Transcript Recessions Happened Each Time Federal Taxes Reached 18% of

Rational Investing
Special Interest Group
combines fundamental and technical analysis
Economic Climate and
Market Weather Conditions
Presented by Herb Geissler, Managing Director of St.Clair Group
November 2015
Only 1 in 7 economists expects a
recession in the U.S, within 12 months.
What does that “one economist” know
that the other six may be missing?
 Consensus: Washington politicians “would never allow a
recession to occur in the year of a Presidential election”
 Consensus: Year before a Presidential election (eg: 2015)
always has been the most profitable for the stock market
Recessions Happened Each Time
Federal Taxes Reached 18% of GDP
Slipping Profit Margins Have Reliably
Predicted Imminent Recession
Bad Winter, Sluggish Spring, Weak
Summer => Declining US Economy
3Q/15 = 1.6% p
Causing Manufacturing PMI
to Drop Since Last Thanksgiving
9 of 11 recessions started
when PMI was 50 or lower
As Confirmed By Regional
Federal Reserve Banks
Causing Job Gains to Flatten, then Fall
Monthly Jobs Added
Post Mid Term Returns Have Been Shrinking During Current Kuznets Bear Cycle
This year may be first time, ever, that 3rd Year was not profitable
Market Valuation is at an
Unsustainable Extreme
Tobin’s Q Ratio = total stock market valuation / replacement value of assets
A Severe Recession and
Market Drop Seems Likely
However Moving Average Spreadsheet
Has Flipped to “All Clear” for November
13.7%
14.3%
8.2%
4.5%
9.6%
timed
5.6%
10.0%
6.7%
(-1.6%)
0.4%
B&H
(-12.1%)
(-11.7%)
(-20.2%)
(-12.7%)
(-19.3%)
mmDD
Timed
With Growth Stocks Continuing
to Outperform Value Stocks
50/50/0 Dilemma
• 50/50/0 measures are all pulling back from positive extremes
• Struggling all year to break above January 2 price
• Close is barely above MA200day and MA50 is below MA 200
• PEt = 23.4 = 4.3% earnings yield vs 2.3% 10yr TBond
Major Global Markets All Are
Bouncing up from LT Support
Santa Claus may be generous to Wall Street, once again
Intermediate-Term Net-Out
Prudent Caution is still called for
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FED is no longer fueling excess liquidity, but Europe is still in QE.
US economy is weakening and Washington remains dysfunctional
Election hoopla increases confusion and uncertainties
Recession is imminent, but not immediate
US stocks struggling in a trading range: favorable seasonal forces
providing long-term support and excessive valuation limits tops
Can be “cautiously safe” when above 4 and12 month moving average
After Santa Rally during next few weeks, tough correction is likely
Index and Momentum trading handicapped by lack of decent trends
Disciplined Position Trading could profitably ride isolated trend-bursts
Spreadsheets and Technicals will show red lights for jumping into safe
haven and green lights for when to bottom-fish the bargains
For the longer haul,
Seminar scheduled for February 13
Seminar will examine the Dangerous D’s
 Debt, Deleveraging, Devaluation, and Deflation
 Debilitating Demographics
 Dysfunctional Democracies
But, for investors, problems often are opportunities in disguise
 Preserve capital to buy bargains with simple market timing
 Identify best opportunities with trend-following methods
 Surface strongest prospects with rational stock selection
 Assure gains with disciplined entry and exit rules
Saturday morning seminar starts at 8:30 and ends by 1 pm
 Registration fee is $125 in advance, $150 at the door
 Copy of slides and spreadsheets for enhanced 5 Diverse Strategies
assured with pre-registration ($75 credit for previous purchasers)
During tumultuous markets, a fact-based
outlook, a sound plan, and good discipline
are all more essential than ever
 Tonight, Lucio Facchini will discuss Tony
Robbins’ research and insights on
managing your investments
 Before we begin that next segment, any
questions about market climate?