Transcript Document
The Secular and Cyclical Outlook for Stocks, Bonds, and Commodities Since 2000 a “Lost Decade” For Investors… Are you Prepared for Another “Lost Decade?” AAII Silicon Valley Meeting Saturday November 13, 2010 Presented by: Tom Kopas www.pringturner.com 4 3 2 1 19-years/ 69% decline/ 19-years/ 67% decline/ 6 recessions 4 recessions 16-years/ 62% decline/ 4 recessions ? 10-years/ 38% decline/ 2 recessions ? Halfway Through Secular Bear Completed Secular Bear Target Area 2016-2020 4 U.S. Stock Prices (Inflation Adjusted) 1 U.S. Commodity Prices Commodity Oscillator (72/240) 3 2 2000 1966 1929 1901 2 4 1 2 1 3 4 2 2 4 6 1 6 4 5 3 3 7 1 3 5 7 5 Key Points: Secular Trend for Stocks Long Periods of Alternating Good and Bad Performance Secular Trends Change at Extreme Valuation Levels Currently Halfway through our 4th Secular Bear Market Be Aware of Commodity Secular Bull Market Capitalize on Cyclical Stock Market Opportunities Understanding Secular Environment is Key to Success Pring Turner Investment Approach Financial markets are linked in a logical, rational, and sequential relationship to business activity. Financial markets have tracked these business cycle sequences for over 150 years. The Random Noise of Economic News! Money Supply ? Bond Prices Stock Prices Economy Commodities Secular Bear Secular Bull Secular Bear 4 to 5 YEARS Bonds Stocks Inflation Utilities Banks Technology Food Producers Technology Transports U.S. Treasuries Consumer Discretionary Oil Drillers Oil Drillers Diversified Metals Energy Diversified Metals Healthcare U.S. Treasuries Key Points: Investing Around the Business Cycle Markets are Linked in a Logical, Rational, Sequential Relationship For over 150 Years, Markets have Tracked Business Cycle Sequences During Secular Bear Markets Economy in Recession More Often Pring Turner Organizes the Business Cycle into 6 stages Currently in Stage 4 Good for Stocks and Inflation Sensitive Securities Bad for Bonds Business Cycle Drives Profitable Asset Allocation Decisions …Uptrend still intact. Oscillator registered sell signal but… Green/Red highlights show when KST is above/below its 12 Month Moving Average Green highlights show when our secular model is bullish Green highlights show when this cyclical model is bullish Trading Range likely to be broken this cycle Early phase of Commodity Outperformance over Bonds Key Points: Secular Trend Bonds/Commodities Bonds have been in a Secular Bull Market for nearly 30 years Bond Owners Beware: Secular Trend is at a Critical Juncture Cyclically Bonds are Vulnerable to Interest Rate/Inflation Risks Small Rise in Interest Rates Leads to Substantial Losses in Bonds Commodities Continue Secular Uptrend Risky for Bonds Opportunities in Inflation Sensitive Securities Tactics to Protect and Grow Your Wealth Class Stocks Secular Cyclical Bear Bull Secular Trend at Critical Juncture Bonds Inflation Sensitive Assets Bear? Bull Tactics Use Business Cycle to Tactically Allocate Assets Inflation Themes are in Secular Bull Resourced Based, Foreign-Emerging Markets Quality with International Exposure Income Producers Bear Review and Reconsider Risks Lower Bond Allocation Reduce Bond Maturities Set up Short-term Bond Ladder Hedge Bonds with Inflation Sensitive Securities Bull Favor Natural Resource Companies “Chindia” Theme, Global Resource Demand Precious Metal Exposure Resource Based Countries Canadian Royalty Trusts Pring Turner Capital Group www.PringTurner.com Thank you for Listening… You are welcome to visit our website www.pringturner.com for research updates