Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

The Year Bias Died

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“All of us show bias when it comes to what information we take in. We typically focus on anything that agrees with the outcome we want.” – Noreena Hertz

I have been wanting to write this article for some time now this year. I wanted to wait until the results I was attempting to achieve became overwhelming. I think we’re there, so I am eager to share. Before I do, let me take a step back and share briefly my history as a trader and investor. I would divide my investing & trading history into three segments.

1998-2007 – Long term investor. Buying and holding assets.

2007-2014 – Combination of buying long term investments & discretionary trading

2015 – Combination of buying long term investments & ATR based trading

I graduated from college in 1998, began working, and investing. My focus was accumulating capital, and putting it to work buying companies that I believed in, understood, had good balance sheets, and for the most part paid dividends. It worked. I enjoyed it. I was good at it. At this point in my life my expertise was understanding companies, not the global economy, or technical analysis. My father was an executive, and my brother was an entrepreneur. I had grown up in business, and been educated in the management of companies.

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Market Volatility is About to Get Wilder for 2016

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I can’t get too excited about possible market follow-through in any one direction on the S&P 500 Index unless and until price breaks and holds either above 150 or below 100 on the SPX:VIX Daily ratio chart below.

Currently, price is still in what I call the “Major Conflict Zone.” Yes, I realize it’s a huge range, but that’s the way 2015 has gone. In my opinion, I think 2016 will see greater volatility and much larger swings than we’ve seen this year…hang onto your (Santa) hats, folks!

 

Mollycoddled

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I was a grumpy old man even as a child, so this post emanates from that legacy.

I’ve been puzzling over the peculiar reaction the market had on Monday to the savage attacks that took place in Paris. Never would I have dared imagine that assets across the board would excitedly zoom upward following this brutal mass killing in one of the most beloved cities in the world. It just made no sense.

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Mutual Fund Outflows Warn Of Another Major Leg Down in Equities

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On the chart below, I plotted the month-end values of the S&P 500 against the Domestic (U.S.) Long-term Equity-Only Mutual Fund Flows. Although we don’t have the data for the October month end yet, the first two weekly reporting periods (Oct 7th & Oct 14th) for Domestic Equity Funds have seen net outflows of -$1.31 & -$1.44 billion, respectively, for a total of roughly $2.8 billion in net outflows MTD (data for the week ending Oct 21st should be released in the next day or two).

Note how investors “bought the dip” in previous corrections, providing institutions with the capital to buy more stocks which fueled the next leg higher in U.S. equities whereas this most recent correction has been followed by persistent, massive withdrawals from US equity funds.

$SPX vs Fund Flows
$SPX vs Fund Flows

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