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Post-Election Thoughts

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Tuesday, 13 November 2012
in Finance Blogs

Financial writers far and wide are weighing in on the US Presidential election result and its implications.  So jumping into the ring, here are mine.

For the third cycle in a row I cast a protest vote. After voting for George Bush in 2000 (actually it was more a vote against Al Gore) I wrote in Ron Paul in 2004 and 2008.  This year I voted for Gary Johnson, although I do not consider myself a Libertarian.  I consider myself an independent who has long since been alienated from a two party system that looks a lot like dangerously competitive cartoons from opposite ends of a narrowly constructed ideological spectrum.

When you write a newsletter, you learn about being a newsletter writer; just like when you become a plumber, you learn a lot about plumbing.  I once made an unfavorable public blog post about what I considered to be a cartoon that went by the name of Sarah Palin and was summarily served with an indignant email and subscription cancelation from an otherwise satisfied NFTRH subscriber.  Lesson learned:  There is little place for political commentary in financial analysis.  Besides, political ideologues make really biased financial commentators; and in the markets bias just kills you.

Disregarding this for a moment, my view is that the 16 years under Bill Clinton and George Bush resulted in a rigged system that did indeed help the rich get richer, the poor get poorer and the middle class get positioned right over a trap door.

If you depersonalize it, you may see that Barack Obama was simply the agent of redistribution that was always fated to come to power in the wake of a stacked game that just kept right on giving to certain well-placed interests that used, abused and benefited from the fruits of the system of ‘Inflation onDemand’.  My public writing has been very consistent since 2004 with regard to this dynamic.

A system took hold that depended on outsourcing real and productive industries (and thus, jobs) in favor of the much easier path of leveraging the world’s reserve currency and the Treasury bond market to in essence print our way to perceived prosperity.  Privileged entities in the financial world got to use the money – compliments of bogus interest rate policies of the Greenspan and later, Bernanke Federal Reserves – before it was sliced, diced, marked up and sold to the public.

A personal frustration throughout the 2003 to 2007 timeframe was that I felt nearly alone (along with a relative few other crazies) in my negative view of what the inflationary regime would bring to this society.  My commentaries were filled with references to ‘McMansions’ and ‘60” Plasmas’ bought on credit.  My harshest commentary was reserved for a hubris-addled society that refused to wake up to its oncoming plight, not for the stooges they elected to political office.  You get the government you deserve.

Now we are here.  People are waking up and getting pissed, but where was their indignation when they were blissfully living on a precipice in the pre-2008 crash inflationary bull market that seemed to lift all boats?  Fat, dumb and happy is where many people were.

We are down the Rabbit Hole and the world has not ended my friends.   It is changing.   A rotten system is morphing, but is likely to use the same inflationary mechanics as its previous version.  The would-be beneficiaries have changed to be sure.  But it is the same system and frankly and speaking personally, I decided to play this system for all it is worth a long time ago.  If you can’t beat ‘em…

There is no place for belly aching and ideology in financial market management.  This newsletter is all about coldly managing what is, not what we want it to be.  So with that said, we happily move on to our usual programming with the political environment only to be mentioned when it is relevant to the analysis from here on.

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Updating the HUI-SPX Ratio

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Tuesday, 13 November 2012
in Finance Blogs

There were reasons for the mind numbing gold stock correction out of the hysterical events of the 2011 Euro-led meltdown and its aftermath.  Take your pick…

  • Too many lousy gold mining operations not keeping on top of costs and/or execution projections.
  • Too many scammy smaller operations doing little more than issuing stock and telling stories needed to be weeded out.
  • Over bullish sentiment was that this time the gold bug true believers really were going to take Hamburger Hill as Europe’s implosion would be taking down the rest of the civilized world.
  • Highly strategic yet indirect manipulation of the gold miners’ product – a barbarous relic not welcome in an economic discussion by today’s monetary policy setting intellectuals – by a very overt (publicized) manipulation of the Treasury yield curve in Operation Twist.  I will spare you another chart of gold’s correlation to the curve.

There are more reasons, but now is a time for planning for what comes next.  Not crying over spilled nuggets.

A lot of damage was done to the ratio of the HUI Gold Bugs index to the S&P 500. So where are we now?

hui-spx ratio

We are at a ‘W’ bottom that formed with a lower right side of the ‘W’ while MACD (along with other indicators not shown) made a weekly bullish divergence.  That’s good, but more needs to be done.

The green shaded area shows the middle of the ‘W’ that should hold as support as the ratio bull flags with a downward biased consolidation.  Yet this is really not a great looking picture as the moving averages have turned down more noticeably than at any point in the bull market out of 2000 thus far.

Is that a negative?  Could well be, if we are going to go by unbiased TA signals.  But if on the other hand that bullish divergence and the extended bottom (‘W’) making process is implying pent up energy, then the out performance of gold stocks over regular stocks could be stunning.

My work on the macro economic fundamentals – updated most weeks in NFTRH, hint hint :-) – says this is a very viable course.  Regardless, if that thick red resistance zone is surmounted along with the moving averages, your head is going to spin watching the gold sector [re]assume leadership.

The last couple days of short-term out performance have been fun.  But the real work begins now.

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Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Wednesday, 31 October 2012
in Finance Blogs

We are wrapping up October with markets far and wide in the midst of corrections of varying degrees.

The US stock market is following some old clichés in that it apparently hates the uncertainty of the upcoming presidential election and well, it is the spooky month of October after all.  The market has done everything it was supposed to do this October and the correction is not yet indicated to be over.

NFTRH’s main area of interest is gold for all the reasons brought forward to date.  But gold and its wild and slightly touched little brother, silver – along with their precious distant cousins platinum and palladium – remain mired in strong corrections of the formerly over bought reactions out of September’s QE hype fest.  There is no evidence as yet that these corrections are ready to end.

On November 6 we in the US will either stay with the devil we know or elect the devil we don’t (and with a history of flip flops a mile long, I for one do not know the guy in the least – and he was governor of my state).  The broad US market may be operating on uncertainty and the precious metals market may be operating under the constraints of a still-Twisting Federal Reserve and its resultant flattening of the yield curve.  Gold follows the yield curve, no ifs ands or buts and is apparently shackled to and perhaps through the election.

Courtesy of Ned Davis Research

Courtesy of Ned Davis Research

The graph above shows the average Dow performance (over the previous 14 cycles) in all election years, when the incumbent is due to win and when the incumbent is due to lose.  The red box highlights the timeframe of our current – post QE announcement – corrective phase.

Interestingly, today’s Dow is mimicking the average election year to near perfection!  I am going to assume that the market has no clue yet who it thinks is going to win.

When it figures this out we might expect a hard decline or a vigorous rise as it seeks to get in line with either the “incumbent party wins” or “incumbent party loses” scenarios on the cycle graph above.

As for gold, it is the same old tired story.  I would guess that the Fed watched it and other assets run for a while into what it knew was an imminent QE operation.  Conveniently, large commercial hedgers knew enough to systematically build up their short positions into last week’s FOMC announcement, which offered no new inflationary operations and reaffirmed the yield curve dampening Operation Twist.

While the Dow may be held captive by the average election year cycle gold is held captive by something else altogether.  When the yield curve (shaded area) is rising increasing stress and inflationary pressure (pressure to compromise the currency) is indicated to be building within the system.  When it is declining, prudent policy is indicated to have everything under control.

The problem here is illustrated by the FOMC’s own words:

“The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities” [i.e. Operation Twist]

It is not a free market telling us that systemic pressures are contained.  It is a non-governmental monetary authority with the power to buy and sell debt-based ‘assets’ in service to painting desired images and outcomes.  I am going to leave it for other publications to theorize about how well clued in the commercial traders were to this operation.  All we have to know is that the operation is in force until it no longer is.

To summarize, there is little doubt that the financial markets are being held captive to the election process while awaiting clarity and gold is being held captive to deliberately engineered mechanics within the yield curve.  Don’t fight it.  Gold needed a correction anyway.  The Fed’s supply of short-term debt instruments to sell is finite and gold is going to get where it is going soon enough; as will the stock market.

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Happy Halloween… Trick or October Pivot 2?

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Thursday, 25 October 2012
in Finance Blogs

The run up and aftermath to the FOMC’s QE announcement last month brought a surge of bullish optimism to market players – especially those in the over bought precious metals – that was unsustainable.

Enter the predictable October fright fest that has seen big-name US earnings reports routinely punished and sentiment knocked down across the broad markets.  It should be clear to all by now that the US economy is decelerating.

Of course, one look at the Copper-Gold ratio tells that story well enough and has been telling that story since the spring time.  Gold is a counter-cyclical asset that benefits when policy makers are pressured to attempt to compromise their currencies in service to economic growth.  Copper is a cyclical commodity that goes in line with economic growth.

The economy and markets got a little bump last year in Q4 amid all sorts of bearish calls by the most visible market callers.  People were terrified and for their fear were served up a heaping helping of bull after what we called the ‘October Pivot’ a year ago.

That was then; what about this year?  Well this time our work has been following a decelerating economy and the inflationary policy used to battle it.  Inflation is not a good thing even though it’s promotion can help manufacture temporary bullish environments.  Also, within an inflationary regime some assets will respond better than others.  Hence the initial ramp in the precious metals that is now being corrected.

We cannot know for sure what will come out of today’s meeting of the interest rate and debt manipulators at the FOMC, but we do know that they have the backing of an October deflationary lean with precious metals, commodities and now stock markets all playing their October roles to near perfection.  I wonder how Prechter masks are selling this year.

Here is the USD chart from NFTRH 209.  Uncle Buck found support after becoming deeply over sold with the QE party.  The red box shows converged and down turned moving averages that will act as resistance.  We are allowing for USD to ding the 200 day averages at around 80.50 on its counter-trend rise.  Like so many markets, the USD remains on an intermediate trend – in this case, down – which would only be broken by a successful rise above the moving averages.

The competing Euro has a moving average box of its own.  In this case a cluster of rising averages that would act as support.  If the Euro breaks down, chances are the whole broad market bull is going to break down.  But here’s the thing; they have not broken down yet and imposing your will on the market – whether that will is bullish or bearish – is not advisable.  Sadly, all too many people do it; while talking their book so to speak.

The correction in the broad markets – including in the precious metals sector – was expected, is normal and is now maturing.  It will continue to mature into its conclusion very shortly or it will mature and morph into something more virulent and end the broad market rally that got so many people off sides last summer.

As difficult and pained as the process was, NFTRH caught that rally last summer and has not yet abandoned the bull case because this October has played to near perfection to the existing plan.  The plan calls for the USD being held at 80.50 or lower and various markets – most notably for our main theme, the precious metals – holding certain support levels.  One of them was shown yesterday for silver.

Let’s see what the FOMC does and let’s understand that the market needed to punish the QE momentum players in a fitting October correction.  Let’s resist making the mistakes that the doomsayers made one year ago until it is actually time to make such calls.  Meanwhile, the bull is intact.  My preferred theme is the precious metals, now that dangerous over bullishness is getting cleared out.  There are other themes out there.

For example, if the bull is to continue as expected one might consider the positive risk vs. reward setup in Emerging Markets vs. broad US stocks as illustrated by the above EEM-SPY chart.  Perhaps as the rally renews into its final up phase the more speculative stuff will out perform.

To answer the title question, NFTRH had expected what was termed an October “issue” within a still-bullish bigger picture and taken and advised necessary risk management steps.  Yet nothing has changed with the bullish view as yet.  Let the US dollar break 80.50 to the upside, let the gold-silver ratio (risk off indicator) break its 200 day moving averages to the upside (it is at the 200′s now), let junk bonds lose the 50 day averages and let T bonds break their downtrend and I will be happy to revise the plan.

For now, the costume I plan on wearing for Halloween has two horns and no, I am not talking about the devil.  It is bound to be interesting as we head through spooky season into year end.

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The 20-Minute Business Model

Posted by Michael Fredrickson
Michael Fredrickson
Michael Fredrickson is a strategic business advisor at Head Of The Board, LLC.
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on Wednesday, 17 October 2012
in Business Blogs


Stop Watch

"Start-ups that succeed are those that manage to find a plan that works before running out of resources."--Ash Maurya

A key part of our business is to pursue new ventures or adjacent businesses where we can leverage our strengths and experience to create value. We sometimes find it challenging, though, to move forward with fundamentally new business models. We tend to have drawn-out debates about how to approach the market, which customers to serve, and whether the new model has merit.

Much of this debate can occur in a vacuum. We tend to get risk-averse when thinking about the investment required to execute a new model and all the uncertainties around it. As a result, we can get stuck in analysis paralysis: a lot of talking without much forward progress.

Enter the Lean Startup methodology, championed by Eric Ries. Ries's book and writings contain a wealth of ideas for incrementally building a start-up. Ash Maurya has written a related book entitled Running Lean: Iterate from Plan A to a Plan That Works that gives practical advice and examples on building and testing a business model.

Maurya emphasizes the need to develop a testable business model quickly. A start-up simply cannot afford to invest months to develop the traditional 10-to-60-page business plan. Maurya instead has developed a lean business model canvas that allows you to put the key elements of your business model on a single sheet of paper in 20 minutes. The key elements are:

  1. The problem we are trying to solve
  2. Target customers and users
  3. Our unique value proposition
  4. Our solution
  5. Channels
  6. Revenue streams
  7. Cost structure
  8. Key metrics
  9. Our unfair advantage (something that can't be easily copied or bought)

Sounds extensive, right? You might be thinking: It's not possible to get all that down on paper in 20 minutes.

It is indeed possible; we experimented with the lean canvas and were able to document a start-up business model in 20 minutes. Over the course of a few articles we will talk through the Running Lean methodology using that business model as an example.

Lean Business Model Example

We have identified a market opportunity in the traditional Private Equity (PE) model, where the PE fund has misaligned incentives. Fund managers have two fundamentally different ways of looking at risk/reward trade-offs, compared with their investors:

  • A fund manager might typically be paid 2% of funds annually and also earn 20% of the gains earned on fund investments. The net result can be "heads I win, tails you lose" incentives where the fund managers are incentivized to overpay on risky companies, receive the annual 2%, and hope for a big upside gain. The investors of course do not want overpaid and risky portfolios.
  • PE funds have limited time windows in which to invest their funds, creating a rush to do deals. This again creates misincentives to overpay.

As a result, PE funds may be underperforming the S&P500 by up to three percentage points despite taking more risk. Similarly, the Kauffman Foundation reports that 62% of their venture capital fund investments failed to exceed returns from public markets.

The Problem Statement

Following the Running Lean methodology, we summarized this problem (in roughly five minutes) as:

  • Investors have a lot of cash sitting on the sidelines earning ~zero returns.
  • Investors are dissatisfied with the current PE model, which elevates fund managers' enrichment above investors' desire for prudent investment.
  • Some investors want to better control and manage risk and take a more active role in their PE investment choices.


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What is the net worth of the average adult

Posted by Chandra Stevens
Chandra Stevens
Chandra Stevens is a financial analyst based in the Boston area.
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on Monday, 15 October 2012
in Finance Blogs


The answer is $49,000, according to the Credit Suisse global wealth report, based on their estimate that global household wealth in mid-2012 totaled $223 trillion at current exchange rates (emphasis ours).

Looking ahead, and assuming moderate and stable economic growth, we expect total household wealth to rise by almost 50% in the next five years from USD 223 trillion in 2012 to USD 330 trillion in 2017. The number of millionaires worldwide is expected to increase by about 18 million, reaching 46 million in 2017. We expect China to surpass Japan as the second wealthiest country in the world. However, the USA should remain on top of the wealth league, with USD 89 trillion by 2017.

Between mid-2011 and mid-2012, only China and North America increased their net worth, and India and Europe saw the sharpest falls, according to the report. The world as a whole had a 5.2 per cent fall in household wealth.

Obviously, as the above figures are in UD dollars, there is a conversion effect. This chart breaks down some of the components including the USD exchange rate, and looks only at some of the key countries.

While the markets have been surging (in almost all these countries), house prices have been generally either stagnant or falling. The US, however, largely bucks both of these trends, which is one reason why it’s one of the few countries to have gained in total wealth in 2011/12:

Colombia had the biggest wealth gain:

A steady USD exchange rate, combined with an 11% improvement in market capitalization, helped Colombia to top the country rankings with a 16% rise in household wealth. Algeria, Hong Kong, Peru and Uruguay also recorded gains of more than 5%. The downside is more evident, especially in Eurozone countries, where double-digit losses were recorded everywhere (see Figure 7). Other sizeable declines were recorded for Russia (–13%), Mexico (–14%), South Africa (–15%) and India (–18%), while Eastern Europe had a very poor year, led by the Czech Republic and Poland (both with –18%), Hungary (–25%) and Romania (–36%).

The eurozone’s wealth losses are much more predictable of course. When looked at in dollar-terms, the falls are exacerbated by unfavourable euro-dollar movements, but wealth declined in euro-terms as well:

… by EUR 50 billion in Germany, EUR 148 billion in France, EUR 177 billion in Spain and EUR 286 billion in Italy. Sizeable USD wealth reductions were also recorded in the UK (USD 720 billion), India (USD 700 billion), Australia (USD 600 billion), Brazil (USD 530 billion), Canada (USD 440 billion) and Switzerland (USD 410 billion).

Breaking all this down into individual wealth, we get the below pyramid. A whooping 69 per cent of the global population has less than $10,000 to their name, comprising just 3.3 per cent of the total wealth. And the top 0.6 per cent are worth more than a million dollars, and together control almost 40 per cent of global household wealth.

There were 962,000 new millionaires in the US and and 460,000 in Japan, but no significant increases in numbers in other countries. Europe lost some 1.8m dollar millionaires, mainly in Italy (–374,000), France (–322,000), Germany (–290,000), Denmark (–179,000), Sweden (–142,000) and Spain (–87,000).

At the top of the pyramid, there are 84,500 UHNW individuals with net worth exceeding USD 50 million. The recent fortunes created in China lead us to estimate that 4,700 Chinese individuals (5.6% of the global total) now belong to the UHNW group, together with a similar number in Russia, India and Brazil (taken together).

The debt statistics show a similar global shift – with the developing economies catching the debt-bug:

At the top of the pyramid, there are 84,500 UHNW individuals with net worth exceeding USD 50 million. The recent fortunes created in China lead us to estimate that 4,700 Chinese individuals (5.6% of the global total) now belong to the UHNW group, together with a similar number in Russia, India and Brazil (taken together).

As demonstrated here:

Look at India and Latin America go!

On a per capita basis, though, it is the ‘core’ European countries that have the most household debt:

Debt per adult grew in all of these high-debt countries between 2000 and 2007, except good old Germany (where it was flat) and Japan (where it fell, possibly because of the ageing population as debt tends to be negatively correlated with age). Australia, Norway and Canada have had some of the biggest increases in household debt per adult since 2000.

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What’s the Dumb Money Doing Now?

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Thursday, 11 October 2012
in Finance Blogs

Back in May, as the stock market was heading into its final decline prior to this year’s seemingly improbable second half rally, I wrote an article called Dumb Money Sold in May and Went Away.  Later, this view was backed up with positions in global emerging bonds and markets, global bonds, developed global markets, frontier markets, technology, energy, rare earths, lithium, silver and gold.

The article was met with several derisive comments – which I actually appreciated due to their psychological signals actually supporting the probabilities that a pivot was close at hand.  A few of the best comments from the SeekingAlpha version of the article:

“Gary = Dumb Investor.  Simple enough.”

“You lost me at the title. If you didn’t sell in May (even April like I did), then you are the dummy. Lol.” [Personal cash levels were substantial heading into May, as was appropriate at the time]

“Maybe I’m the dummy here. How on earth did someone find the justification to write this drivel? The S&P 500 is down 6% or 7% since the start of May. Is the writer a little slow on the uptake? Smart money sold in May!!”

“What a horrible article, the quality of SA articles recently is definately on a downtrend.”

There were also a few semi-complimentary responses, but on the whole the comments indicated a readership that had taken the term “dumb money” personally (it’s just an impersonal and common analytical phrase folks, jeez) and convinced itself that the market was no place to be amid the Greece turmoil and commonly accepted wisdom of the “sell in May and go away” bromide.

Here is the updated version of the sentimentrader.com graphic that was used in the May article.  While the structure is certainly much less bullish on a contrarian basis than it was in May, it is not indicating an extreme in sentiment swings just yet.  In fact, the sentiment structure is in alignment with the current view that the bullish view can (not will, can) hold sway into year-end.  Oh would that we can one day get a bear signal that is as strong as the improbable bull signal was last May.

Above is another graphic from sentimentrader, breaking down the structure by specific sector.  As you can see, while a few sectors have sprung to over bullish, others remain in neutral territory.

Finally, here is another breakdown that dials back out to a more macro view.  As you can see, we are heading toward the opposite pole from the May over bearish one but are as yet not anywhere near an extreme.  The big exception is in the CoT structure, which is nowhere more bearish than it currently is in silver and gold.

To answer the title’s question, the dumb money is coming back into the market to some degree.  It lurches in, backs off, rationalizes its position, becomes afraid of missing the upside, becomes afraid that it is too late to make some ‘coin’… and when you depersonalize it you realize that the market is just doing what it always does to one degree or another as the gentle tides of human sentiment and psychology sway back and forth over the cycles.

Currently, there seems to be a deep feeling among investors that the markets are no longer real and are excessively managed by monetary, financial and governmental authorities.  If you have read me at my most tin-foil moments, you know I generally agree with that premise.

But the market is the market.  I know Greece, Italy and Spain threatened to end the world as we know it.  I know that Ben Bernanke seems to be the most brazenly manipulative Fed Chief yet.  I know a presidential election cycle is in effect – it has helped NFTRH’s analysis immensely since the May angst – and the FOMC QE decision and the conveniently positive jobs report last week were beneficial.  None of this matters.

I don’t want to give the impression I was confidently bullish through every step of the process.  These are the markets and the whipsaw rally out of early summer was really difficult to manage.  Speaking as a human (as opposed to a market letter writer/blogger), I found the process pretty annoying and frustrating.  But in times of doubt (about NFTRH’s ‘inflationary 2012′ or i2k12 theme), there was always the sentiment backdrop, along with the election year cycle and supportive technicals to lean on.

The market is bullish, subject to a clearing of some of the more over done sentiment issues currently building in the precious metals and a few other areas.  One day the market will be ready to get bearish; perhaps really bearish.  But with dumb money not yet heavily sponsoring the bull case by this metric at least, we can (can, there is no ‘will’ in the markets) go higher even and perhaps especially, if October presents some corrective activity to clear the sentiment profile. 

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Systemic Stress is Building, and it’s Bullish (for now)

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Thursday, 11 October 2012
in Finance Blogs

Using the spread between 30 year and 2 year US Treasury yields, we can gauge when policy makers are in control of market participants’ perceptions and when they are losing control to the free market’s will.

Operation Twist was announced in September of 2011 in the aftermath of the first phase of the Euro crisis as the yield curve had exploded higher, taking the monetary stress barometer, gold, with it.  Over bought on unbridled momentum, gold entered an extended correction in line with the yield curve, which complied with policy makers’ goal of calming down the system.  As shown many times in the past, gold and the 30-2 yield curve generally travel together.

By the time Op Twist’s extension was announced in June, an already mature gold correction and an in-line yield curve unsurprisingly did not respond to the manipulators’ directive.  The operation whereby the Federal Reserve would buy up long-term bonds and sanitize the process by selling off short-term ones was exposed as the macro parlor trick that it is. It resulted in little more than a deflationary pretense against which inflationary policy could be promoted anew.

In hindsight, the free market knew that a bald faced and more honest inflation regimen would be engaged by policy makers desperate to keep power, as the yield curve shook off the Twist manipulation and looked ahead to full-on inflation or ‘i2k12′ (Inflationary 2012) as NFTRH coined it early in the year.

A rising yield curve is all about the promotion of inflation.  The weekly view of the 30/2 yield curve and gold shows the Greenspan era inflationary regime, which was promoted against the bear market early last decade.  This was the kickoff to what NFTRH terms the age of ‘Inflation onDemand’.

Greenie’s version of ZIRP resulted in a credit bubble and mal-investment far and wide.  When he tried to take it back by raising short-term interest rates, the yield curve complied but a system already too far out on the leveraged limb eventually began to fall apart.  The system was beyond normal austere policy making.  To put it in non-technical terms,FrankenMarket needed juice and it needed it fast.

Enter the man for the job, Greenspan lackie Ben Bernanke, the new Federal Reserve chief, fresh with monetary and economic management ideas straight out of academia.  Enter a whole new level of management where an epic macro game  of ‘all or nothing’ came into play.

As US financial institutions began to fail, the curve began to rise as the Fed cut rates as fast as it could.  Inflation was again being promoted, but the act of inflating did not stop the oncoming liquidation of Q4, 2008.  The curve declined from the 2008 stress spike as it usually does during deflationary liquidations.  These periods of deflationary pressure serve to build up the next stress spike in the curve.

As QE1 eventually took hold, the curve rose into the events surrounding the 2010 ‘Flash Crash’, at which point QE2 was promoted.  This launched an intense phase of inflationary cost pressures that culminated in the curve topping out in late 2010, with commodities following suit in early 2011.  This resulted in the deflationary pressures that held sway for the balance of 2011 before eventually giving way to a new inflationary regime that was born in the summer of 2012.  Enter NFTRH’s long-awaited i2k12.

But the nominal 30 year bond yield has been declining since… forever; deflation is the play!

No sir, a wellspring of goodwill was passed on to Alan Greenspan by Paul Volcker in the mid-80′s and Sir Alan borrowed against this goodwill for all it was worth until finally, the system could not take it anymore.  The great bull market of 1980 to 2000 expired and the age of Inflation onDemand began.  The monetary metal was rightly contained until the current era where inflationary policy is used ever more desperately to battle the next oncoming liquidation.

There are no bond vigilantes anymore.  There is just a massive market in US Treasury bonds being worked over by really smart people employing really dangerous operations.  The middle chart above shows a curve that is ready to continue upward into building inflationary stress.  The last chart shows that gold has not been deterred despite what is made to appear to be an ongoing deflationary continuum.

The current inflation could run until the curve reaches new highs and/or the Continuum paints another red arrow at the downtrend line.  Or it could just run until the system ends; it’s a which ever comes first type of scenario.  That’s our system folks; very high risk and high reward.  But it is terminal.  Hence the case for gold.  The barbarous relic would help people bridge the gap between the dying system and the one that comes next.  That is why it is not taking the bait anymore on the periodic liquidations.

Be safe first… speculate second.  Safety means eliminate debt and own things of value.  I fully believe that happiness can be achieved in these painful times.  But you have got to take control and not take the mainstream media bromides to heart.  I am not sure where this post came from or even where it went to.  But there it is anyway.  A great weekend to you. 

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FrankenMarket Lives (on)!

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Tuesday, 02 October 2012
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I often refer back to my first publicly written article (FrankenMarket Lives, 2004) because it simply stated the terms by which the stock market lives here in the age of Inflation onDemand, which was kicked off by Alan Greenspan in 2001 and is ever more aggressively managed to this day by his successor, Ben Bernanke.

From the article’s opening segment:  “As we enter the summer of 2004 [fall of 2012], our markets appear to be moving with all the grace of Dr. Frankenstein’s creation, staggering forward, arms outstretched and seeking sanctuary [i.e. inflation].”

From the ending segment: “This market was stitched together with debt, and it will require more of the same to keep it going.”

This is why risk is so high for bears, as it is for bulls.  The stock market is running on lust for easy monetary policy, which these days does not simply mean that authorities seek to maintain accommodative interest rates but rather, that they seek to destroy prudent savers and risk managers, forcing everyone into the pool – a cesspool of putrid, rotting things that died on the vine long ago – of speculation.  The nation’s seed corn is in that sewage as well.  It is ‘all or nothing’ and there is ample risk to go around for everybody.

FrankenMarket was fed a heaping helping of unsound and inflationary monetary policy at the last FOMC meeting.

Buying un-payable legacy debt with newly printed money is nothing if not intensely inflationary.  Here I will ask that readers not automatically think ‘inflation=rising asset prices’, because inflation also equals moral hazard, booms and busts, economic burdens and diminishing returns.  In other words, deflationary liquidations become part of an inflationary regime.  There is nothing smooth and sustainable about a seemingly bullish environment brought about by money printing.

Here we have FrankenMarket – now eight years on – still being stitched together with ever more exponential layers of debt seeking more of what has held it together post-2008.  When the original article was written in 2004, I never imagined the inflationary situation could take this long to resolve and indeed it did not; phase 1 of FrankenMarket – Alan Greenspan’s phase – was resolved but good in 2008.

Phase 2 has simply amplified the hazards and exponentially increased the risks; not of a bear market or even a temporary liquidation like 2008.  Phase 2 – being ‘all or nothing’ – has increased the risk of the end of the system.  This is the only reason I can think of that policy makers have gone all in, despite a stock market near post-2008 highs and a ‘jobs’ picture that while still depressed, has basically stopped degrading.

We can drop any pretense that our economy is about anything other than the ability of policy makers to leverage the world’s reserve paper currency toward asset propping ends.  The investor class is favored and the working and lower middle classes – along with Granny and her Treasury bond income – are collateral damage.  In fact Granny may be in junk bonds by now at the advice of her smart, young financial adviser who found her some really nice return.

We are all speculators now.  Get used to it.  We were once a nation of workers, savers and builders.  We should not blame policy makers for this because they are just the dim-bulb extension of our own fading inner light.

I often used the word “hubris” in early writing because the main threat was not the evil Greenspan or the dangerous Bernanke (he of the famous 2002 speech “Why It Will Not Happen Here”), but rather our own apathy as a people (and Europe, here we include you as well along with most of the developed and modern world).  But in America especially, a sense of entitlement that accompanied the 60” Flat Panels and 4,000 s.f. McMansions bought on credit showed a society that had forgotten the faces of its hard working fathers and mothers.

We have gotten the financial system we deserved and we have gotten the government we deserved.  Not enough of us used critical thinking to speak out against the trends that have been in place since Greenspan engaged the age of Inflation onDemand.  What we did was sit back, make ‘coin’ off of the bastardization of the currency and lever up.  All the while the mainstream financial media and financial services industry drone on about earnings, valuations and other conventional stuff.

The monster popped its stitches in 2008 and the Fed has sewn the thing back up again.  If they vacuum up enough sludge and pump enough money we may see the final destruction of the bears as the prices of things gain traction.  But with the risk of inflation-fueled price increases comes the increased risk that all of this leverage will fail into liquidation.

That’s our market, and eight years on it still lives.  Risk management is our number one job, not gold stock investing, regular stock trading or conventional thinking.  Risk management against all possibilities.  Now, post-FOMC QE panic, NFTRH tightens up the focus because we stand to make some serious gains and lose some serious capital perhaps all within shorter time cycles than ever before because leverage has gone exponential in the interest of keeping FrankenMarket’s stitching from coming unwound again.

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i2k12 Back With a Bang

Posted by Chairman
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on Tuesday, 25 September 2012
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NFTRH 204 went like this… Crazy talk about the Outer Limits and complete control in the opening segment (It’s All Out the Window Now) and a serious talk about the DML (Dear Monetary Leader), deflationary destruction and the Crack Up Boom in the Wrap Up segment.  In between was a whole lot of nuts and bolts functional analysis of the situation.  Anyway, here’s the other half of the bookend…

i2k12 Back With a Bang

Dear Monetary Leader is ushering in a brave new world and we will have to be nimble and ever in possession of a functional filter or better yet, nonsense detector.  I believe this is it, the beginning of the end game.  It is funny to think that so many months ago this letter had come up with another one of its little buzz phrases in ‘i2k12’ (inflationary 2012), which I had imagined holding sway in the second half of 2012 after the deflation scare had reloaded the will of policy makers to inflate.

Now we are here and I must admit there were times when I was brought to my figurative knees with respect to that view.  That is what markets do; they humble you and challenge you to be the best you can be.  That is probably the biggest reason I love this so much.

Moving along, I write a lot about perceptions among market participants and now I am not so sure policy makers even care about perceptions.  I see so many extreme things in so many charts that taken at face value, would cause me to write RISK IS HIGH… GO CASH.

But then turning away from the technicals, sentiment and macro fundamentals the FOMC statement from last week says “the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month” and their actions “should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative” and… “the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.”

To which any sane person might question “what if these policies fail to bring about the desired effect this time as they failed to do the first two times?”

Further, we might question whether this is the crack up boom.  Now, we hear about the hyper inflationary spiral every time the 30-year yield approaches the red line (EMA 100) of the chart on page 4.  So why is the usually evenhanded NFTRH suddenly acting like a raving inflationist?  I would have to say that the biggest reason is the proximity of asset markets to their recovery and/or all-time highs even as the Fed panics as if we were in the midst of a deflationary Armageddon.

What I find fascinating is that they are trying to pump asset prices even further.  The FOMC mentions supporting the mortgage markets by its manipulation of interest rates.  Well, here is the Housing Index; it has something to do with mortgages doesn’t it?

The chart was produced on July 1 for NFTRH 194 and a now modest looking target of 145 was set.  At the time this was just another indicator to keep us leaning bullish over a very difficult summer as the rally got going.  At the time the target was established many people – including this writer – wondered how and why it could get to the target.  Now look at it; the thing is going parabolic.

To me, this is exciting, fun, scary… no, frightening all at the same time.  I have been writing for a lot of years now and the stuff I have been writing about may actually be engaging.  Again I am not smart enough to know whether the eventuality will be a deflationary unwinding or a hyperinflationary blow out.  Prechter and desciples of von Mises can fight that one out.  I don’t need to know the ending because right now we are on another transition from deflationary to inflationary and NFTRH rides the interim macro plays.  i2k12 is engaging, finally.

Yet I cannot get ‘CRACK UP BOOM’ out of my head and it is not just because asset markets are going up.  It is because of the resolve with which the Federal Reserve seems to have locked itself into its stance.

The game has changed and I sense NFTRH changing with it.  That is because I am changing.  Change is good I guess.  Let’s play it for all it is worth and hope that by taking enough prudent action along the way the fallout will not be as bad as it could be when this macro operation fails one day.

Meanwhile, the last word this week goes to the lone FOMC dissenter, Jeffery Lacker – one the bad cops I often refer to on the blog – who in reality is a relatively sane and ethical person, like Richard Fisher and a few other lonely official voices.

“Further monetary stimulus now is unlikely to result in a discernible improvement in growth, but if it does, it’s also likely to cause an unwanted increase in inflation,” he said. “Unemployment does remain high by historical standards, but improvement in labor market conditions appears to have been held back by real impediments that are beyond the capacity of monetary policy to offset.”

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It’s All Out the Window Now

Posted by Chairman
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on Thursday, 20 September 2012
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In the run up to Thursday’s FOMC announcement of open ended ‘asset’ (mortgage debt) purchases, ZIRP extension and Twist continuation, NFTRH had been using the average US presidential election cycle, sentiment backdrop and of course technical analysis to stay bullish (with associated rising risk profile).  We had incorrectly minimized the potential for QE right here and now in the interest of not running with an increasingly over bullish herd and with respect to risk management.


Well, that is all out the window now because the US has apparently conspired with Europe to jointly enter the currency depreciation sweepstakes with the US springing out of the gate to a healthy lead.  Sentiment is becoming dangerous, speculation is breaking out and liquidity warning indicators like the Gold-Silver ratio, US dollar, US Treasury Bonds, TED Spread and LIBOR have all been dispatched on a southward journey in the interest of greed, speculation… and desperation.  This is the moment of maximum hubris by Ben Bernanke and powerful policy makers the developed world over.


This is the moment that this newsletter’s name comes to the forefront because we as market participants, as participants in society are down the rabbit hole now.  We have actually been there since 2001 (some would argue since 1971) but now all pretense of normalcy is gone.  The somewhat clichéd title of the main website ‘but it is what it is’ (biiwii) comes into play because this is the system they have created for us.  Our dear leaders actively manage the environment in which we operate and thus far, survive.


“There is nothing wrong with your television set. Do not attempt to adjust the picture. We are controlling transmission. If we wish to make it louder, we will bring up the volume. If we wish to make it softer, we will tune it to a whisper. We will control the horizontal. We will control the vertical. We can roll the image, make it flutter. We can change the focus to a soft blur or sharpen it to crystal clarity. For the next hour, sit quietly and we will control all that you see and hear. We repeat: there is nothing wrong with your television set. You are about to participate in a great adventure. You are about to experience the awe and mystery which reaches from the inner mind to — The Outer Limits.”


outer limits

You just knew this was coming… :-)


Why the little smiley face?  Because since day one (for biiwii.com that was June of 2004) I have felt that the system (of Inflation onDemand) is phony baloney and began preparing in line with this view in 2002.  Precious metals, debt elimination, alternative heating, personal protection and other initiatives have been combined to augment a relatively happy lifestyle, while always remaining aware of the artifice and embedded moral hazards of the system in which we operate.


Excerpted from first thing I ever wrote, which may have also been the last thing I actually needed to write, FrankenMarket Lives http://www.biiwii.com/frankenmarket.htm, in 2004:


“Whereas a less mature, formative America worked and produced itself to the stature of superpower, we now find a bustling, mature society that sadly feels entitled to its riches and stature.  In short, hubris has set in to the American consciousness, and it is hubris that I believe will be its downfall.  We are simply not seeing things through the same eyes that our great grandparents, grandparents and even parents saw them through.” And…


“The market will look to the economy, and being a forward looking monster, I expect it to see one of two things; The Fed taking away the punch bowl for real, deciding too late that the party is over, or more realistically, it will see a Fed doing all it can to sustain the monster it created.  This market was stitched together with debt, and it will require more of the same to keep it going.  We are knocking on the door of hyperinflation, and I believe the Fed will choose to open that door, given that it is too late for our economy to de-leverage in any orderly fashion.”

Since this was written I have come to respect the idea of deflation as an eventual terminator of the system.  This would be the alternate ending to von Mises’ Crack Up Boom hyper inflationary blow up.  I am not learned enough to be able to predict which will win out, so NFTRH will just proceed with the simple picture it has used since its launch in 2008.


30 year yield

Monthly 30 Year Yield, AKA the ‘Continuum’


The Continuum AKA the multi-decade decline in long-term T bond yields acts as a backbone to the Federal Reserve’s main body of work; i.e. inflation.  When the lower boundary of the Continuum is threatened the Fed acts in an inflationary manner, ostensibly to save the system from a deflationary unwinding.  When the upper boundary (the 100 month exponential moving average) is threatened, a red arrow gets inserted into the picture and just kills anyone foolish enough to go in hard on the inflation play; like ‘Bond King’ Bill Gross did concurrent with the most recent red arrow’s appearance.


So, according to the Continuum at least, we see why Ben Bernanke went steroidal last week.  He had the implied permission of this chart.  It has been after all, a neatly mocked up deflationary backdrop ever since Europe started to unwind and the Fed and those who follow its breadcrumbs began sopping up T bonds to epic and over bought status.


But that play is out the window now as the frightened millions who bought the deflationary bear argument at the exact time they should have been looking bullish sit squarely in the line of fire of inflationary bazookas being manned by the Federal Reserve and ECB.  Folks, we are going off the charts now and risk will continue to rise with market prices.  It’s a high stakes game after all.  All or nothing.  With gold and silver prices above 1700 and 30 respectively, crude oil at $100 a barrel and the S&P 500 above 1460 backed by a lame economy, one wonders how much upside certain asset markets have in them.  It is a long way after all, to the next red arrow.  We’ll leave aside (for now) the question “what happens if the Continuum does not paint a new red arrow at the EMA 100 but rather, just smashes through it one day?”  Well, here’s a hint… we would hear a lot of the name ‘von Mises’ and a lot about his ‘Crack Up Boom’.


But that is what bubbles are.  They are all until eventually they are nothing.  We may be forced to speculate and make our funny munny that would be created out of debt monetization.  I personally enjoy this process in warped sort of way.  I understand the terminal nature of what is in play.  I understand what happens when money gets so frightened that it just flies up its own ass in a panicked display of unbridled greed and fear.  But this is what I have been preparing for since 2002.


I was created first by Robert Prechter and then nurtured by Marc Faber, Bob Hoye and a notable and unnamed person I met down in the Rabbit Hole.  He also played a role in activating others, including some who are widely known now.  That was a weird and scary time in my life.  Today is just destiny I guess.


So it is all out the window now, with “it” mostly defined as conventional analysis by conventional market analysts.  The lunatics are taking over the asylum and you are about to participate in a great adventure.  You are about to experience the awe and mystery, which reaches from the inner mind to – The Outer Limits.


Be ready for anything; like risk, riches, marshal law, the system’s end or a brighter future.  We are going off the balance sheet and off the charts.  Okay, now NFTRH 204 reels in the loony talk and returns you to your normal programming.


And with that NFTRH 204 transitioned to more traditional analysis because there are fortunes to be made, there is capital to be preserved, perceptions to be cemented and and a willfully created speculative environment to be managed.

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The Age of Boom & Bust Accelerates

Posted by Chairman
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on Tuesday, 18 September 2012
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Like it or not, human will – and a hell of a lot of financial chicanery – has created this bull market.  Powerful people, not duly elected but rather appointed, are continuing to degrade the peoples’ money in the interest of keeping the system moving forward.


Here is the S&P 500 shown establishing a new technical objective (hey, it’s TA and it does not care about right and wrong) after hitting our long-standing target of 1460.  I had no clue why SPX was targeting 1460 other than the election cycle that NFTRH followed all summer.  But now I (and you) have a clue, thanks to the DML (Dear Monetary Leader) following up his Jawbone with action – very inflationary action.



When the inevitable politics of the ever-increasing divide between the have’s and the used-to-have’s crop up people should remember the massive and open ended asset bailout that was just kicked in.  Here I have got to tip the hat to papa Gold Bug Jim Sinclair who, for all the misery he takes was right on with his ongoing ‘QE to infinity’ mantra.  This is the mechanics of why some are enriched and some are disenfranchised.


The only time I have a problem with the ‘QE to infinity’ stuff by the way is when it causes people to hang on during those extended phases when deflation is the greater threat.  You know, the times like over the last year when the inflation gun was being reloaded?


It appears that Mitt Romney spit in the eye of the monetary gods when he tried to politicize the Fed and announced Bernanke’s probable ouster by a would-be Romney administration.  The Fed showed him a thing or two about politics, didn’t it?


Imagine the S&P 500 in a strong cyclical bull market, the economy lukewarm but not in crisis (on the surface, anyway) and still the Fed goes open ended and all in.  This is precedent setting and this could well be the last play of the current system because if a massive asset bubble results from this there will probably be no coming back from the eventual crash.






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HUI-SPX Ratio Aims For Higher Levels

Posted by Chairman
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on Thursday, 13 September 2012
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Gold bugs were sent to the woodshed for much of the last year while the regular stock market spent much of its time bulling.  This has served two purposes.  First the over bullish (gold fever) sentiment profile was cleared out in the precious metals and a over bearish profile was at least partially addressed in broad stocks.

This is a potentially excellent setup for people who made the necessary adjustments last year and now await a continuation of a trend that appears to be in its infancy.  Let’s look at the big picture view of the HUI-SPX ratio, which shows the severity of the gold stock correction vs. the broad stock market.

hui-spx ratio

Monthly ‘big picture’ view of HUI vs. SPX

By trend continuation I mean a follow through to the initial bottoming signals, which are support found at the 50% Fibonacci retrace of the entire bull market (for the ratio) out of 2000, deeply over sold conditions (worse than 2008) registered by the sensitive CCI and STO, which are now above -100 and crossed up respectively.

The ratio is at a resistance area and this is a week where a man who manages market perceptions is holding a meeting of the FOMC.  So who knows what lay ahead in the micro term?  But what I like about the picture is that the panel indicators became so deeply over sold that they rival not the routine over sold condition of 2008, but rather are in the same condition they were in at the start of the major bull market.

This at a time when gold has been making higher highs and is above support in relation to crude oil – which affect mining bottom line margins – and most other commodities.

au.wtic ratio

Gold’s price in WTI Crude Oil units is above ‘big picture’ support and constructive for higher levels

Gold is in a bull market in ratio to the stock market, which affects stock investors’ desire to buy gold stocks.

au-spx ratio

Gold’s monthly view vs. the stock market is bullish

Was the correction over the last year was something to be afraid of?  Well, tuning out the trend followers (whose primary goal is to always appear right) that were calling an end to gold’s bull market in favor of equities (6 months into the trend, mind you) what we see above is a beautiful consolidation down to support.  We also see a continuation of a series of higher highs and higher lows.

The correction over the last year was an opportunity to sell stocks in favor of gold once again.  That is of course, unless an intact secular trend is about to end.  When gold out performs the stock market, players tend to gravitate to the gold stock sector.  Here is a ‘big picture’ look at the nominal HUI.

hui monthly

Monthly HUI shows phase 1 up, 2 down, 3 up and 4 down

In NFTRH we managed the failure of the big picture breakout into the recent major correction by daily and weekly charts.  More recently we have been managing what is potentially an important bottom by those same charts. The charts and other tools tell us that the sector is over bought, but constructive to continue to bull going forward.

But the monthly chart above gives you an idea of how strong the next leg of the HUI’s bull market could be, whether it is engaging now per the current view or later, if the current bottom unexpectedly fails.  The red resistance zone is key.

The bottom line is that the gold sector did a lot of good, corrective work over the last year and gold looks good technically in relation to other markets, which in turn benefits the gold stock sector.  Precious metals are over bought short term, with some signs that argue for caution (notably the CoT structure), but the big picture is positive.

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Bernanke Plays it Perfectly

Posted by Chairman
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on Thursday, 06 September 2012
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From last week’s opening segment:
“Another way to look at it is that the market’s fate appears to rest with the jawbone of the man about to speak at Jackson Hole on Friday.”

From last week’s closing ‘Wrap Up’ segment:
“I think the theme now is that if you are a trader and if you have profits it is a logical time to take some or all of them.”

We know that the decelerating economic backdrop (with inflation measures in check) is supportive of a Fed going unconventionally dovish in unleashing QE style policy if it so chooses. We also know that the political backdrop is not supportive, with Republicans sounding off about a gold standard and a soon to be former Fed chief.
Ben Bernanke walked a middle ground on Friday, giving the market – especially the precious metals segment of it – enough of what it wanted to hear without actually having to announce a policy move. The implication is that bullish price activity can continue and if it doesn’t – especially if markets decline along side a more acutely decelerating economy, the Fed stands ready, willing and able to attempt to inflate the system.
The Fed chief is stuck between a rock (poor economy and thus, a poor jobs picture) and a hard place (Republicans ready to lynch him if an announcement of unconventional and market-moving policy is made). He chose to remain consistent as the Fed is on guard to do what it has always defaulted to; print money if needed to attempt to devalue the currency in the name of economic growth.
Election Cycle

We are only two months from the election so it is time to start looking past it and that may be what Bernanke is doing. Though the doomsayer websites (and emailers) would have us squatting in our homes with shotguns out the front windows at the ready for attacks by everyone from dispossessed former McMansion owners to government death squads, the market – and the world – not only refused to end this summer, they have been grinding onward and are well-intact.
Two months sounds like child’s play after what we have been through since the Euro crisis first exploded well over a year ago. Still, this newsletter continues to highlight the rising risk profile, although Bernanke’s skillful walk of the fine line and the market’s reaction on Friday force me to wonder if that was it; if that was the correction prior to the 1460 target on the S&P 500.
The US Presidential election year cycle highlights three potentials. Once again we review the chart courtesy of Ned Davis Research.

Friday’s post-Bernanke action implies the market seems to think that Barrack Obama will hold the White House. When the incumbent party is to win, there is an August rise into an accelerated rise (top example). We have been operating under the middle example, which is the average of all election years, to be on the safe side. In that scenario, we prepare for the routine yet notable correction of the middle example as well as the severe correction and potential bear market that could follow the bottom example, when the incumbent party loses the Presidency.
To review where we have been, the blue box highlights the time period when market risk was low – as pervasive bearishness gripped most casino patrons market players – and a bullish risk vs. reward stance was appropriate. A bottom was ground out into June and per the three examples (green box), it has been all bull all the time during a process of sucking the frightened players back in. We are evidently still in that process, judging by the immediate market reaction after the nimble Fed chief spoke on Friday.
However, the green box can carry a few days into September. Since the US market will not open until the 4th, we are basically there. This week could be the pivot to an interim correction per the average cycle, a harsh correction or worse, or in the event of an incumbent victory, a continuation and upward acceleration. This paints the coming one or two weeks as very important, don’t you think?
Of course this is just election cycle analysis, which by no means has to continue working well with the current market situation. I am not a gambler, but don’t they have a saying about riding a hot hand? The Presidential cycle has been taken seriously by this letter writer since May and that helped keep the analysis on the right side over a very difficult summer. What more can you ask from an indicator? We’ll continue to respect it.
Back on Fed Watch

One continues to wonder if QE will even be necessary any time soon. Sure, the current US financial system – along with those of so many other nations – is technically insolvent and is locked into a regimen of periodic and officially sponsored inflationary policy in order to service a massive debt load and continue to function normally; with “normally” defined as “kicking the can down the road as long as possible, but doomed to an ugly demise at the hands of a real and undeniable deflationary unwinding or an increasingly intense inflationary panic.”
So never mind the talk about the Fed standing ready to aid the economy as if it just needs another boost to finally get the sucker humming again. The economy is broken because it has been locked into a recurring nightmare of inflation onDemand ever since Alan Greenspan began using such policy in an ever more intense manner against the bear market of 2000-2002. He initiated a massive credit bubble that is still being dealt with today, only with government debt having replaced free market debt as the major driver.
The full text of Bernanke’s Jackson Hole speech is available at MarketWatch: http://goo.gl/WJokU, but here are some pertinent snippets that betray a massive ego on the part of intellectual monetarists:
“One mechanism through which such purchases are believed to affect the economy is the so-called portfolio balance channel, which is based on the ideas of a number of well-known monetary economists, including James Tobin [http://goo.gl/Am4Ib], Milton Friedman [http://goo.gl/cbir], Franco Modigliani [http://goo.gl/b9ZPi], Karl Brunner [http://goo.gl/OoThu], and Allan Meltzer [http://goo.gl/EZBia]. The key premise underlying this channel is that, for a variety of reasons, different classes of financial assets are not perfect substitutes in investors’ portfolios.”

These names are trotted out as gods instead of as economists. They are trotted out like the great social, cultural and scientific thinkers who have actually changed the quality of peoples’ lives as opposed to simply learned and taught about how to manipulate paper money. Our dear Fed leader is reverential toward these men and cut from the same cloth.
It is all about mechanisms, theories and formulas to them. Gold – the barbarous anchor to stability and one-for-one value retention – on the other hand, is much too simple. Why have simple when you can have overly complex and fraught with risk?
“Large-scale asset purchases can influence financial conditions and the broader economy through other channels as well. For instance, they can signal that the central bank intends to pursue a persistently more accommodative policy stance than previously thought, thereby lowering investors’ expectations for the future path of the federal funds rate and putting additional downward pressure on long-term interest rates, particularly in real terms. Such signaling can also increase household and business confidence by helping to diminish concerns about “tail” risks such as deflation. During stressful periods, asset purchases may also improve the functioning of financial markets, thereby easing credit conditions in some sectors.”

What he does not mention is that the need for such measures is the direct result of decades of manipulation of credit conditions and thereby, paper money. He does not mention that “tail risks such as deflation” only come to things that have first been inflated by being printed not only to excess, but right off any sane macro balance sheet and into the sublime. He does not mention that the use of ever more powerful monetary tools toward new inflation will bring ever more powerful corrective forces into play down the road, just as current problems were brought into existence by previous inflationary monetary policy.
These people – and here we include the likes of today’s “brilliant” thinkers like Paul Krugman, Larry Summers and the monetary rock star himself, Nouriel Roubini – actually believe their own bullshit, and that is dangerous because they are setting our policy.

This segment could go on and on, but I’ve got a newsletter to write. They make the rules and we play by them. So let’s get to it... NFTRH then goes on to the functional analysis that has kept the letter on the right side of the markets over a difficult summer.  Stay updated with the free (and spam free) eLetter.


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What Do Small Caps and Semiconductors Think They See?

Posted by Chairman
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on Tuesday, 04 September 2012
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The general Small Cap and the Semiconductor sectors are considered speculative leaders to the broad US stock market.  In painting bullish chart potentials, what do they think they see?

Small Caps: Still Bullish, But at Important ResistanceWe observed a bearish pattern on the Small Caps and a bullish one on the inverse fund TWM in mid-May, noted the "kiss goodbye" to the topping pattern at the end of May, noted a precarious situation for bears in mid-July, a Bull Flag channel in early August and then the competing bullish patterns a week ago.From the mid-July post:"Markets are still making higher highs and higher lows.  But but but... the markets are supposed to tank claim the bears.  Well maybe my furry friends, but despite the negative feel of this summer, they are making higher highs and higher lows."Technically, the bulls continue to hold sway.  I have been beating the drum on risk because any non substance abuser in the financial markets must remain aware of the risk profile at all points during the ongoing cycles, but thus far 'price' says bullish.Today we update the IWM ETF and find a maturing Cup - complete with Inverted H&S characteristics (it's not an H&S reversal pattern because there was no previous downtrend from which to reverse) - that would ideally break above the red neckline, form a Handle and move higher to the ridiculous sounding target of the equivalent of RUT 930 or IWM 92.

It sounds crazy, since we know the economy is decelerating and corporate performance is slowly degrading.  But the charts (along with risk and psych profiles) said be bullish in May and June.  Now this crazy chart says IWM has the potential to make jaws drop on the upside.  Well, speaking of jaws, that jawbone about to start moving in Jackson Hole tomorrow morning will have a lot to say about that, as will the red neckline on the chart above. Semiconductors:  At SupportThe semiconductor ETF SMH broke down through the neckline of an H&S top as noted back in mid-May:  Semi's back below a neckline... not a pleasant chart.  As the spring of angst (+ price destruction) morphed into the summer of continuing angst (+ contrarian bullishness) SMH found a bottom, painted a nice 'W' on the chart (targeting 35+) and broke above the old neckline.  That is now support.

Interestingly, I spoke with an associate the other day who - unlike your blogger - remains intimately involved with the semiconductor industry and the manufacturing sector in general.  He told me that semi is "dead in the water".Hmmm... what does the chart above think it sees?  What does the IWM (small caps) chart above think it sees?  Why do these charts have the nerve to think they can paint such bullish potentials?  Well, we all know what these charts think they see; they think they see what the precious metals that blasted upward last week out of long-term consolidation patterns think they see; just like the broad US and European markets we have been bullishly tracking all summer. They think they see a perhaps coordinated campaign by US, European and Chinese policy makers to blow the inflationary gasket by engaging the competitive currency devaluation sweepstakes.  Given that the risk profile has risen notably over the summer from its previous 'contrarian bullish' status, it could be a good idea to hear what the man has to say (or not say) tomorrow morning before committing too heavily to a particular viewpoint.Bullish looking charts can after all, be broken with the flap and yammer of a jaw.


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"So, How Did I Do? "

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Thursday, 30 August 2012
in Finance Blogs

"So how did I do?" - This is a question financial advisers hear often.  Surprisingly- this is not an easy question to answer neither for an adviser nor for the client themselves.


Many investors choose their investments and advisers based on their past performance; and many advisors select investments based on the same. What is really unsettling about this, is that many investors (and sometimes the advisers) do not fully understand how the performance is measured and how to correctly interpret the numbers.

How is it possible, that even though they keep investing in the "winners" ( investments with good track records)  their own accounts seem to perform poorly. Many  investors get confused reading their own financial statements and broker's reports but do not feel comfortable admitting this and go along until they lose faith in the investment advisor and the  industry altogether.


Follow along the example with me for a minute and when you are finished reading this, you will know how to answer two very important questions in investing:



  • How do I measure my progress towards my goals?
  • How do I evaluate my Investment Advisor?






Investor Nellie Nervous gets her brokerage statement at the end of the year. After reading it, she becomes angry and confused. This has been a roller coaster year, which made her lose a lot of sleep and now she cannot tell if this was a good or a bad year. Her broker, Chance Lucky tells her that she made a whopping 220% return. Yet, when she looks at the statement her investment , stock ABC,  is reported to have a 20% loss. How can that be? Is chance lying to her? Let's investigate:


On January 1st, Chance called Nellie with an investment idea. The stock of ABC, which was worth $100. Chance is very enthusiastic about this particular one and,  reluctantly,  Nellie agrees to invest $100. At the end of the year, this same stock is worth $80 per share (a 20% loss).


Clearly,  the math is pretty easy and the stock of ABC is a horrible investment.  But before we close the case, declare Chance a liar and a cheat and report him to the authorities,  lets look at what happened between  January 1st and December 31st of that year:

As luck would have it, immediately after Nellie bought the stock of ABC it started tanking. Shortly after the purchase, her original $100 investment declined to $80. After losing money and sleep, Nellie sells the stock, taking a loss and vows never to invest or listen to Chance again.

Nellie now has only $80 of her original $100 invested, and she is bitterly disappointed. However, she is not too upset, because she sees that the stock continues to drop further and further and she congratulates herself on a good decision to sell.


When the stock reaches $20, Nellie's broker, Chance Lucky, calls her again  and tells her that the stock is now a real  bargain and convinces her to invest her remaining $80 to buy 4 shares of stock,  now at $20 each. Reluctantly, Nellie agrees again:

Chance lives up to his name and makes a good call for a change. The stock rallies from it's $20 low back to $80 and Nellie's investment is worth $320 ( 4 shares X $80) on December 31st. Thus, one scary year later Nellies original investment of $100 is now worth $320 ( or a whopping 220% return).

When Nellie gets her brokerage statement at the end of the year, she is confused.  Her investment return shows -20%, whereas she knows for a fact that her original $100 dollar investment is now worth $320 ( less Chance's commission). More importantly, she is not sure whether or not Chance is a good advisor. On one hand, the investment he recommended lost 20% of its value. On the other , she seem have made money. Frustrated, she closes her account and decides not to ever invest again.





In this example Nellie got lucky and made a hefty return on her investment, but the math works the other way around as well.  Often investor loses money even when the investment he selected performs well. This results from adding or withdrawing money throughout the year at inopportune times.


What we have just seen with Nellie is the difference between a Time-Weighted and a Dollar Weighted Rate of Return ( sometimes called IRR). Or, more plainly put investment return vs investor's return. One measures performance without consideration for timing of cash flows, the other takes those into consideration.  As we've seen from this extreme example, the difference is not all that subtle.


So which one matters most and how do you use them?The answer is two-fold and is also the answer, posed at the beginning of this post:



  • As an investor you are concerned with the size of your account, so the Dollar-Weighted Return ( the IRR)  is the best way to measure your progress toward your goals.

  • However when you are selecting an investment manager to assist you with your portfolio, or a fund to invest in,  you are mostly concerned with his skill in consistently selecting the right investment, not his luck or his timing so the Time -Weighted Return is what you should be looking at.


Even though Nellie ended up with more money, she is right not to invest with Chance again. Besides the fact that he failed to select a suitable mix of investments to make sure Nellie reaches her goals and  does not lose any sleep while at it, there is no way to tell whether his investment selection skills are good or did he get, well.... lucky.

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Political, Economic Potholes Along the Yellow Brick Road

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Thursday, 30 August 2012
in Finance Blogs

MarketWatch has a piece today on the recent headline making noise out of the GOP about a return to the gold standard.

GOP's Gold Standard Idea Isn't Likely to Shine

"The gold standard, it is argued, would foster economic stability and prosperity, primarily by creating price stability, fixed exchange rates and placing limits government deficit spending as well as trade imbalances. It would also limit credit-driven boom/bust cycles through constraints on the supply of money."

Yes, absolutely.

"Opponents argue that the gold standard would limit the flexibility of governments and central banks in managing economies, restricting the ability to adjust money supply, government budgets and exchange rates. Opponents also point to the inflexibility of the gold standard, which may have contributed to the severity and length of the Great Depression."

In other words, a gold standard would limit monetary authorities' ability to "manage" economies by manipulating money supplies.  As a knock on effect, it would also limit their ability to provide welfare to favored constituents like the first users and abusers of newly created money, e.g. the big investment banks.

The article then goes on to make several points about why a return to the gold standard is unlikely (I agree that it is unlikely any time soon).  Here is the most telling reason, however:

"Money is now a matter of pure trust. American dollars still [bear] the words: “In God We Trust”. But God is not directly responsible for control of money; governments and central banks are. Politicians and policy makers are unlikely to willingly cede the power that a paper money system provides"

The article goes on to some silly stuff about a Tuscan spa, wealthy clients and the covering of these clients in 24k gold.   So, we'll leave the article now except to note that it also has a link to the ever clear headed Mark Hulbert and his
Bullishness rising faster than gold.  Read it.  Gold is not the risk/reward proposition it was a few weeks ago as it has raced to over bought levels in quick time.  But that's how the barbarous relic rolls when it breaks out.  From Hulbert:

"Unfortunately, there’s some bad news to accompany the good: Gold timers have reacted to bullion’s recent strength by eagerly and enthusiastically jumping on the bullish bandwagon."

We anticipated this in
the newsletter, gave parameters for over bought upside and for a potential reaction to correct the over eagerness.  A downside reaction, if indeed it comes about could be an ideal spot for traders of the metal to initiate new positions.  Holders of the metal should have taken long term positions long ago and should calmly sleep through any near term turbulence. 

Back on theme, while there is talk about the gold standard by the Republicans, they are just blowing hot air and taking advantage of a hot button issue and relevant topic.  Don't hold your breath on a gold standard even if Romney/Ryan gain the White House.  You and I, as lowly market participants and economic survivalists need to read between the lines in a functional way.

Gold is fine, as a standard or not.  As long as it remains an asset class as opposed to official money, it will be subject to market forces and the macro manipulations of current power holders.  These manipulations can constrain the metal as Operation Twist has played a roll in doing for a year now.  They can also launch the metal to higher levels, when the manipulation is toward increased money supply.

Sign up for
Notes From the Rabbit Hole (NFTRH) to effectively manage the process if you would like an effective source of market intelligence to track the progress of gold as well as the bigger picture macro landscape.  Or simply watch the blog and/or check out the free eLetter for a lighter and less formal version of the analysis.

By Gary Tanashian


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Attend one of these Small Business Events: Network and Grow your Skills

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Sunday, 29 July 2012
in Business Blogs


You can find plen­ty of events for small busi­ness­es and star­tups this sum­mer and fall, to edu­cate your­self and your staff, and to net­work with your peers. Here is our hand-picked list of con­fer­ences, sem­i­nars and events. Don’t miss out on these excel­lent oppor­tu­ni­ties to help you start a busi­ness, grow it and run it like a pro!

* * * * *

Start­up Week­end
Mul­ti­ple Cities and Dates 2012 – see web­site for full list

Start­up Week­ends are 54-hour events designed to pro­vide supe­ri­or expe­ri­en­tial edu­ca­tion for tech­ni­cal and non-technical entre­pre­neurs. Begin­ning with Fri­day night pitch­es and con­tin­u­ing through brain­storm­ing, busi­ness plan devel­op­ment, and basic pro­to­type cre­ation, Start­up Week­ends cul­mi­nate in Sun­day night demos and pre­sen­ta­tions. Par­tic­i­pants cre­ate work­ing star­tups dur­ing the event and are able to col­lab­o­rate with like-minded indi­vid­u­als out­side of their daily net­works. All teams hear talks by indus­try lead­ers and receive valu­able feed­back from local entre­pre­neuri­als. The week­end is cen­tered around action, inno­va­tion, and edu­ca­tion. Whether you are look­ing for feed­back on a idea, a co-founder, spe­cif­ic skill sets, or a team to help you exe­cute, Start­up Week­ends are the per­fect envi­ron­ment in which to test your idea and take the first steps towards launch­ing your own start­up.





Spark & Hus­tle Tour
Mul­ti­ple Cities and Dates, May through August 2012

Led by Tory John­son, the jam-packed, high-energy day enables you to expe­ri­ence big break­throughs in your busi­ness and your­self.

Meet great peo­ple who can help with prod­uct devel­op­ment and pack­ag­ing; man­u­fac­tur­ing and dis­tri­b­u­tion; mul­ti­ple rev­enue streams and col­lab­o­ra­tions; men­tal pre­pared­ness for mon­u­men­tal suc­cess; and so much more. 
Beyond the jam-packed ses­sions, this event is ideal to meet part­ners, col­lab­o­ra­tors and even clients!





VIP Con­tract Con­nec­tions & Team­ing from Amer­i­can Express Open
August 2, 2012, Boston

The Fed­er­al Gov­ern­ment awards near­ly $100 bil­lion in con­tracts annu­al­ly to small busi­ness own­ers. Are you ready to learn how to help grow your busi­ness through gov­ern­ment con­tract­ing?

This event gives atten­dees the access to buyer/seller con­nec­tions (VIP Con­tract Con­nec­tions), inter­ac­tive and engag­ing work­shops on gov­ern­ment con­tract­ing for small busi­ness, net­work­ing oppor­tu­ni­ties and keynote speech­es by gov­ern­ment offi­cials and experts.





Infu­sion­soft Small Busi­ness Suc­cess Tour

August 16 – San Fran­cis­co 
August 24 – San Diego 
Sep­tem­ber 13 – Chica­go 
Sep­tem­ber 28 – Los Ange­les 
Octo­ber 5 – Boston

This series fea­tures a full day of strate­gies, tips and mar­ket­ing best prac­tices from the experts at Infu­sion­soft. You’ll receive hands-on instruc­tions on how to devel­op a high­ly effec­tive sales and mar­ket­ing plan you can start imple­ment­ing right away. You’ll learn to:

Drive high­er cus­tomer refer­ral traf­fic tomor­row 
Cal­cu­late and opti­mize the life­time value of your cus­tomers 
Cre­ate a con­stant flow of new cus­tomers who are ready to buy 
Build a healthy and respon­sive data­base 
Get the right mes­sage, to the right per­son, at the right time





Depart­ment of the Navy (DON) Small Busi­ness Oppor­tu­ni­ty Con­fer­ence
August 6-8, 2012, San Diego

The DON OSBP is con­duct­ing its annu­al Gold Coast Small Busi­ness Oppor­tu­ni­ty Con­fer­ence in San Diego, CA on 06-08 August 2012. The pri­ma­ry pur­pose of the event is to pro­vide a forum to edu­cate, guide and assist small busi­ness­es in work­ing with the gov­ern­ment pri­mar­i­ly the Depart­ment of Defense. NDIA and NAV­SUP have col­lab­o­rat­ed to bring inter­est­ing and moti­vat­ing speak­ers that will present top­ics of inter­est with regards to work­ing with the gov­ern­ment. Plan on attend­ing infor­ma­tive and rel­e­vant general/plenary and break-out ses­sions includ­ing Indus­try Day with five of the Navy com­mands. Visit over 250 indus­try and gov­ern­ment exhibitors along with dozens of posters con­tain­ing com­pa­ny infor­ma­tion and oppor­tu­ni­ties. As with any of these events, there are also plen­ty of oppor­tu­ni­ties for net­work­ing.





Lub­bock Cham­ber of Com­merce Gov­er­nor’s Small Busi­ness Forum
August 7, 2012

The Forum is designed to give small busi­ness own­ers essen­tial tools to help their busi­ness­es suc­ceed, pro­vide jobs for Tex­ans and strength­en the South Plains econ­o­my. The Texas Work­force Com­mis­sion will present infor­ma­tion on the many ser­vices avail­able for small busi­ness own­ers, includ­ing the $2 mil­lion dol­lar Skills for Small Busi­ness Fund, which pro­vides grants to com­mu­ni­ty col­leges that small busi­ness­es may access for employ­ee train­ing needs.





MacTech Boot Camp

August 7 – San Diego, CA
Sep­tem­ber 5 – Min­neapo­lis, MN
Decem­ber 5 – Miami, FL

MacTech Boot Camp is a one day event for those that sup­port the home user, and small busi­ness mar­ket held around the coun­try. MacTech Boot Camp is a single-track, hotel based sem­i­nar that is specif­i­cal­ly geared to serve the needs of con­sul­tants and techs want­i­ng to serve their base bet­ter. This event is geared toward those that already sup­port the home and SMB com­mu­ni­ties, or that want to become a con­sul­tant sup­port­ing these areas.





Entre­pre­neur Week Presents: Olympic-Size Net­work­ing Extrav­a­gan­za
August 9, 2012, New York City

Join 200 oth­ers for big laughs, engag­ing con­ver­sa­tion, and an inti­mate net­work­ing space. Attend­ed by accom­plished pro­fes­sion­als & entre­pre­neurs + all around fun crowd from a vari­ety of indus­tries includ­ing: Tech, Fash­ion, Mobile, Angel Investors, Ven­ture Cap­i­tal­ists, Real Estate, Hos­pi­tal­i­ty, Green Energy/Sustainability, and many more!

Net­work with Entre­pre­neurs, Investors and/or come find a co-founder. 
Angel investors and vc’s get up in front of the crowd prompt­ly at 7pm to dis­cuss areas they invest, what they’re look­ing for, and more.





Sage Sum­mit 2012
August 12-14, 2012, Nashville, TN

Sage Sum­mit is the pre­mier con­fer­ence for Sage cus­tomers and part­ners. It’s the des­ti­na­tion for learn­ing bet­ter ways to lever­age the soft­ware you already own and know and dis­cov­er­ing new tech­nolo­gies. Plus you’ll hear what’s work­ing for other peo­ple in your indus­try and gain insight on how to over­come the chal­lenges your orga­ni­za­tion faces.

Small Busi­ness Trends CEO Anita Camp­bell will be mod­er­at­ing a panel about social media by small busi­ness­es, on Wednes­day August 15, from 10:30 am to noon. Look for  Ses­sion ID C-0128 – hurry, lim­it­ed slots left.





2012 Kansas Busi­ness Match­mak­er
August 14, 2012, Wichi­ta, KS

Kansas Busi­ness Match­mak­er 2012 brings buy­ers and small busi­ness sup­pli­ers togeth­er for pre-matched one-on-one meet­ings in a 1 day con­fer­ence. Small Busi­ness Sup­pli­ers pre-register for the event, using their com­pa­ny NAICS codes, and are pre-matched with reg­is­tered buy­ers for 10 minute meet­ings.





One Woman Nation­al Busi­ness Con­fer­ence and Expo
August 17-18, 2012, Sugar Land, TX

“Chang­ing the Face of Busi­ness One Woman at a Time” is the theme of the tak­ing place Aug. 17 and Aug. 18 at Sugar Land Mar­riott Town Square. The two-day con­fer­ence will give busi­ness own­ers, entre­pre­neurs and cor­po­rate employ­ees the chance to net­work with like-minded deci­sion makers.The con­fer­ence also fea­tures a trade show exhibit­ing prod­ucts, ser­vices and busi­ness oppor­tu­ni­ties.

Speak­ers will dis­cuss indus­try trends and busi­ness growth strate­gies. Sup­pli­er diver­si­ty offi­cers will talk about how to bet­ter serve the small busi­ness com­mu­ni­ty and meet new poten­tial suppliers.There will also be a “Youth Explo­sion” pro­gram for young entre­pre­neurs. One Woman is an annu­al women’s busi­ness pro­mo­tion, advo­ca­cy and devel­op­ment forum.





Small Busi­ness Event Ven­dor Out­reach Ses­sion
August 23, 2012, Wash­ing­ton, DC

Ven­dor Out­reach Ses­sions are a series of pre-arranged 15-minute appoint­ments with Small Busi­ness Spe­cial­ists from var­i­ous com­po­nents of the Home­land Secu­ri­ty Pro­cure­ment offices. These ses­sions pro­vide the small busi­ness com­mu­ni­ty an oppor­tu­ni­ty to dis­cuss their capa­bil­i­ties and learn of poten­tial pro­cure­ment oppor­tu­ni­ties. Also in atten­dance will be Prime Con­trac­tor Small Busi­ness Liaisons from sev­er­al of the large busi­ness­es who have con­tracts with DHS.

Sign up for the August 23rd VOS will be on August 16th 2012 begin­ning at 12:00 noon East­ern Time. Please read the instruc­tions care­ful­ly as the ses­sions fill up quick­ly. Instruc­tions can be found at http://www.dhs.gov/xopnbiz/smallbusiness/gc_1297786003006.shtm.





Tech­S­peak for Entre­pre­neurs
Sep­tem­ber 20-21, 2012, New York City

For women entre­pre­neurs, tech knowl­edge is free­dom…free­dom from fear, free­dom to pur­sue their dreams of ven­tur­ing out on their own. No longer will they be out of the loop from their tech team, no longer will they be held hostage by their con­sul­tants who “know more”.

At Tech­S­peak for Entre­pre­neurs, you will learn: 
How to plan, in detail, your entire project so that your tech team will know exact­ly what to do. 
How to hire the right tech peo­ple. 
How to man­age the project and catch mis­takes early 
How to deliv­er you project on time and on bud­get

Early bird pric­ing expires July 30th.





Mar­ket­ing­Profs B2B Forum 2012
Octo­ber 3-5, 2012, Boston

B2B Forum isn’t just anoth­er event. It’s the event for B2B mar­keters who don’t just fol­low yes­ter­day’s best prac­tices; they cre­ate the next prac­tices need­ed to move their busi­ness­es—and indus­tries—for­ward.

Five pro­gram­ming tracks cov­er­ing the mod­ern mar­ket­ing mix: lead gen, con­tent, social media, mobile, and mar­ket­ing essen­tials. 
Dozens of smart ses­sions by pro­fes­sion­als on the pulse of mar­ket­ing trends and growth.





Inc. 500 | 5000
Octo­ber 3-5, 2012, Phoenix, AZ

Inc. 500|5000 Con­fer­ence & Awards Cer­e­mo­ny is the must-attend event for the nation’s lead­ing entre­pre­neurs. Join your col­leagues and peers for three days of unpar­al­leled net­work­ing and learn­ing from the lead­ers of Amer­i­ca’s fastest-growing com­pa­nies. This year’s speak­ers include Cap­tain Mark Kelly, Com­man­der of the Space Shut­tle Endeav­our’s final mis­sion, Guy Kawasa­ki, Found­ing Part­ner of Garage Tech­nol­o­gy Ven­tures, and Marie Till­man, Founder of the Pat Till­man Foun­da­tion.





Women’s Busi­ness Con­fer­ence 2012
Octo­ber 4-5, 2012, Louisville, KY

This year’s theme cel­e­brates the entre­pre­neur­ial, inno­v­a­tive and adven­tur­ous spir­it of women busi­ness own­ers. They are start­ing busi­ness­es at record rates and run­ning these busi­ness­es on their own terms. They refuse to sit idle, wait­ing and watch­ing. They have con­fi­dence and power to shake things up, take smart risks and do things dif­fer­ent­ly to move for­ward. They are impact­ing pos­i­tive change at every turn, speak­ing out on issues of pub­lic pol­i­cy, light­en­ing their envi­ron­men­tal foot­print and cre­at­ing jobs that fuel the econ­o­my. They are part of some­thing much greater than them­selves—a grass­roots move­ment of women busi­ness own­ers and their com­mu­ni­ty of sup­port­ers all ded­i­cat­ed to help­ing one anoth­er grow, thrive, give back and leave a lega­cy.





The New York Enter­prise Report 2012 Small Busi­ness Awards
Octo­ber 10, 2012, New York City

The New York Enter­prise Report Small Busi­ness Awards is the annu­al awards pro­gram hon­or­ing the achieve­ments and accom­plish­ments of the 500,000+ small busi­ness­es through­out the tri-state area. Now in its 7th year, the Awards gala attracts more than 400 busi­ness own­ers and exec­u­tives and is often referred to as “the net­work­ing event of the year.” Don’t miss the chance to do busi­ness with the “who’s who” of the New York small busi­ness com­mu­ni­ty.





Pub­con Vegas 2012

Octo­ber 15-18, 2012

Sup­port­ed by the indus­try’s lead­ing busi­ness­es, exhibitors and spon­sors involved in social media, Inter­net mar­ket­ing, search engines, and online adver­tis­ing, Pub­con Las Vegas 2012 will offer a week-long look at the future of tech­nol­o­gy pre­sent­ed by over 200 of the world’s best speak­ers in more than 100 bold cutting-edge ses­sions.







Small Busi­ness Influ­encer Awards Gala
Octo­ber 17, 2012, New York City

The Small Busi­ness Influ­encer Awards will honor the Top 100 small busi­ness influ­encer cham­pi­ons at a fes­tive Awards Gala on the evening of Octo­ber 17, 2012 at the Jav­its Con­ven­tion Cen­ter. Last year’s event had a capac­i­ty crowd at a small­er venue. This year it will be big­ger than ever — with the Awards Gala as the evening event at the New York XPO Small Busi­ness Con­fer­ence. Don’t miss this excit­ing event! See last year’s recap. Mean­while, be sure tonom­i­nate some­one for the Small Busi­ness Influ­encer Awards (per­haps your­self?).





Small Busi­ness Expo
Novem­ber 8, 2012, Los Ange­les

Small Busi­ness Expo is a full day net­work­ing event, trade show & con­fer­ence of the year for busi­ness own­ers, C-Level Exec­u­tives & com­pa­ny decision-makers.

Net­work with other busi­ness pro­fes­sion­als & check out the excit­ing exhibitor hall 
Estab­lish new con­tacts and recon­nect with old ones. 
Fur­ther your edu­ca­tion by attend­ing work­shops & sem­i­nars. 
Learn about new prod­ucts and ser­vices that will help your busi­ness grow. 
Inter­act with the movers and shak­ers of your indus­try. 
Dis­cov­er new and inno­v­a­tive tech­nolo­gies.





Glob­al Entre­pre­neur­ship Week
Novem­ber 12-18, 2012, 20+ Coun­tries

Glob­al Entre­pre­neur­ship Week is the world’s largest cel­e­bra­tion of the inno­va­tors and job cre­ators who launch star­tups that bring ideas to life, drive eco­nom­ic growth and expand human wel­fare. 
Dur­ing one week each Novem­ber, GEW inspires peo­ple every­where through local, nation­al and glob­al activ­i­ties designed to help them explore their poten­tial as self-starters and inno­va­tors. These activ­i­ties, from large-scale com­pe­ti­tions and events to inti­mate net­work­ing gath­er­ings, con­nect par­tic­i­pants to poten­tial col­lab­o­ra­tors, men­tors and even investors—intro­duc­ing them to new pos­si­bil­i­ties and excit­ing oppor­tu­ni­ties.





New Media Expo
Jan­u­ary 6-8, 2013, Las Vegas

NMX, for­mer­ly Blog World & New Media Expo, is the first and only industry-wide con­fer­ence, tradeshow and media event ded­i­cat­ed to pro­vid­ing valu­able con­tent for Blog­gers, Pod­cast­ers and Web TV pro­duc­ers. Pre-register now and receive Super Early Bird rates.



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Get the most out of your Board

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
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on Tuesday, 24 April 2012
in Business Blogs

Sometimes the best way to re-imagine the use of an asset is to think about it as your only asset. Imagine slashed budgets, a hiring freeze, a tough competitive landscape, and unreasonable time constraints (or perhaps you don't have to imagine this state). If you had zilch, you'd have to be more innovative, more passionate, and more creative. You'd have to make the most of what you do have.

And one asset that's always with you and too often ignored is your board. Now is the time to stop thinking of your board as a mere legal formality and start thinking of it as untapped potential. More than a legal requirement or simple list of fancy names adorning letterhead, a strong board of directors can be a source of great ideas, great revenue, and great leadership. While these lessons come from the world of not-for-profits, this power of zero thinking can provide powerful ideas that anyone can use.

Here are three ideas to get you started:

1. Select for love of the product or service. One of the main criteria for selecting someone to join a not-for-profit board is passion. Instead of being paid with stock options or cash or other benefits, our board members pay us! They are involved with our activities as they are alumni or parents or current participants, or simply enthusiasts of our programs. Big donors, big volunteers, and big champions end up on the board. That check or those hours are a proxy for measuring the passion someone has for our product or service.

Are your for-profit board members passionate about your product or service? Do they love it? Do they ever even use your product or service? For this post, I examined the individual habits of board members of two struggling companies: Hewlett Packard and Yahoo. Are the board members champions of the product and services of those companies? Sadly, many of the HP board members use rival computers at the office: three use Dells, one uses a Lenovo, and two use Macs. Many Yahoo board members appear to use Gmail accounts — including one who publishes a Gmail address widely on the internet.

2. Select for diversity. People often ask about the demographic composition of a not-for-profit board of directors. Before investing money in us, they want to know how many women, how many African Americans, and how many Latinos are on our board. Why? This seems like an arbitrary question. But it turns out that this isn't just some politically-correct litmus test. It's actually a very simple performance indicator. Boards that look more like their target market have a better understanding of their target market. The Teach for America board includes teachers, and parents of kids in public schools — members who represent diverse markets. Similarly, it makes sense that one of the world's largest providers of home products and personal care items, Unilever, now has three women on its board. In fact, research shows that companies with diverse boards outperform those with a "male, pale, and stale" composition. A 2010 Catalyst Information Center study (PDF) found "companies with gender diversity at the top drive better financial performance on multiple measures — including 36% better stock price growth and 46% better return on equity."

3. Encourage transparency. Why are the proceedings of boards so mysterious? Sure, some of what happens in a board meeting should be kept under lock and key so that shareholders, competitors, vendors, and employees are not spooked. But many board proceedings are routine, and many topics would benefit from being in the light of day. And if board members had more contact with employees beyond the CEO, those board members would have a more complete understanding of the company's strengths and weaknesses. Many not-for-profit board members work on various special projects or white papers with disparate members of the staff. For example, the CTO of DonorsChoose is in regular contact with board member Jeff Weiner, the CEO of Linkedin. They discuss DonorsChoose's plans to better utilize data and analytics — areas of deep expertise for Linkedin, a communication tool that helps the board and staff to be better informed.

Board building is an ongoing activity, and a process of continuous improvement. And while my three suggestions might seem outrageous for a Fortune 500 company, advice and opportunity sometimes come from unexpected sources. Can you afford not to listen?

By Nancy Lublin

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Step 13: Tell Your Friends & Colleagues

Posted by Chairman
The Chairman is focused on providing value to business owners and those looking for practical financial guidan...
User is currently offline
on Friday, 20 April 2012
in Finance Blogs

The very fact that you are reading this sentence tells us a lot about your character.

Clearly, you crave knowledge since you’re actively seeking information to increase your financial acumen and portfolio returns. Having gotten this far in this 13-step primer, it’s likely you’ve acquired the skills needed to handle most money-related matters You have no problem picking out a decent bottle of red wine, are vigilant about using your car’s indicator at every turn, and are above-average looking.

OK, those last three are just hunches. Still, we think the world of you, Fool. And we think the world will be a better place now that you’ve gotten a bit more Foolish.

Have we sufficiently buttered you up? We hope so, because before we come to the grand finale of this motley Magna Carta, we have one favour to ask: If you think we’ve helped you along the road to financial freedom, how about helping us?

Put your chequebook away

The kind of help we’re talking about is much more valuable than writing more zeroes on a cheque or donating your lightly worn 1990s clothes to charity. We’re talking about giving away a bit of your most precious asset — knowledge.

If we’ve done our jobs right (fingers crossed!), you should now be on the path to financial freedom. Now you can help others do the same by passing on the important money lessons you’ve learned. It’s as easy as clicking the “Email” link at the bottom of this page (or any of the other 12 pages in this guide), and sending the information to a few friends, colleagues or loved ones.

If each of us pays our knowledge forward — the money lessons we’ve learned here and in the school of hard knocks — we will improve the financial footing of someone we love and care about. But the giving doesn’t stop with one person.

The pay-it-forward idea is like a chain letter (minus the absurd promises, over-use of exclamation points, and threats of doom befalling those who do not comply): If two of the people you tell about the importance of taking control of their financial futures tell two people and the process keeps repeating, after only about 26 iterations, everyone in Australia will be on their way to becoming successful individual investors. After 33 iterations, we’ll have reached everyone on the planet.

And it’s all thanks to your original, selfless act of paying Foolishness forward.

More ways to pay Foolishness forward

If you’ve got more to give, consider helping a friend plot a wealth creation plan, teaching a youngster in your life some basic money maths skills, or helping your parents get their important papers in order.

You don’t have to come up with a way to pay it forward on your own. Ask worthy recipients for suggestions for how you might help lessen their financial worries:

* When your neighbour asks for a hot share tip, instead show her how simple it is to discover great businesses.

* If debt’s weighing heavy on a friend’s shoulders, lend a sympathetic ear whenever the urge to splurge strikes, and gently inform them of the good life ahead once they are debt free, saving and investing.

Of course, this naturally leads to a very important question …

What’s in it for you?

Besides the warm-fuzzies and a few giant scoops of good karma, plenty. Paying it forward pays you back.

Specifically, there are three ways generosity is good for your mind, your wallet, and the world.

1. It’ll make you smarter. First, we guarantee that you will get smarter by sharing what you have learned with someone else. Studies about the way we process information have found that 10% of what we learn is through listening, 20% takes hold when we get involved (or “own” the information by taking notes and actively participating in the learning process), and a whopping 70% of what sticks in our brain for the long haul gets ingrained by the act of teaching what we know to others.

2. It’ll make you happier. According to Knox College psychology professor Timothy Kasser, people who focus on generosity are happier (and healthier) than those mired in materialism. That’s right, we actually experience a psychological lift from helping others. You don’t even have to write a cheque to get good giving vibes: Offering time or lending skills to a good cause takes us out of our navel-gazing routine and connects us to something grander.

3. It’ll make you richer. Another nice side effect of generosity is that giving has been shown to tangibly boost the benefactor’s bottom line — and not just in a tax-writeoff way. Research shows that people who are observed behaving charitably are often recommended for leadership positions in their professional lives.

Imagine the kind of movement that we could start if everyone reading these words right now did just one thing today to improve their finances. You are one click, one phone call, one conversation away from making financial freedom and stability a way of life.

Here’s how you can do it. Choose three people in your life who could benefit from a little Foolishness. Maybe it’s your spouse, a best friend, your grandkids, or garbage collector — anyone you think would benefit from a few of the financial tips and tricks contained in these 13 steps. Got your names? Got their email addresses? Send them an email, pointing them in our direction

Pat yourself on the back — you have just made the world a better and more Foolish place.

Happy saving, investing, and living.


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