StockbrokerPro.com NOTES…Tuesday, May 6, 2003

      • This is my second NOTES. It will be changing in format and style over the course of the next few months, until I find what works best. Currently I am mixing fact and opinion, advice and research. At some point I will segregate such topics. I beg your indulgence as NOTES develops. I also urge you to email me your feedback as to what you like and dislike, what works for you, and what is a waste of your time. I want NOTES to be valuable for you.

      • Investors put $1.6 billion into equity funds in March vs. the $10.6 billion they took out in February.

      • There are 93 million mutual fund shareholders in America…with $6 trillion invested in mutual funds.

      • Technology stocks are up more than 10% this year.

      • We've had three years of stock market losses; unemployment is at 6%; we've had 12 interest rate cuts; we have a trade deficit equal to 5% of GDP (gross domestic product); we have soaring federal and state deficits — and portfolio managers are still upbeat (as they have been for the past three years).

      • In 1980 only 6% American households owned stocks…by 2001 52% did.

      • The major market averages have now rallied 16% from their March 11 lows. Is the stock market celebrating the end of the war? What about the continuing loss of jobs and the crushing of the U.S. dollar?

      • Companies have shed jobs for three straight months, and America has lost jobs in 6 of the past 8 months. In the manufacturing sector, manufacturers have cut jobs for 33 straight months.

      • Where does one look for returns in world of 1.25% money market rates and 5% long term-bond rates?

      • One year ago 613 gas rigs were at work on American soil and in contiguous waters…now, after a cold winter there are 805…however, in 2001 there were 1,068. Gas prices are higher…but how many more rigs will (or can) the drilling industry put to work? Has regulation and environmental concerns made the upside of the drilling industry too tough to capitalize on? Are there significant opportunities for those companies with the right people, the technology, the financial wherewithal, the drilling prospects and the business model to navigate such a difficult business environment?

      • I still believe the market is overpriced and that one should be careful. A test of the floor of this trading range is inevitable. That said, it seems as though the upside of the trading range is expanding…that's good. A squeeze on short positions could take the market a bit higher. Remember, bear market rallies are significant and violent…and are huge traps for those who are not fleet of foot. Be aware of value and don't get carried away.

      • In the April, 2003 issue of Active Trader Magazine (www.activetradermag.com), technical analyst and money manager, John Bollinger, said, "Market timing, which did not pay at all during the expansion phase [of the market], pays tremendously well during the consolidation phase. Franky, for the technical investor or trader, this is the best of all possible worlds because there are big, fat, intermediate swings to trade. Also, classic indicators such as the advance-decline line, new highs/new lows, the MACD, moving averages, and overbought-oversold indicators work very well in this type of environment.

" The important thing to understand right now is that we're not in a buy-and-hold environment, we're in a trader's environment. The keys to success in a trader's environment are market timing and industry group and market sector rotation which is simply to say, market timing on both a macro and micro level."

      • If the American stock market continues to follow the Japanese market (as it eerily has so far, with the Japanese market has losing 80% of its value over 14 years)…then, in spite of U.S. investors losing $7 trillion over the past three years…there's still another $8 trillion to be lost…Ugggghh…let's hope the U.S. government and central bank (the Federal Reserve) do not do the same things that the Japanese government and their central bank did…which, basically was to let deflation take over the markets without opening the money (yen) supply spigots, while interest rates went to 0% without any economic stimulation. Certainly we’re smarter than that!

     •  Although I am negative on the market in the intermediate term, I am very positive in the long term. Corporate America WILL come back strongly at some point, and will do so admirably, as it always does.

      • For brokers and investors: there are annuities with total market protection on the downside and significant market participation on the upside.

      • Investors are begging to be communicated with by professionals who care and know what they are talking about.

      • This is THE best environment for brokers to increase their client base. Brokers are not talking to their people…it is time for true professionals to shine.

      • There will be the greatest transfer of wealth (from one generation to another) over the course of the next decade than ever before. There are so many things to be talking to clients about. What about long-term care for parents, and the taxability of estates?

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For broker coaching check out David McKee at (603)-598-3794. Check out his website: www.simpleintellection.com.

In this NOTES, David writes:

Have you ever felt that at some level you knew everything?

 You do.

Decisions lead us to action. What "exactly" is involved in the coming to a decision?

 One element is that measurements are made, against an often unknown set of factors derived from desires. Desires to advance, or expand, and what the consequences were of those actions, as well as the desires to keep [your self] from diminishing, or retreating, and those consequences.

 The word "nature" is defined as: the manifested sum and order of causes and effects. In the future weeks of NOTES, we will isolate some very specific causes and effects, and in so doing reveal the fundamentals of knowing how to know.

 One of the most effective ways is simple intellection, the act of resolving the obstructions to knowing.

You can contact David to further explore how any of these concepts applies to you in your quest for professional effectiveness.

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