Quiet the Noise (Listen to the Data) This is the first Newsletter in this format, but hopefully, with your feedback and with familiarity over time, the following indicators will help give you a “temperature reading” on the market and the risk level on the “field.”

Relative Strength Line Up of the Asset Classes:

  1. Domestic Equity (Overweight)
  2. International Equity (Overweight)
  3. Fixed Income
  4. Foreign Currency
  5. Cash
  6. Commodity (Void)
  • #1 Asset Class: Domestic Equities
  • #2 Asset Class: International Equities
  • Market Status: BULL
  • NYSE Bullish Percent: 68%

Offense An interesting NY Times article on Mark Twain’s October market sentiments. Just when we think we are in volatile times not seen before, this surfaces from Twain dating back to 1894; “October. This is one of the peculiarly dangerous months to speculate in stocks…The others are July, January, September, April, November, May, March, June, December, August and February.”

Whether I think October is a good or bad time to invest doesn’t matter, I don’t get a vote. The RULES governing all of the investment decisions made in our client’s portfolios get the vote. Outlining the philosophy behind our asset management, I think, can never be overdone. For the clients (2 have actually said this!) who remark to me “oh, my blood pressure just dropped” when they fully realize that Cokie doesn’t get a vote, that Cokie isn’t calling market bottoms and market tops or deciding when to buy bonds over stocks: YOU GET IT.

Rick Ferri, author and money manager addresses the concept of investment philosophy best, “Strategy comes from philosophy. If you don’t have a philosophy, you can develop a strategy, but it’s only going to blow apart the next time it doesn’t work for a month or two. And you are going to go onto another strategy, and that’s the worst thing you can do.” Investment strategies are a dime a dozen, a philosophy will guide you successfully though the next market cycle. Our Rules philosophy has guided us through the good and the bad; lock arms with us and together we will weather the market’s uncertainties with conviction and discipline; a winning combination.

I want all of my clients to GET IT—and buy in to our rules-based-no-emotion-philosophy. This is my newest charge: 100% of our clients will GET our philosophy. Click here to email me for a 10 minute, one-on-one philosophy re-cap—your stress levels will diminish and the understanding I hope you will gain will offer great sleep at night in these volatile times.

Q4 Happy Hour! October 15th 5:30-7:30

“Income & Finding Opportunities in a Dynamic Interest Rate Environment”

“Equity and Economic Outlook in Times of Uncertainty”

210 Coming Street, Charleston

We hope you will join us for beverages and light hors d’oeuvres.

Our guest speaker is Luke Webber, the regional manager at Lord Abbett. Luke will be discussing ways to generate income and find opportunites is our dynamic interest rate environment. Luke will also be giving us his outlook on times of uncertainty, pertaining to our economy and equity.

As always friends and referrals are welcome!


Government Shutdown stats from our friends at Dorsey Wright:

Obviously, the big news (besides Obamacare) that everyone has been reading, viewing or talking about is the US government shutdown, the first in 17 years — dating back to January 1996. The government did in fact shutdown on October 1st, and with this, many have questions about what’s open and closed, what payments are honored, and how the stock market has fared during past shutdowns. So today we thought we would offer a little fodder for your consumption on the topic — some that we generated, and some from other sources that we found insightful. First off, for those interested, we came across an article from USA Today that answered 66 questions on the topic. To access that article, click here.

Regarding the stock market’s behavior, above we offer two images. The first shows the market action for the S&P 500 Index [SPX] during the last US government shutdown that lasted for 21 days, from December 16th, 1995 to January 5th, 1996. Given that December 16th was a Saturday, above we show you the market performance from December 15th’s close to the close on January 5th. When it was all said and done, over those 21 days the market was basically flat, gaining +0.1%; granted, during those 21 days we started off with a sell-off only to rally back up towards the end of the shutdown period. The second image above was accessed from Barry Ritholtz’s site, with the actual data provided by SentimentTrader.com. As you can see, this shows all the past government shutdowns, how long they lasted, and how the market performed before, during and after the shutdown. Generally speaking, as you can see there has been no major impact or trend regarding the market during these periods of shutdown.


Rules Quarterly

Some ask, “What makes Red Triangle’s investment philosophy so different?” Or, “if you were to offer 1 thing investors should do to succeed….” and the answers is RULES.

I want to demystify the noise for investors and and help them break free from Wall Street’s games. Whether these investors do so via our way or on their own, I don’t care–I simply want to move the needle—the Wall Street RIGHT-SIZING needle. And if investors start demanding more and better, the needle WILL move.

Soap box, DONE. I’m down…until next quarter’s update.

Rule #1:

IF: Bear Market status is confirmed…(measured by CASH outperforming S&P on a relative strength basis and/or SH (short version of S&P 500) outperforming SPY)

THEN: Apply Bear Market Rules:

  1. Raise 50% cash IF Cash is NOT a #1 or #2 ranked Asset Class
  2. Raise 75% cash IF Cash IS A #1 or #2 ranked Asset Class

Past Example(s):

On 7/7/2008 (Remembering that Markets didn’t “sell off” until September that year…) 50% cash was raised because #1 & #2 Asset Classes were Commodities and Foreign Currencies. However, on 7/23/08, CASH moved into the #2 Asset Class spot, thereby triggering an additional 25% cash to be raised.

The take away: The next time we find ourselves in a Bear Market, your accounts will have already adjusted for it just as in the above example, and hopefully, we will be 2 months early, yet again!

Stay tuned for Rule # 2, next quarter.


Subscribe to Cokie’s Blog for more frequent updates on Markets and Matters….

Most of my blogs are less than 200 words—short and sweet! I have 2 weekly posts one is uber- short and the other highlights our Investment Management “Rules” with one Rule detailed each week.

Q3 Most Read Blogs:

  • Buffett with a Boost, Nix the Buy and Hold
  • DIY’ers DON’T Hunt Elk (or invest your retirement account) On Your Own!
  • American Airlines’ 401k Plan Is Broken—What Are The Chances Yours Could Be Too?


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