P.O. Box 2049
Wimberley, TX 78676
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A Statement for a Sane US and Global Economy

Great societies makes it possible for almost every citizen to lead a meaningful and fulfilling life. Yet, American society is currently focused almost solely on profit; people are forced to chase money at almost every turn - having less and less time toward life fulfillment and happiness.

The US economy needs to once again function more like a highway network - built to take people to prosperous or financially secure places. The laws and policies that we enact must once again lay down “pavement” that sanely determines where the economy should takes its citizens.

Again, right now, our economy is increasingly built solely around profit, rather than being designed to use profits to get people to their true financial needs.

By allowing businesses to use zero-hour contracts, mainly provide low wages, and require people to work more and more hours for the same pay, we have built an economic highway that moves profit and stock prices forward - but leave people without the economic means they need to achieve well being and realise their potential.

When people don’t have decent wages or stable jobs, these underlying economic failings undermines citizen well being in all sorts of ways. And for those of us who do have stable jobs, the need to work more hours also means less time with our families and to pursue our goals in life outside of work.

As a society, we need to get back to prioritizing social prosperity and fulfillment over Wall Street profits. We need to repave the economic highway to make it possible for people to arrive productively at a meaningful and self-sufficient life.

We must rebuild a future economy that gets people to success and fulfillment by guaranteeing decent wages for the least well-off, banning zero-hour contracts, and reducing inhumane working hours.

Creating a healthy society means building an economic highway system that enables us to acheive our real financial needs rather than keeping us all on a path whose only destination is unfettered profits.

Strategic Investing in 2018: using Global & US ETFs and Mutual Funds

Within the global stock market universe, going foward we will be investing mostly in ETFs and traditional mutual funds of assets classes, sectors, and industries within sectors, depending on whether the investments are in a market uptrend (or not):  

  1. Stock ETFs and funds of diversified US and global large / midsize / small companies;
  2. Stock ETFs and funds of US and global "sector and industry-specific" investments;

  3. ETFs and funds of US and global real estate investment trusts (REITs) - for income;

  4. ETFs of “Price-only” global commodities (gold, oil, natural gas, commodities, etc.) 

Regarding income, we may invest similarly in US and global ETFs and funds of bond asset classes and global regions, assuming these income-focused investments are in a bond market uptrend.

When interest rates are one the rise (like now), income investments are not in favor. Its best to wait for aggressive income investing until central banks cease raising rates. 


Related to the above investment plan, in our Fidelity higher education ORP/403b portfolios, we will be using the same strategy. Of course our ORP/403b portfolios are limited to the investment choices allowed by your educational employer. Fortunately, performance wise, employer-specific investment limitations have not curtailed the long-term growth or risk profile of your Fidelity ORP/403b portfolios under our management.


Finally, in a few of our IRA and brokerage portfolios, we will only be investing in individual stocks that are operating to address or solve an important global issue (to be defined by our research). With the stock markets possibly maturing into the latter stage of this current bull market, individual stocks are becoming more risky and more volatile. 

At this time, we want to limit risk rather than exacerbate risk. Hence, individual stocks are more vulnerable to losses, especially every three months when they report their quarterly earnings.

Understanding How the Stock Markets "Discount Future Growth"

Let me clarify what "how the stock markets discount future growth" means.

Essentially, the phrase means that current price valuations we now see in the global stock markets have already incorporated most of the "good future growth" news they can either imagine or fabricate into future stock prices - something like six months into the future.

Of course there will be some short-term economic or corporate news items that will continue to create "noise" stock price adjustments in the future.

Nevertheless, given that today's stock market prices are probably "fully valued" for the next six months, we need to consider making the following market adjustments as this Update is being written:

1) Systematically reduce the overall portfolio percentages of our current growth investments (that have already done well for us);

2) Prudently rotate some of our 'growth" money into investments that are starting to attract new institutional money.

As needed, we will immediately make investment portfolio adjustments as conditions change.

Please contact me if you have any questions about this Strategy brief - or your current Fidelity portfolios. 

Rocky Boschert

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Understanding Investment Technical Analysis

What is Technical Analysis?

Technical Analysis is the forecasting of future investment price movements based on an examination of past price movements. Like weather forecasting, investment technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time.

Technical analysis is applicable to stocks, indices, commodities, futures or any tradable instrument where the price is influenced by the forces of theoretical market supply and demand.

Current price movement (aka “market action”) refers to any combination of what happens between the market open or close, intraday highs and lows, and total trading volume for a given security over a specific time frame.

The quantified time frame can be based on intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price data and last a few hours or many years.

At Arrowhead Asset Management, we only watch daily, weekly, and monthly price data for our investment decisions.

Key Assumptions of Technical Analysis

Technical analysis is applicable to an investment where the price is only influenced by the forces of supply (sellers) and demand (buyers). In order to be successful, technical analysis makes three key assumptions about the securities that are being analyzed:

  • High Liquidity - Liquidity essentially means the combined buy and sell volume (# of shares). Heavily-traded stocks allow investors to trade quickly and easily, without dramatically changing the price of the stock.
  • Below Average Fees and Charges - We also only invest in ETFs or other investments that are easily bought or sold and do not have any hidden fees or charges. 

  • No Extreme News - To be sure, technical analysis cannot predict extreme events, including business events such as a company's CEO dying unexpectedly, and political events such as a terrorist act. When the forces of “extreme news” are influencing the price, technicians have to wait patiently until the chart settles down and starts to reflect the “new normal” that results from such news.

The Basis of Technical Analysis

Modern technical analysis works on three quatifiable assumptions:

  • The Price of a Security Accounts for Everything Good and Bad About the Investment
  • Investment Price Movements Are Not Totally Random - They Generally Represent "Factual" Supply and Demand
  • The “What Is Happening" Is More Important than the “Why It's Happening”

Price of a Security Reflects Everything

Technical analysts believe that the current price fully reflects all known information. Because all information is already reflected in the price, it represents the fair value, and should form the basis for analysis.

The market price of an investment reflects the sum knowledge of all participants, including traders, investors, portfolio managers, analysts, market strategist, technical analysts, fundamental analysts and many others.

It would be folly to disagree with the price set by such an impressive array of people with such professional expertise.

Technical analysis utilizes the information captured by the price to interpret what the market is saying with the purpose of forming a view on the future.

Prices Movements are not Totally Random

Most technicians agree that prices are always in a trend. However, most technicians also acknowledge that there are periods when prices do not trend. If prices were always random, it would be extremely difficult to make money using technical analysis.

An investment technician believe that it is possible to identify an investment's trend, invest or trade based on the trend and make money as the trend unfolds.

Because technical analysis can be applied to many different time frames, it is possible to spot both short-term and long-term trends.

"What" is More Important than "Why"

The price of an investment is the end result of the battle between the forces of supply and demand for the company's stock (or the Fund's daily price). The objective of technical analysis is to forecast the direction of the future price. By focusing on price and only price, technical analysis represents a direct approach.

Fundamental analysis is concerned with why the price of an investment is what it is. For technical analysts, the why portion of the equation is too broad and many times the fundamental reasons given are highly suspect.

Technicians believe it is best to concentrate on what the price is and rarely on why the price is where it is. Why did the price go up? It is simple, more buyers (demand) than sellers (supply). After all, the value of any asset is only what someone is willing to pay for it. Who needs to know why?

General Steps to Technical Evaluation

Many market technicians employ a top-down approach that begins with broad-based macro analysis. The larger parts are then broken down to base the final step on a more focused/micro perspective. Such an analysis might involve one, two, or all three steps below:

  1. Broad market analysis through the major indices such as the S&P 500, Dow Industrials, NASDAQ and NYSE Composite.
  2. Sector analysis to identify the strongest and weakest groups within the broader market.
  3. Individual stock analysis to identify the strongest and weakest stocks within select groups.

The beauty of technical analysis lies in its versatility.

Because the principles of technical analysis are universally applicable. It does not matter if the time frame is 2 days or 2 years. It does not matter if it is a stock, and ETF, a market index or commodity. The technical principles of price support, price resistance, price trend, price trading range over time (and other aspects) can be applied to any chart analysis.

Technical analysis is by no means a panacea. But investment success requires serious study, dedication, and an open mind. Technical analysis expertise inceases the success rate substantially.

At Arrowhead Asset Management, we use technical analysis to take major risk out of our investment decisions. And it works 80% to 90% of the time!

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