Why does this bull market get no respect?

This quarter we mark the 4 year anniversary of the bottoming of the great recession, at least in equity market terms, because as we know there is still a large portion of the country that has still not recovered.

The past weekend's edition of USA today was headlined by a question Why does this bull market get no respect?  One of the short answers is the lack of confidence people have in investing period.  After being rocked by the dot.com bubble in the early 2000's then enduring the subsequent equity market free fall along with the bursting of the housing bubble, investors are practically scared stiff.

To make matters worse investors who have sat this huge rally out are probably even more fearful to get back in now as the equity markets touch new 5 year highs.  With investing you have to be forward looking.  Does the future look better than the past?

As we pointed out in this post along with Doug Kass, there will always be varying degrees of uncertainty.  The question then becomes, which ones are worth dealing with and which ones are not?  As more "black swam" events appear to be occurring more frequently, it gets harder and harder trying to decided when to be in the markets and when to be out.  In our minds, it is not an all or nothing strategy.  Rather it is having a basic understanding of what future risks could be and then adjusting your strategy to minimize those risks head on.

Full USA Today article here

Websites Vary Prices, Deals Based on Users' Information

Have you ever noticed the variation in pricing among online retail sites?  Have you ever wondered why?  Personally I have seen prices for items on Amazon change by the hour.  This WSJ article takes an in depth look at the why and how of online pricing.

In case you were wondering, price discrimination is perfectly legal as long as it does not discriminate based upon race, gender, religion, etc.  Case in point an airline can charge you $400 for a plane ticket while the person next to you only paid $200.

This article can give you some additional insights as to what to look for in online deals and also provides details on how some of the mentioned companies look to maintain or increase profitability.  Maybe some of these methods could work for you business owners out there.

Doug Kass: 15 Surprises for 2013

We wanted to get this post out before the first month of the new year passed us by.  Every year mark news maker and portfolio manager Doug Kass of Seabreeze Partners puts out his list of 15 surprises.  His list can tackle not only financial topics but also political and world issues.

What I like about the Kass article is what he says right off the bat which are the lessons he has learned from putting together such a list year after year.

• how wrong conventional wisdom can consistently be;
• that uncertainty will persist;
• to expect the unexpected;
• that the occurrence of black swan events are growing in frequency; and
• with rapidly changing conditions, investors can't change the direction of the wind, but we can adjust our sails (and our portfolios) in an attempt to reach our destination of good investment returns.

I especially like his second point, "that uncertainty will persist."  As we celebrate the ceremonial inauguration of President Obama today as well as Martin Luther King, hope and optimism rain supreme.  There is a phrase that I often hear which is "It's always morning in America".  Translation, tomorrow is a new day and anything is possible.While there will always be opportunities to tackle, there will always be opportunities for success.

For the complete Kass list go here

2013 Week 3 Performance.....Divergence

While the equity markets continued their steady climb higher since the beginning of the year, there has been a divergence of late between the benchmark averages.  This week the DJIA, S&P 500, and Russell were all up over 1% while the NASDAQ could only muster a gain of 0.3%.  The answer comes down to one word, Apple.

Apple continued its slide lower down another 3.9% this week alone.  For the year it is down just over 6%.  This has definitely impacted our performance with the TAMMA fund as Apple is our largest holding representing about 5.1% of our total portfolio value.  This can largely sum up our under performance thus far this year but we are not alone.  The strong rally this month has caught many fund managers off guard and the questions now becomes will there be a pullback and when?

The railroad companies CSX and Norfolk Southern both report earning after the close on Tuesday this week.  The rails can be a good indicator of the overall health of the economy.  We have had these two names on our watchlist for sometime now just waiting for the right entry point.

Living in Detroit there has been a buzz about the city surrounding the international auto show this week. As noted there were over 50 new vehicles launches and while some were just cosmetic in nature other vehicles received a complete overhaul.  So far traffic is up for all of the shows events including opening day to the public which occurred on Saturday.  Some estimates have total vehicle volumes over 15M units this year which would put us back on pace to where we were pre-Great Recession.  The big difference this time around is the automakers have right sized their businesses to really take advantage of this increase in demand.  Currently we own Ford in the portfolio have have previously owned BMW.

Things in Washington have were once again on the quiet side this week.  It appears as though politicians are preparing to kick the debt ceiling and deficit cuts down the road a few more months.  Although it shouldn't come to a surprise for any of us, it is baffling on how this group of people cannot come together to do what is right for the country.  When do we ever see clarity again?

Credit the equity markets and their resilient nature for having the ability to look beyond this set of current uncertainties and rally strong as they have done basically all month long.  Sooner or later fund managers are likely to capitulate and start buying in order to not be left behind which could in the short term drive markets even higher.  It takes a balanced approach, one that we are looking at every day in order to decide how to enter the markets and at what price level on specific positions.

You can never predict the markets so you use the best data available to drive decisions that affect when and what to buy.  Having conviction in whatever strategy you choose is a must have requirement which we certainly have at TAMMA.  However, you have to have a level of flexibility to change with market conditions   A bend but don't break mentality if you will.

As we noted the portfolio trailed the benchmarks this week and we are working on various ways we can enter this market with some degree of confidence and most importantly a margin of safety. 

The Week Ahead
There is a rich amount of housing and manufacturing data of this week.  Markets are closed on for the Martin Luther King holiday.  Monday is also the public Presidential swearing in ceremony.  The President was actually sworn in on Sunday the 20th.

Look for earnings reports to come fast and furious this week.  In addition to CSX and NSC, we will be watching the following names; F5, McDonald's, and Microsoft.

• Mon - Markets closed
• Tue - Chicago Fed National Activity Index, Existing Home Sales, Richmond Fed Manufacturing Index
• Wed - FHFA House Price Index
• Thu - Jobless Claims, PMI Manufacturing Index Flash, Leading Indicators, Kansas City Fed Manufacturing Index
• Fri - New Home Sales

Have a great week!

TAMMA Capital Management

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• Addressing emergency fund needs
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• Looking at various investment options
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