client email with the intention of committing wire fraud. These scammers hack into the client’s personal email account and either create a cloned account using a similar email address, or they comb through the “Sent Folder” looking for financial or personal information. In either scenario, once they come across Pinnacle’s contact information, the hacker sends an email from the client’s address (or the cloned address) posing as the client and requesting funds to be wired to their bank account.

Rock ‘Em Sock ‘Em Multipliers

Right now we sit in an unusual place in financial history: World fundamentals are taking a back seat to policy makers who are defending the current system with new monetary tools. As market analysts, we’ve watched the perpetual bull and bear debate grow as divisive as ever, and while both camps have impressive arguments, neither camp has enough history to make their case.