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JIM: Hi everyone, today is Wednesday, August 19, 2015, we are just 31 days from the first day of autumn and this is our regular weekly, midweek, midday call, bringing to you a summary of market observations from our analysts and how they are influencing our opinions and decisions.

Bernie is on appointment out of the office. These are my comments for today.

JEFF SAUT, our head investment strategist says that we continue to be in a secular bull market, remember that’s a market that goes up over a long period of time, sometimes over 10 to 15 years, but has periods of depreciation that can be confusing and misleading.  For example the secular bull market from the early 1980’s to the spring of 2000 actually had the stock market crash of 1987 as part of its legacy.

Jeff points out that this is a stock pickers market, the indices, the S&P 500 and the Dow Jones Industrial Average, for example will not bail you out; you have to own the right stocks.

This is what TOM DORSEY at Dorsey Wright and Associates is also saying.  Tom’s organization analyzes the markets very differently than Jeff Saut does, but they are coming up with the same conclusions.  Dorsey Wright looks at the technical attributes of sectors and stocks and is able to pick the leaders from there.  Jeff has a fundamental view; he looks for the qualities of companies to own while Tom looks at the quantitative attributes.  It’s a nice combination and we have used this blend since 2002 and have managed to reduce a lot of volatility and to grow assets at a reasonable pace.

MICHAEL GIBBS, Managing Director, Equity Capital Markets; actually employs these two views but draws from different sources.  Mike manages 2-3 portfolios for financial advisors to use with their clients at Raymond James and does a careful analysis himself along with other fundamental and technical resources.  It appears that one may have an advantage when diversifying investment management decisions, just like one reduces risk when diversifying with asset classes, sectors and individual stocks.

Coming to terms as an investor as to how one wants their portfolio managed is a personal decision, but based on a short list of choices.  I have estimated there are perhaps no more than 20 investment strategies one can use, most depending upon risk tolerance and timing needs.  Timing needs meaning when you need the money for living purposes.

As a client, if one doesn’t have these aligned with one’s financial advisor’s management choices, then that’s something to be worked out.  There are of course a number of things that make up a good partnership and timing needs and investment style are two meaningful ones.

In the example above where I mention individual stocks vs broad groups of stocks that make up the whole market, it’s possible that individual stocks could provide intermediate value more so than index investing would.  While the outcome of each is quite unpredictable and my statement has to include for compliance purposes that this may not happen at all, this could make a big difference in the investor’s success depending upon timing needs and investment style.  Please make sure that they are aligned.

Speaking of timing, Scott Brown, our chief economist, is still looking for clues for when the Federal Reserve may raise rates. This rate hike prediction, now a five year story as to when they will raise rates, is sounding more and more like the boy who cried wolf:  by the time the wolf shows up (rates rise) investors will looking in the wrong direction.

Our market indicators?  All three of the major pockets of stocks we look at, the NYSE, the OTC and the Optional group are all nestled around the 40% level, which means that 60% of each group has sell signals associated with it.  This would be a good opportunity if the direction was headed back upward, but it is not, it is still downward, which means we won’t be adding new positions just yet.

Interest rates?  They are still low compared to what they have been in recent months and the trend still appears downward in direct opposition to what fundamental analysts are saying about rates in the near term.  It is the classic battle of the bull and the bear and only time will tell us the future.  Until next week, continue to enjoy your summer.  Any questions or comments?

Opinions expressed are not necessarily those of Raymond James & Associates. The author's opinions are subject to change without notice. Information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. It is not possible to invest directly in an index.

International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. Further information regarding these investments is available from your financial advisor. Investing in stocks involves risks, including the possibility of losing one's entire investment. Dividends are not guaranteed, will fluctuate and must be authorized by the company's board of directors.

Raymond James & Associates, Inc., Member New York Stock Exchange/SIPC

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