Rainer's Investment Insights

Stock Market Divergences The curious thing about divergences is they can last for months, sometimes even years before they dissolve and turn into one big market convergence again. As long as one economy, - the US -, is the global leader, a return to correlated markets is what most parties wish for. Divergence occurs - as an exception, when regional economies are running into headwinds - by plan or by chance. Few people are able to predict the exact time of change from divergence to convergence, but - stock market cycles, seasonal behaviour, even statistics can become the proverbial "straw that breaks the camel's back". If we just knew, which one! Therefore, we reluctantly accept that there is no ONE measure tape, which tells us for sure, when a stock market rally comes to an end, BEFORE it happens. Divergence Pictured: Over the last 2 years, the divergences in trend between the US stock market and the rest of the world could hardly be any starker: Source: Yah...

STOCKS RUNNING OUT OF STEAM... Investors keep telling me that their portfolios did not perform, while markets seem to have run up to new highs month after month.  Is that a fair assessment? Just a reminder to the reader: My investment strategy is medium term say 3-6 months, i.e. short term (days or less) consideration are really only important to me when I look to make changes to a portfolio. Anything said in this blog, be it outlook or forecast does not refer to tomorrow or end of the week. I only talk about the next 6-12 weeks' financial market probabilities and how I intend to trade. For more on my strategy please go to this page. Global Indices To check what happened over the last 12 months or more, I'd like you to take a look at the sample charts from the US, Europe and Asia in their respective currencies. US indices S&P 500, 1-year view, 2 major corrective moves; source: chartnexus S&P500: The large caps were favourites for many years but i...

"The end is nigh for stocks to rally", or is it?  In the last paragraph of my  post from February 12th , I outlined a four-week window for a last ditch effort by the equity bulls, - very much against the noise and chatter in the media, who preferred to stir up fear that we see a disastrous extension of January's bloody correction in equities and commodities.  Needless to say that my proposed strategy returned a handsome profit, even with as basic an investment tool as mutual funds.Importantly, the choice of funds,  and the tactical adjustments in between,  made all the difference.  Re-Introducing A Model Portfolio Due to change of software and provider, I am restarting the model as of January 1st, 2016. This portfolio is in line with a high risk profile, which means we limit the equity exposure to a maximum quotient of 90%, with the remaining 10% invested in bonds and cash. At no point during this period did we expose the portfolio to more ris...