Monday, March 21, 2005

Cumulative Knowledge (03/20/2005)

I'll admit...I've been lazy this weekend. After figuring out some pretty complicated programming stuff late Friday night at my day job...I decided to relax and kick back over the weekend. So, I watched TV, read some books, put off doing my taxes, and took my daughter to see the Robots movie. The movie was pretty good. Would have been really cool if we could have seen the Imax DMR version of the film. Still good nonetheless.

One thing I caught up on this weekend was Cramer's Mad Money show on CNBC. Were you like me and caught yourself rubbernecking to the show? It felt like I was watching a traffic accident in progress. But, in the end...the show works. Why, I have no idea. But, there is some value. If you can get past the corny highjinks, preachy tone, and bald headed crystal ball...the show comes alive when the viewer interaction begins. Granted it's a somewhat one-sided interaction...but interaction nonetheless. In fact, I believe the show's approach shares more in common with us bloggers than we care to admit.

Now on to the notes...

  • Almost 47% of U.S. food dollars will be spent in restaurants in 2005. In fact, the U.S. restaurant industry is projected to set a sales record of $476 billion in 2005. Could this be a boon for greasetrap cleaner DAR?

  • Need a job? Looks like a nationwide shortage in ultrasound field technicians. And a growing demand for Veterinarians.

  • Increased crop production raises land values, which pushes out livestock. So, if farmers are doing well with crops then they'll turn more land over to farming and less to cattle thus boosting crop production and limiting meat production.

  • Annual farmland price survey data from Iowa State University shows the average price for Iowa farmland surged 15.6% to $2,629/acre in 2004.

  • Top Oil producers in Texas here.

  • Texas ranks first in the U.S. for new corporate offices and expansions in 2004. Second on the list is Michigan. Last time Texas was first was back in 1992 when tied with North Carolina. Read here.

  • According to the Mortgage Bankers Association, more than 32% of mortgages are now adjustable.

  • Prisons are normally big landowners in the state they reside. Why couldn't they sell some of that land to satisfy the large state government budget crunches? Looks like Texas is already doing just that. Read here.

  • Did you know there's a 20% drop in household spending in apparel, decline of 18% in spending of food away from the home, a decrease of 10% on food at home, and 16% drop in owned housing for the ages of 49 - 59 years old? If spending drops for pretty much everything for these 49 - 59 year olds...what spending categories see increases? Healthcare is up 23%, reading material up 32%, and a small increase in entertainment spending. This research was performed by the BLS and obtained from the Economic Beat Column by Peter Francese at Barron's. What age bracket does the current glut of Baby Boomers reside? Ages 47 - 54 years of age.

  • An aging population means sluggish growth in output per person. Business profits will be pressured as profit growth is weighed downward and pension obligations rise. Plus, an influx of new workers, a.k.a...the Echo Boomers, and you've got a decrease in the average productivity of the employed labor force as happened in the 60's and 70's when the Baby Boomers entered the labor pool. A decrease in average productivity means higher unit labor costs and thus higher prices.

  • The fall of GM? Is GM a great buying opportunity? Or time to get out while the Titanic is sinking and the band plays on? Me? I'm avoiding GM altogether and watching the auto parts group. It's way too early to buy them right now...but another bad year like 2004 and things might get interesting. Already Japan and China are courting Delphi due to their low cost high quality manufacturing process. Could it be out of line that one of these countries buy a company like Delphi? I'm not smart enough to know. But, will continue to watch the group.

  • I've studied many trading styles. But, I'll be the first to admit...Elliot Wave has always been placed on the back burner for me. The reason? I don't like anything that changes the past. In essence, subjective viewpoints are tough for me to trade. I come from a programmer's background...junk in = junk out. If your input data can change on you then what is the validity of your output data? I fight this all the time in system development. So, to choose Elliot Wave techniques where counts can change based on something new happening...well...I didn't need something else to aggravate my system mind. This interview with Glenn Neely from Real World Trading changed all that. In fact, I have added this guy's book to my reading list. I'll be honest, I learned a lot from this interview. I like the guy's use of "violent" price action to end the old trend and start the new. I have used "violent" price actions in my trading systems to identify new long term trends so it's nice to see another viewpoint on this pattern. The guy forecasts a bottom in 2015 and then we'll see the most spectacular stock market advance in the history of mankind. In fact, the Glen goes on to predict all sorts of things from a reduction in government overhead, huge efficiencies in our medical systems, third world industrializations, gold still in a secular bear market that will potentially bottom in 2010, a period of deflation, and the 2002 lows in the SP500 & DJ30 will not be broken for the next 50 - 100 years. Please read more here.

  • Another great interview by Real World Trading...this time with Aaron Schindler. Aaron worked with Monroe Trout (one of the Market Wizards). I like his use of inter-market relationships in his trading systems. He gives a brief example of China and oil. The interview also covers some great backtesting topics similar to what GalaTime is currently doing with his covered call system. His comments on trying to be as quantitative as possible in your trades is great advice.

  • And finally, a good laugh. This article, though a bit out there, probably does shed some truth on the recent housing boom. The Testosterone versus Estrogen magazine covers highlighting the different manias (tech vs credit) had me laughing out loud.

And Jaloti, I'll work on getting my weekly posts out there a bit earlier than my always erratic late Sunday/Monday night postings. :-)

Have a great week!

Later Trades,


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