Maybe You Shouldn't Read This...

"I'm convinced that to give away a dollar effectively is harder than to make a dollar."

~ Steve Jobs

Investing:

We have long contended that spending your days glued to the financial press on T.V. or online or in print is a colossal waste of time. Now there is some research that it may be a very costly pastime indeed.

Harvard University has done a study of investor habits. One of the key findings was that investors who consumed no financial news earned better returns than those who were fed a steady diet of it. Stay away from that financial buffet. In the case of volatile stocks, investors who learned nothing about their stocks earned more than twice as much as those whose trades were influenced by the media.

Take a minute and think about that, they earned twice as much by not listening to the constant cheer leading, fear mongering and blind guesses posing as forecasts that bombard us by the hour.

This is why we apply a rules based, price driven and emotion free (for the most part) investment strategy. It is not the news itself that causes most of the trouble for investors. It is the fear and greed that it generates which produce the poor decisions.

That being said, here is a little news of the day:

Markets:

The major indices were all up this morning on the lowest volume in nearly two months. This week is usually full of Wall Street vacationers headed out of town. Complications from hurricane Irene have led many traders to stay home and work remotely if possible.

All of our major indicators still point to elevated risk levels. Recent gains may be pointing to a near term bottom being put in but there is still too much volatility to move back into the equity markets. Commodities, Domestic and International Equities all still fail their "bogey check" against Cash and remain out of the portfolio. We are maintaining our 100% cash allocation for the time being but it is under constant review.

Economy:

Continuing the negative results from the Philly and NY Fed manufacturing indices, the Dallas Fed reported today that "general business activity" fell to -11.4 from -2. This increases the chance that the Institute for Supply Management national factory index due out on Thursday will come in below 50, the breakeven point between expansion and contraction. While the factory sector is a small part of the economy, it is a bellwether for the stock market and has a tight relationship with the S&P 500.

Real Estate:

The National Association of Realtors has released "The Pending Home Sales Index", a forward-looking indicator based on contract signings. It slipped 1.3 percent to 89.7 in July from 90.9 in June. They site a number of issues lowering the index including, tight lending standards, tougher appraisal standards and a need to streamline the short sale process. The bottom line,not surprisingly, is real estate is not getting better yet.