AUGUST 27,
2004 RECOMMENDATION: STAY OUT
We
recommend to continue staying out of the broad USA Stock Market.
Our Business Cycle Index is
below average level. This means continuing unfavorable economic environment for
the Corporate Profits and USA Stock Market. The market dropped so far -1.6%
since our SELL Recommendation on March 31, 2004.
Our recommended “OUT of the
market” periods are typically, although not always, characterized by higher
volatility and sometimes significant stock market falls. We cannot predict if
this pattern will be repeated in the current cycle. All we can say is that there
is an increased probability of such scenario. The chart
illustrates recent performance.
Sincerely
The
Business Cycle Investor Research
August 27,
2004
_______________________________________________________________________________
How to use the buy & sell signals?
Investment Banks, Institutional
Investors and Hedge Funds use the advice
for
proprietary trading, global
asset allocation
and leveraged strategies decision support.
Individual Investors invest
directly on
the quarterly buy and sell
signals in the USA market DJIA or S&P500 index Exchange
Traded Funds (ETF)
or in an equivalent liquid USA market
index mutual fund.
The ETF funds trade on
the stock market just like normal stocks. One transaction in ETFs
provide investors with diversified blue chip portfolio and solid
dividends. Transaction and management costs are minimal.
Stock market follows aggregate Corporate Profits
The proprietary Business Cycle Index is an effective leading indicator of
corporate profitability for the whole USA economy. The aggregate US Corporate Profits are
calculated quarterly by the USA Government and published at
www.bea.gov where
subscribers may independently verify the forecast.
Corporate Profits have historically shown a high 93%
correlation with moves in the major diversified USA stock market indexes: Dow
Jones Industrial Average (DJIA) and S&P 500. Hence, the Business Cycle Index can be
used as a leading indicator of the broad USA stock market.
The Corporate Profits for the whole US economy don't always move in the same
direction or by the same magnitude as the profits reported by
individual companies or even the DJIA or S&P 500.
Validated Methodology
The
proprietary methodology was validated over more than
fifty years of historical data. The Business Cycle Index, first developed and published in
2004, proved to be a consistently accurate indicator of economic conditions
that led to turning points in the Corporate Profits and the broad stock
market indexes.
More information about the research methodology can be found at
www.businesscycleinvestor.com/methodology.htm
Important Legal Statement -
Please read
before making a purchase
Past results are not necessarily indicative of future
results. There is risk of loss as well as the opportunity for gain when
investing in shares and managed funds. When considering alternative
investments, including hedge funds, you should consider various risks
including the fact that some products: often engage in leveraging and other
speculative investment practices that may increase the risk of investment
loss, can be illiquid, are not required to provide periodic pricing or
valuation information to investors, may involve complex tax structures and
delays in distributing important tax information, are not subject to the
same regulatory requirements as mutual funds, often charge high fees, and in
many cases the underlying investments are not transparent and are known only
to the investment manager.
Disclaimer. This information is
not to be construed as an offer to sell or the solicitation of an offer to
buy any securities. The information has been prepared from a wide variety of
sources that publisher GB Capital Pty Ltd (“GBC”), to the best of its
knowledge and belief, considers accurate. GBC does not warrant the accuracy
of the information and forecasts contained here. Opinions expressed in these material may change without
prior notice.
Warning. No recipients should
rely solely upon the general information and/or general recommendations
contained here. GBC strongly recommends that all prospective purchasers of
securities should make their own enquiries and consider their own personal
financial situation and objectives and, in particular, seek professional
advice from a financial consultant, financial planner or stockbroker before
acting on the information contained here and especially when using borrowed
money and leveraged instruments for investments. GBC is not a licensed
advisor.
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Private Client
Subscribers obtain access to the forecast after 6 months delay which may
result in additional investment risk and reduced returns or loss. Financial
leverage
and investing borrowed money is not recommended.
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Recipients and Subscribers invest directly and GBC
does not receive any commissions or fees on the investments.
Disclosure and employee trading restrictions.
Employees and/or associates of GBC typically follow the advice contained
herein. This should not be seen as a recommendation.
Copyright © 2004 GB Capital Pty
Ltd. No part of the material may be reproduced, except as provided by law,
without prior written consent of GBC.
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