It’s Summer Time: Is the Investing Easy?
A talk with Marc Mandel, CEO of the financial services company Wall Street Radio.Net
Marc Mandel’s company is based in Boulder, Colorado, and he has much experience with
the world of investing.
Douglas Goldstein, financial planner & investment advisor, interviewed Marc Mandel on Arutz
Sheva Radio to hear his ideas on the current financial situation and on how the season
can affect the way that we invest.
Douglas Goldstein: It is summer time and these people are talking about the summer doldrums,
trend or things that are going on in the economy in the summer.
What does a “summer economy” look like?
Marc Mandel: It’s interesting because the stock market is more of a discounting mechanism
and it discounts the future.
Therefore, summer time is slow.
Traders go on vacation to Israel, the south of France, and
the Hamptons, but the thing about it is that it’s also a time where we get a summer rally.
We’ve done some research and if you look at the Dow Jones Industrial Average from 1896-2007,
between June 27th and September 6th, it averaged plus 4.3%.
This is interesting because the market on a whole averaged 8% to 10% a year and 4.3%
of that comes during this period, June 27th to September 6th.
It’s a sweet spot for the market.
What’s currently happening now in the U.S. Stock Market is that you’ve got the Dow
Jones Transportation Average, which is made up of truckers, shippers, air freight, railroads
and airlines.
It is actually hitting all time record highs and has never been here before.
There’s an old Dow Theory on Wall Street that you’re in a bull market when the Dow
Jones Industrial Average and the Transportation Average hit new 52-week highs at the same
time or within a similar period of time.
The transports are hitting new all-time highs or 52-week highs and the industrials are not.
The industrials either will rally another 150 to 200 points hitting new highs for the
year, which would confirm we’re in a bull market, or they will fail to hit a new high
that would be a divergence and that would put into question the bull market.
By the price action of the industrial average and the transportation average, we can tell
whether we’re in a bull market or not.
The probabilities are that the industrials will go to new highs and we will confirm we’re
in a bull market.
During the summer season, typically it slows down the trading and the volume, but we also
have a sweet spot in the market.
Douglas Goldstein: What did you mean by a discounting mechanism?
Marc Mandel: What happens is that the price of stocks leads the news.
The news or information is a fundamental factor in the market, so people use fundamentals:
earnings per share, profit margins, sales increases, buyouts, and FDA approval.
These are all fundamental information.
The problem is that stock prices move first before the news is announced.
Price always leads news.
When someone says they did great earnings, that’s what they did in the past, it’s
not what they are going to do in the future.
The market cares about the future because it is a discounting mechanism.
The issue for investors is how they know what the news is going to be in the future, because
no one tells us.
What happen is that insiders, management, hedge money, smart money know the news before
it happens because they are the ones who make the news.
It is not public information, but they buy and sell based on what they know.
It creates a supply-demand dynamic that prices either go up in front of good news, prices
go down in front of bad news, and that’s the discounting mechanism.
Insider and smart money know the news before it’s announced.
They buy and sell creating the price movement and then the news is announced.
That’s how the market discounts.
Douglas Goldstein: Aren’t this insider trading accusations that you’re making?
Marc Mandel: Absolutely.
Wall Street, the U.S. Stock Market is totally manipulated by the Goldman Sachs of the world.
We have this major rally in the market, and the U.S. economy has been averaged at best.
As a matter of fact, the middle class is suffering in America.
The rich are doing really well, but the broad majority of people are hurting and yet the
stock market is going to new all-time record highs.
How is that possible?
First of all, if you have the Federal Reserve printing money in QE 1 and QE 2, but the Federal
Reserve was actually buying stocks.
Therefore, that is a manipulation in itself.
Goldman Sachs, the leading Wall Street firm, manipulates the market.
For people that think it’s a free market, it is naïve.
The market is definitely manipulated.
It’s affected by money flows and the money flows come from major players like Goldman
Sachs, Federal Reserve, Insiders and Management.
Douglas Goldstein: Are there any seasons, for example the Christmas season, that are
also known as a strong time in the market?
Marc Mandel: We’re going back through history.
Past performance has no guarantee of the future, but throughout history in the market, 80%
of the gains have occurred in the Dow Jones Industrial Average in the period of November
through April, six months, 80% of the gains occur.
Obviously, Christmas, New Year, and January are a very strong sweet spot for the market.
There’s a saying on Wall Street, “Sell in May and go away.”
The reason for that saying is because from May to October, the market performs the worst.
November through April, the market performs the best.
There is seasonality to the market.
Christmas, January, and February are really strong months for the market.
Douglas Goldstein: If people are out of work more, or if the society tends to be more of
a workaholic society with people working longer hours and taking less summer vacation, does
that change your outlook?
Marc Mandel: That doesn’t really change the outlook, but basically the employment
issue is a really important issue for the U.S. Stock Market and economy because 66%
of the economy is consumer-driven and is retail in America.
Sixty-six percent of the GDP comes from retail or consumers.
So if they’re not working, if their homes are losing value and they don’t have savings
or a piggy bank, it hurts the spending, the consumerism, which ends up hurting earnings
for many of these corporations.
Employment is a very important issue for America.
It’s one of the reasons why the market is not higher than it is because of the high
unemployment rate in America.
If there are more and more people at work then that’s more and more people that can
spend money.
It’s interesting because there’s this huge distribution or unequal distribution
of wealth in America.
One percent of the population controls 99% of the wealth and so the very rich are increasing
dramatically in America and the middle class is being destroyed.
You can see it showing up in the stock market.
Stocks like Lululemon, which is a yoga clothing company, has gone from $40 to $120 in the
last six months, Coach, which makes high-end pocketbooks and purses is hitting all time
record highs, Tiffany jewelry is hitting all time record highs, and then some of the retail
for the middle class stocks are doing very poorly.
There’s this incredible money flow by wealthy people in America and yet the middle class
is hurting.
There’s a huge disconnect between the rally in the stock market and what’s happening
in the economy for the middle class.
Douglas Goldstein: How can people learn more about the work that you’re doing?
Marc Mandel: You can go to our website, which is www.winningonwallstreet.com, and it is
the best way you can get touch with us.
Our goal is to help people win on Wall Street.
Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host
of the Goldstein on Gelt radio show (Monday nights at 7:00 PM on www.israelnationalradio.com.
He is a licensed financial professional both in the U.S. and Israel.
Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA,
SIFMA.
Accounts carried by National Financial Services LLC.
Member NYSE/SIPC, a Fidelity Investments company.
His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered
at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.
Disclaimer: This document is a transcription and/or an educational article.
While it is believed to be current and accurate, divergence from the original is to be expected.
The original podcast can be heard at https://sites.google.com/site/goldsteinradioshows/.
All information on this website is purely information and should not be used as the
sole basis for making financial decisions.
The opinions rendered herein are those of the guests, and not necessarily those of Douglas
Goldstein, Profile Investment Services, Ltd., or Israel National News.
Readers should consult with a professional financial advisor before making any financial
decisions.
Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/.