Bill Baruch, president and founder of Blue Line Futures, previews E-mini S&P, Gold, Crude market...
The Las Vegas Money Show
05/16/2008 12:00 am EST
Dateline Las Vegas: The Money Show in Las Vegas is billed as the “Number One Marketplace for Investor Education and Expert Advice.” Several thousand investors swarm the booths and pack the lecture and seminar rooms. Each year the show has a distinct personality, which is reflected in the attendees, the speakers, and the products and service being offered in the exhibit hall.
Past years featured emphasis on everything from tax shelters (early 80s) to technology stocks (late 90s). There’s always been a wide streak of interest in precious metals and commodities. This year people in those booths were smiling widely, reflecting the uptrend in gold prices.
But the personality of the 2008 Las Vegas Money Show was reflected in the generally older age of the participants and their enthusiasm for more conservative strategies to protect their wealth and add “alpha” – the performance edge over the stock market indexes. Gone were most of the wild-looking, and wise-cracking young traders. Maybe the only ones left with significant money to invest are their elders, looking to build retirement assets.
In spite of the fact that this decade is shaping up to be the worst on record for stock market performance, there was more optimism than negativity. In one session, a poll of the audience revealed they were bullish on the market for the rest of the year by a 4:1 margin.
Well known stock gurus like Mark Leibovit of VRTrader.com, who has been named Market Timer of the Year for 2006 and 2007 by Timers Digest (and also won the 10-year forecasting contest), suggests that the market will take a dip until mid-summer and then start a rally that will take stocks back at least to their highs of last year.
Jim Stack of Investech Research said his technical indicators such as the “advance/decline ratio” show him that the breadth of the market is positive, and he feels he is close to a buy signal from his proprietary Coppock Guide, which gives a buy signal only once every three to five years.
Cautious bullishness appeared to be the prevalent sentiment – even as speakers acknowledged the current dismal climate for consumers, housing, autos, and the impact of higher energy prices.
Speaking of energy prices, there was disagreement over high oil prices could climb. In fact, more than one guru predicted a sharp decline in oil prices, well below $100 a barrel – a combination of a slowing world economy, more alternative energy, and the collapse of a speculative bubble.
The contrarians at this show had a difficult time making headlines – since everyone was so contrary! One truly memorable prediction came from Leibovit who boldly said that gold would reach $5,000 an ounce in the decade ahead -- <<after>> the United States goes back on the gold standard – at $3,000 an ounce – to solve its dollar and debt problems.
Options a Hot Topic
The really hot topics at the show revolved around Options and Exchange Traded Funds (ETFs). Options took center stage not because they are a cheap way to buy stocks – which they are. But this audience was far more sophisticated, searching for ways to use option strategies to improve portfolio performance or add to income.
Chicago’s Tom Sosnoff founder of thinkorswim group,[ed note – no caps] one of the largest options brokerage firms, entranced a late night crowd of more than 300 with his seminar on uses of the firm’s proprietary trading technologies. People leaned forward in their seats to learn how to sell “naked puts” and earn a high-probability 4 percent a month (which of course works out to a nearly 50 percent annual return) while holding stocks they like. This is all about probabilities and risk parameters which are instantly revealed on a computer screen.
ETFs – Growing Popularity
Exchange traded funds are growing in popularity as a way to invest in the stock market. With more than 600 ETFs now available – and double that number in registration – the concept of a fixed pool of securities (or now commodities) that is traded on an exchange around the clock, is gaining in popularity of traditional open-end mutual funds that are priced only once a day.
Morninstar.com has added a section devoted entirely to ETFs. Jeffrey Ptak who heads up their ETF research explained the interest in this low-cost sector. His favorite new ETF is an international portfolio of government bonds indexed to inflation, much as our own Treasury Inflation Protected securities (TIPS) adjust payments based on an inflation measure. The new security, ticker WIP, allows investors to hedge inflation around the world.
Global Investing – More China
A luncheon panel concluded that China has another upsurge of domestic growth coming, even though the stocks recently had a pullback. Robert Hsu, editor of China Strategy newsletter had picks that included the volatile Baidu.com – the Chinese version of Google. Hsu pointed out that China is now #1 in global internet users.
Franki Chung manages two closed end funds – the Greater China Fund and the Asia Pacific Fund -- both listed on the New York Stock Exchange. Given the complexity of researching companies in Asia, it might be better to let the pros do the job, and just invest in funds.
As I watched investors scurry between luncheon meetings and seminars, loaded down with materials the speakers distributed, I was struck by the absolute focus and concentration on their faces. Sure the cha-ching of the casino games rang in the background as attendees trekked back to their hotel rooms. But the tables and slot machines were strangely empty as this Money Show convention filled the hotel. These investors weren’t playing games of chance. They wanted the odds on their side. And that’s The Savage Truth.
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