Rainer's Investment Insights

'Seemingly intimidating' is what we might call the situation we find ourselves in over the last few weeks, confronted by suitably frightening details, snippets of truth and media frenzy.  Rather than adding to it, I prefer reducing the noise:   Already 'ignoring' any impact from the earthquake in Christchurch, New Zealand, or the triple aspect calamity in Japan, rather referring to it as a single event. What I wanted to research and highlight in this report is how a multitude of challenges could impact a) on the welfare of the global economy b) on the stock market outlook  over the coming months. 3-in-1, at least... Rebuilding Japan's earthquake stricken prefectures and stabilising its nuclear reactors are the main tasks in the short term to medium term. The tasks are complex, but not without precedent with many liking it to the period after the atom bomb hit Hiroshima and Nagasaki in  August 1945. I don't purport to provide answers on how to solve the Middl...

I will be publishing several parts on this topic.  As you can imagine, assessing the repurcussions of the tragic events in Japan for us investors is rather complex, requiring in-depth research, revisiting previous assumptions and trying to put the changed picture into a context that you, the reader, can evaluate for yourself and - apply to your portfolio strategy. PART ONE Japan: In The Throng of a Huge Calamity Where it happened: MIYAGI, also featuring the movie, Karate Kid.  It is acknowledged that the March 11 earthquake - on a Richter Scale of 9.0 - is the largest Japan has seen for centuries.  We all know that earthquakes are common in Japan, - and that each time they happen, people are quick to learn new skills in coping with the aftermath emotionally and practically: I am humbled by the dignified composure of the Japanese people in the face of calamity.  See what you make the advertisements Google search manages to place next to the picture: 'Hydr...

First,my apologies for moving the blog without providing immediate access details. MEA CULPA. A 'SERIES OF UNFORTUNATE EVENTS' A sequence of disturbing events is wearing out investor confidence: the devastating earthquake in Christchurch, alongside  potentially destabilising yet 'liberating' political change in Tunisia and Egypt, then the hangup in Gaddafi land and finally (?) the triple whammy in Japan, a millennium earthquake, 13 meter tsunami, devastating people and country - and nuclear reactors in its path. That appeared to be the last straw for decision makers in faraway lands, who lost their cool and decided on throwing away their riskier holdings this Tuesday, driving global equity markets down sharply.  Selling pressure then took over, with short coverings and computer programs coming into play, creating huge trading volumes on both sides of the Atlantic. Last night the selling volume was 30% higher than usual but a -2% downside, = 'within expected rang...

I presented you this graph on Ferbuary 20th, 2011,as my view to the short term outlook for gold prices.  Here is what happened (chart on the right):  As you can see, there was no need to change anything with regards to the arrows I drew.  We saw prices falling as anticipated to exactly 1410, and then the explosive rebound following the outline of the yellow arrow. This suggests that gold as the forerunner for equities has done its part at the time it was envisaged.  This means that equities are poised to strengthen and broaden the rally, which started a fortnight ago.   Consequence or Serendipity? There are of course a lot of reports, stating exactly the opposite, and commentators quote as many fundamental reasons as they refer to technical analysis, too.  All of these views cannot be termed 'wrong', but are probably not providing the in-depth analysis you would expect big investors to have access to.    Since gold has provided the base ...

A few days ago I showed you a chart, which outlines the cyclical momentum now till April based on Henning Schaefer's Cosmotrend .  It is now quite likely that reality follows the outline. The chart shows a peak in the markets earlier this week,  again early next week and  then a volatile phase immediately thereafter  which could bring a pullback, especially for those markets that have yet experienced a sizeable downside momentum in recent days.  Hence, we should not simply buy into a falling market like today, but wait till early next week, when the effects of the volatile phase should culminate, find a low point and immediately start rallying from there.  This kind of market is quite difficult to trade, - and I am glad I have approached this entry with 2 steps already, now targeting one more for early next week.  We shall see how we fare, - but so far - not so bad at all, as most of the funds we switched into show positive returns often in exc...

Someone pressed the "RESET" button!  5-DAY VIEW Large caps in the US poised for a more substantial rally, soon. Stocks  When assessing equity valuations on a global level, we are (almost) back to the same levels from where the current advance has started only last week.  However, there are now strong regional divergences and the same goes for asset classes.   US Small Caps support at higher level, less risky position. In the Russell 1000 left (US small caps - 5-day view), we can see that the current support levels are comparatively higher than in the large caps above, as the decline in the last 2 days has only revisited levels of Friday.  Indeed, if markets suffer some extra volatility now, Small Caps have a secondary support level (red horizontal line) and could therefore be considered the less risky proposition. This supports our argument for a broader based rally, next time round.  What is important to realise that the support levels we now see...