If you are looking for the perfect Christmas gift, or a new piece of jewelry for yourself, I wanted to let you know that I am selling beautiful pearls that I handpick in China. As you all know, I speak Chinese and lived in China for several years. What you may not know is that I have spent several years learning about pearls and making contacts in the industry there, and began selling jewelry via word of mouth in SC. The pearls were so popular that I knew I had to take it a step further and sell them online after I ordered from several competitors and realized that I had a huge advantage in terms of quality and presentation. The name of the company is HinsonGayle…it is named after my mother.

Please visit the store at www.HGpearls.com. The pearls are great quality and very affordable compared to retail stores. To help spread the word, I am offering my friends an additional 20% off of all Christmas orders! If you or anyone else you know would like to buy pearls, just enter the promotion code “HG” at checkout and receive 20% off the order thru 12/31, plus free shipping. Anyone can use this code, so please feel free to pass this email along to your friends and family!

All orders come with a 30-day guarantee and return policy, and beautiful jewelry boxes that make great presentations for anyone giving the pearls as a gift (you can see a picture of my earrings box on the site). My goal is to build a brand, not just sell pearls. So I am going the extra mile to make it look like it is an established brand from the get go.

Thanks!

Gregory

Market Alert! 2008-11-23

I am wondering what is going to happing to Citigroup, the 3rd largest U.S. bank. The stock was in free fall this past week, losing more than 20% for three days in a row on Wednesday, Thursday, and Friday. My guess is that the government will do something by tomorrow morning.

Whatever happens should be interesting.  We will know more later!

Gregory

Market Update: 2008-11-20

Well, it has been a long trip, but it looks like we have finally arrived. As I write, the S&P 500 is trading at 786. We are now officially testing the depths of the 2002 market bottom! The S&P 500 index is trading below 800 this morning, which is where it bottomed in October 2002 after the "New Economy", tech-bubble market burst during the first years of this millenium.

Early on this year I began saying that the S&P 500 index technically looked a bit scary. The chart appeared as though it was making a secular double top. As the year progressed, and the market continued to fall, it became more and more apparent that a return to the 2002 lows was completely "in the cards". And now, that "worse case" scenario has come true. No one, other than yours truly (and my Dad), thought it was even possible. I sure as heck know that Jim Cramer wasn't talking about it (please correct me if I missed that episode, not that I watch him much anyways)! It amazes me how much a simple stock chart can tell you about what may happen to stocks in the future.

Now that the S&P 500 has fallen below 800, a new question comes to mind: "What next?" This is more challenging to answer, because no one really knows. But there are really only two possible answers which I will explain next.

Possibility #1) The stock market has bottomed. Wow, finally we can relax! Under normal circumstances, I would expect that the S&P 500 would not breach its previous cyclical bear market low. The S&P 500 has major, long-term technical support at 775, and that means that it should not fall below that level for any extended period of time. Sure, it could fall below 775 for a week or so, and then as long as it quickly bounced back above that level I would not consider that a breach of support. However, the economic fundamentals that in the long run help us decide the true value of stocks are anything but normal right now.  That leads us to the other possibility.

Possibility #2) The stock market is getting ready to fall off a cliff! Assuming that the S&P 500 is not able to hold support at 775, then the coming market action will be horrible. In what I would consider a worse-case scenario, the market could lose up to 50% of its current value. Now, calm down, I am not saying that will happen! But, the reality is, if the S&P 500 falls below 775, there really isn't much support below until you get to the 400-500 level. The market would have to lose another 50% of its current value to drop to 400! All odds are that, if we do break down from here, the market will end up catching itself before falling all the way back to its early 1990s valuations. Maybe it can stop at 600 or 700. However, that still won't be any fun. But, if you have cash in the bank right now, any breach of 775 will equate to the buying opportunity of your lifetime. As I said yesterday, now that we are back to the 2002 lows, it is smart to consistently and unemotionally buy into the stock market over the next 6-12 months. Don't buy all at once, because there is a chance you will be able to buy even more shares at a cheaper price later if things get really, really nasty. The fact that the banks appear as though they are breaking down, isn't a good sign either. At this point, banks could easily lose another 25% of their current value. Given that financials make up around 16% (i.e. the biggest share) of the S&P 500 index, if the financials do lose another 25% that means that the S&P 500 will shave off another 4%. Based on yesterday's close of 807, that will take the S&P 500 to support at 775. And that is assuming that all other sectors in the S&P 500 don't fall any futher! So, could the S&P 500 break below 775? As one famous former Vice Presidential candidate would say, "You betcha!"

In summary, the next few days, weeks and months are going to be very interesting. We are living in what could be historic times for the US stock market. It is likely, but not guaranteed, that the market could have a total collapse. In the meantime, I expect that the S&P 500 will not give up 775 without a fight, so I expect more volitility in the near term and a lot of bouncing around between 775 and 900 or so. If we get another rally, it could be big, say another 20-30%. But I doubt it will hold either. Now that we are below 800, I think we will have to test this level again after any rally that does occur to ensure that we made a bottom. If we do start to break down below 775, watch out below. I would not be surprised to see panic selling with heavy moves to the downside and the odds of a stock market crash would be raised as well. Hold your breath, it is gonna be a wild ride!

We will know more about when this bear will finally hibernate later.  Until then, Happy Investing!

Gregory

Market Update: 2008-11-19

On October 22, 2008, I penned the following: "I still think that the stock market is ripe for a relief rally, and I anticipate it could rally by 20-30% by early January. But I don't expect the rally to be anything more than a sucker's rally." Well, we had that rally, and we have since lost it all. Suckers!

Yep, between the intraday low on 10/27 and the intraday high on 11/4, the S&P 500 rallied 23%. Even if you just look at the closing levels on those two days, the rally was a nice 18.5%. Now all of those gains are gone. But that outcome was expected.

Now the question that everyone is asking is "Have we bottomed? Did we successfully test the October low this past week?" And now for my answer...drum roll, please..."No!"

Although it is (not so) possible that we have already bottomed, I still believe the odds are that the S&P 500 will drop to 800 or below.  The October 2002 low on the index was in the 770s, and this schizophrenic market is most likely not going to let this bear go until we test that multi-year low. Of course, as of October 27 the index fell to 818 intraday, which is really darn close.

One of my biggest concerns is that the banking sector now appears to be totally breaking down. Call it capitulation or what you will, but it doesn't look good! Over the last week or so, the BKX banking index has been testing its July intraday low of 46. I first saw signs of trouble last week when two of the three largest US banks, Citigroup (C) and Bank of America (BAC), broke below their previous lows even though the BKX was still holding up above 46. My gut feeling was that both BAC and C were getting ready to pull the rest of the banks down with them (misery loves company), and as of yesterday and this morning, it looks like that is finally happening. Yesterday the BKX closed at a new low of 45.68, and now this morning it is continuing to spiral down another 5.5% to 43.15 as I write. The problem is, if this trend holds and we do break support, then I don't see much support below. There is "Support Lite" in the low 40s, but after that there is absolutely no support until you reach the upper 20s to 30. If the BKX were to fall to 30, that means that banks could lose another 30% of their current depressed values.

Banks and financials in general still contribute a nice chuck of change to the S&P 500 portfolio. So if they continue to fall as looks likely, then news lows in the S&P 500 are going to be easy to accomplish. This morning US markets are once again testing keys support levels. The Nasdaq is making new lows this week. Banks are in need of life support. Homebuilders are going up in flames. Oh, and did I mention, we are in recession! And it is getting deeper! At this point, I think we are not that far away from seeing the S&P 500 under 800. Once we get there, I will reevaluate the situation and write again. It will be very interesting too, because then the question will be, "Will the S&P 500 hold support and bottom around 775-800? Or will it break the lows of 2002 and go off into the abyss?"

We will no more later.  Until then, I am buying the S&P 500 (i.e., S&P 500 index fund or SPY) once a week to ensure that I accumulate stocks while they are searching for the bottom. I plan to do this for the next 6 months by steadingly unwiding my cash position into the market in weekly, equal amounts (aka dollar-cost averaging in). I most likely won't be able to find the exact bottom, but I will be sure to buy as many shares as possible now that we are substantially closer to the bottom than we are from the top! I am not buying banks or homebuilders right now, but am holding on to the shares that I still own in those sectors. And oh yeah, Happy Investing!

Gregory

Market Update:  2008-10-24

Here we go again. The next few days, once again, are looking ripe for the capitulation we have been looking for.

This morning’s open is going to be especially exciting since major index futures have halted trading for several hours now due to the fact that they have hit their limit down stops. That means they have traded so low that they are not allowed to trade any lower until after the market actually opens! After a rout in Asia last night, with the Nikkei 225 crashing back to its 2003 lows, our markets could see major turmoil today. In addition, you have the dollar tanking against the yen but rising against the Euro (a joke of a currency), which is sending mixed signals to the markets. We have the potential for an outright stock market crash, down more than 10% in one day, today or early next week. A crash would be a blessing at this point because it would likely scare away all the speculators and help to calm down this raging volatility of late.

To take advantage of this morning’s opening, I have set two limit orders to buy EWJ (Japan) and XLK (technology) around 11-12% below yesterday's close. I don't know if we will get there or not, but we’ll see. Nonetheless, Japanese shares are being given away for practically free at the moment, so I have no doubt in my mind that by buying the EWJ now I will make a great return on it when the markets recover over the next decade or so. Remember, even with stocks selling so low right now, for every seller there is a buyer. I am one of the buyers! If you have any stocks or ETFs that you would like to mark down to even lower prices and sell to me, please give me a ring!

Have fun watching the markets today! If we do get a crash, before 4:00pm I plan to move cash into the S&P 500 index fund within my retirement account. I am eyeing 775-800 on the S&P 500, and we could be there soon. We will know more later. Until then, Happy Investing!

Gregory

Market Update: 2008-10-22

After dropping another 15% today, I just couldn't help myself to sit back and not pick up some more gold mining shares today.  I bought more GDX, which is and ETF and moves similarly to the XAU Gold and Silver Mining index. As of today, the XAU has wiped almost all of the gains of recent years and there is major support between 60-70 that goes back for the past 25 years. Of course, that is if you don’t include the all-time bottom in the low 40s back around 2000. Bu it didn’t stay that low for that long.  Plus, the last time the XAU was under 50 gold was only $250/oz. Gold is over $700/oz now, so I see a huge disconnect between the gold mining stocks and the actual metal price. I think gold mining shares are in an extremely oversold state now, and I just don’t see how buying now won’t pay off over the next few years. After all, pretty soon the Feds are going to run out of ink the way they are printing dollars. I don’t see how gold can’t benefit from all the money being thrown at this financial crisis. I guess the hedge funds have sold about all the gold shares they have left, so I anticipate that soon we should have a bottom on gold shares.  Gold shares were the biggest winners of recent years, so unfortunately they are being unloaded by the hedge funds that have to raise cash to meet all their redemption request. Shows how much those idiots know, I think they are soon going to regret the fact that they threw the baby out with the bathwater!

The other big sector I am watching closely is the oil and gas services and equipment sector. XES is my ETF pick for that sector. I have already bought some, and plan to buy more as it falls further. I anticipate that commodities and related stocks will see their bottom around the same time that the S&P 500 bottoms.  Remember, my target for the S&P 500 is 775-800, and with today's new closing low of 896, we are getting closer. I still think that the stock market is ripe for a relief rally, and I anticipate it could rally by 20-30% by early January. But I don't expect the rally to be anything more than a sucker's rally, so I will most likely cash out of some positions if we do get the rally so that I will have cash ready to buy back in later in the winter or spring when the market falls back to our autumn lows for a test.

We will know more later. Until then, Happy Investing!

Market Update: 2008-10-13

All three major U.S. stock market indexes including the Dow Jones Industrials, S&P 500 and the Nasdaq Composite, were up more than 11% today! That is the good news.

The bad news is that just about all other “biggest one-day percentage gains” in history occurred in a bear market. Bull markets do not see such big, one day events. Rather, they see steady increases over the long haul.

As I said last week in my 10/08/2008 Market Update, Congratulations, President Obama, this market was oversold and due for a relief rally. Specifically I wrote, “I am not even convinced that our markets will get a bounce from this cut today [the Fed rate cut, that is, and stocks did not bounce that day as some expected they would]. The only thing going for the stock market right now is that it is a bit oversold, which means we could get a relief rally any time now.”

Well, it looks like we got the bulk of our relief in just one day! Today marks the beginning of a dead-cat bounce that should help us recoup around 50% of the recent losses. That means the S&P 500 could see an additional 10% or so in gains (to around 1100 or slightly higher) before we head back down to test the lows later this year or next.

If you don’t know what a dead-cat bounce is, just think about it. What happens when you drop a dead cat on the floor? It bounces! But in the end, once all the bouncing is over, the poor cat is still dead.

We will know more about how high and long this dead cat will bounce later. Until then, Happy Investing!

Gregory

Market Alert! 2008-10-10

OK, it is a good thing I recommended taking money off the KBE last week. Over the past two months I have removed over 50% of my money out of the KBE, which tracks the banking index.  Since I posted my 9/29/2008 Market Alert! titled I just sold some KBE, I the banking index fund has lost 30% as of this morning's pre-market trading price.

The reason I have changed my stance on banks is because it is apparent now that more that just a handful have major problems. And even scarier is the fact that President Bush is likely going to announce at 10:25am this morning that the federal government will begin to take equity stakes in the banks in an effort to further inject liquidity into our broken financial system. This means that the banks will be issuing new stock shares, which will dilute shareholder earnings. This is not good for bank stocks, which is likely the reason they are down more than 10% in the pre-market trading this morning.

I am sorry, if the U.S. government is going to change the rules of the market as they have unrentlessly done for weeks now, it is impossible for me to make a reasonable market assessment with regard to the banks. And since the banks this morning are now trading below their 7/15/2008 low, that tells me that there is a very good chance that the banks will not hold at this support. If support doesn't hold, we will likely not bottom until we wipe out at least 80% of the value of the bank stocks from there peak in 2007. This is case in point as to why, as an investor, you have to take risks in order to make money in the long run. But when the rules of the game change or things become clear that they are not going to work out as previously thought, you also have to be willing to cut your losses and find another opportunity elsewhere. Having said that, I do still have some exposure to KBE...just much less so they I did several months ago. At this point I don't plan to sell anymore of my KBE position; instead, I will just wait for banks to recover. And I am a patient man!

Gregory