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A View From Here October 2012

October 10, 2012 • Print This Article

Inspiration, move me brightly...

If you asked me about the stock market before joining the securities industry in 1988, I would have said "when everyone thinks alike, they are likely to be wrong." That is what my father told me the one time I asked about the subject as a teenager. He loved the stock market and would read through Barons magazine on the weekends and The Northern Miner and Globe and Mail during the week in an effort to gain an investment edge.

When I was growing up, Friday nights at 8:30 were reserved for the only television show dedicated to investment industry, called Wall $treet Week in Review on PBS. The show opened with a dry but humorous discourse of the week's action by its host, Louis Rukeyser. He would then answer viewer mail and interview a revolving cast of experts on subjects which affect the world-wide economy. Because my father was an early riser, he rarely made it through an episode without falling asleep. After joining the securities industry, I began to take interest in the program and dismissed the view that this was 'Mr. Rogers Neighborhood for business people.'

I was lucky enough to attend a speech by Louis Rukeyser at Roy Thomson Hall in 1990 and judging from my seats near the upper deck, the show was popular (or the attendee's donated enough to PBS and received free tickets). The key point that sticks with me is in regard to forecasting economic Armageddon. He pointing out that since the program began to air in 1970, there would be certain guests who would induce fear that touched that space in your gut which tells you that everything is going to be bad from here on. He then displayed a simple chart of the growth of the major index's since that time.

The following link will take you on a 10-minute journey through a 30-year review of the program (or at least the most important part). It is funny how things seem to repeat themselves over and over again.
http://www.youtube.com/watch?v=oEfJ0tpMars

25 Years so far...

When it comes to the Stock Market and October, one harkens back to hallowed memories of pendulums swinging in the wrong direction. This year marks the 25th anniversary of 1987 market crash. Looking back, it is hard to believe that the market sold off almost 30% on October 19, 1987, especially when you consider that it closed almost 7x higher by September 30, 2012. Maybe Mr. Rukeyser was onto something!

Reverse Indicators

Old-timers may remember the saying "When brokers remove the quote machines, it always signals the end of a bear market." Of course, this wouldn't occur today, now that computers have taken over, but it is worth noting that it happened in the firm I worked for in 1990...just before the markets resumed its upward trend. Another signal worthy of consideration is when brokerage firms decide to close branches.

Hence, you will hopefully understand my intrigue when one of Canada's largest decided to close 16 branches last month. Here we are, 3 1/2 years into a recovering environment, wondering how much longer it could last and we get a shot-in-the arm like this...a signal that suggests to me that we could see a further extension to the recent rise in the markets that nobody seems to be talking about from a positive perspective.

Of course the reason for the closings did not come as a surprise: investors have been 'sitting on their hands', worrying about Europe, the economy and earnings. No wonder we have had low volumes and despair on Bay Street.

Our accounts continue to hold their gains for the year and have been particularly strong as I write this note. Judging from what we are seeing out there, it's a pretty good feat.

Thanks for taking a look

Have a great long weekend, and as always,

All Good Things

my dad

- Louis Rukeyser's Biggest Fan! - My Dad
 

Filed under: Uncategorized

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation ("MRCC"). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des ├ępargnants.

Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

 

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