Monthly Archives: December 2009

"Buy The Rising Trend", Market Research

Buying a stock that is already in an upward trend and at the same time provide new buy signals can be very profitable over time, a recent technical analysis from shows.

“The results are clear and very interesting. Shares with the purchase tag from the rising trend has given consistently good results over time, with significant excess returns relative to the benchmark index.”

Asbjørn Taugbøl

(Article in English, copy of original survey in Norwegian)

A recent analysis by research managers Geir Linløkken and Asbjørn Taugbøl at have concluded that the shares that sends purchase signals in a rising trend can be a very profitable investment over time.

“The results are clear and very interesting. Shares with the purchase tag from the rising trend has given consistently good results over time, with significant excess returns relative to the benchmark index,” Taugbøl says.

The research report shows that the shares after buying signal has an average return after one month at 2.7 percent and after 12 months at 20.0 percent.

Stock Exchange’s average is respectively 1.0% and 12.3%, resulting in an excess return of 1.7 and 7.7% respectively after one month and 12 months.

Sales tags, ie shares that are entering a downward trend, falling on average 1.1% the first month.

After one year, the shares of convergence on average increased 5.2 percent, ie 7.2 percentage points less than the benchmark index, the study shows.

Taugbøl and Linløkken has an extensive research work taken based on the shares on the Oslo Stock Exchange from 1996 to 2009.

For each stock is identified on the days on which it has entered a rising trend, and defined this as a buy signal.

Altogether, it was identified 3747 buy signal.

It is then seen to exchange rate movements in the post-purchase signal, and compared with the benchmark index (OSEBX). Similarly, it is seen what happens when the stock comes in a falling trend, defined as a sale tag.

Altogether, it was identified in 2792 such sales signals.

The trends are automatically identified, and the requirement of an upward trend is that it has a rise rate of more than 10 degrees.

Here are the results:

The figure shows the average share price five days prior to the signal and one year after the signal for Norwegian equities in the period 1996-2009. The blue curve is buying signals, when the stock comes in a rising trend. The red curve is selling signals, while the share going into a declining trend, and the black line shows the average share price for the benchmark index in a moving time period of one year for the given date range.

The blue curve, ie, buying signals, is above the black curve after the signal date, and the red curve, ie the sale signals, located under the black curve after the signal date. It shows that the purchase signals, ie purchase of shares when they come into an upward trend, on average, have a positive share price performance relative to the average benchmark index development.

Conversely, the sale signals, ie purchase of shares when they are entering a downward trend, on average, a negative share price performance relative to the average benchmark index development.

For Norway, shares the purchase signal an average return after one month at 2.7% and after 12 months at 20.0%, against the exchange‘s average of respectively 1.0% and 12.3%.

Sales tags, ie shares that are entering a downward trend, falling on average 1.1% the first month. After one year, the share of sales signal from the downward trend in average increased 5.2%, ie 7.2 percentage points less than the benchmark index.

The calculation of the average development of the share purchase signals the trend is done on the basis of as many as 3747 cases. The uncertainty in the estimate, measured by standard deviation, is thus relatively low.

In addition, the average returns for buy signals 22 to 250 days after the signal, between 6.7 and 8.1 standard deviations above the benchmark index’s return.

So high values are considered clearly significant.

In both Norway and Sweden provides thus shares coming into an upward trend, a better return than the benchmark index, while shares that are entering a downward trend for lower returns than the benchmark index.

In addition, it emerges from Figure 5 and Figure 6 that in both countries increases excess return most of the first 3 to 4 months after the signal.

It is seen how the excess return for shares that have given buy signals from the rising trend, varies from year to year. Large variations will degrade the overall performance, but at the same time give indications in which situations the strategy seems particularly good, and when it does poorly.

Excess return 66 days after purchase signal for Norwegian shares, distributed on the year they gave the signal. The upper half of the figure shows, for Norwegian stocks, excess return 66 days after purchase signal from the rising trend in relation to the benchmark index on an annual basis since 1996. The blue bars show the excess return after 66 days. The red, horizontal line indicates the average excess return after 66 days for all signals. Lower part of the figure shows the benchmark index's development over the same period, stating the annual return. In parentheses below the figure indicated the number of buy signals per year.

The benchmark index has in the period 1996 – 2009 had both positive and negative returns on an annual basis. In positive years it is natural that there is more purchases signals than in negative years, but after almost 14 years, there has been a positive excess returns in 13 of them.

Nor is such that it is some years in particular contribute greatly to the excess return overall.

A strategy based on buying signals from the rising trend, seems thus robust against annual fluctuations.

Excess return for Swedish shares 66 days after purchase signal from the rising trend as a function of the year they gave the signal.

Shares with the purchase tag from the rising trend has given consistently good results over time, with significant excess returns relative to the benchmark index.

Based on historical exchange data for the shares on the Oslo Stock Exchange during the period 1996 – 2009 and OMX Stockholm during the period 2003 – 2009, have shares that are coming into increasing trends, done better than the benchmark index in the following year.

For buy signals, a relatively steady increase in excess return over the period after the signal date, but with a slightly higher rise pace the first 3-4 months.

Conversely provides sales signal negative returns and to a lesser return.

The trends identified by fully automatic systems, over a relatively long period of time. It provides a large number of signals, as a basis the data is considered good and the results statistically significant. The survey shows high excess returns over time, with 13 of 14 years of excess return for Norway, and seven of seven for Sweden.

The results are seldom sensitive to the stock exchange in the same period, rising or falling.

The trends identified by Investtech fully automatic systems, over a relatively long period of time.

It provides a large number of signals, as a basis the data is considered good and the results statistically significant.

The most well-functioning stock markets are affected by the same mechanisms as the Norwegian and Swedish.

Especially presumed underlying psychological drivers, with greed and fear that central factors, there is thus no reason to believe that the overall conclusions of this report will not be valid in other markets.

Here’s the original report with more information and examples.

(In Norwegian only).


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Norway's Prime Minister Fears Social Unrest

Norway‘s Prime Minister Jens Stoltenberg fears that the massive build-up in sovereign debt can trigger global social unrest in with unpredictable consequences.  He points out that many countries have built up huge deficits and huge debt, and that this is not sustainable and can not continue.

“The crisis is not over. 2010 is going to be an uncertain year”

Jens Stoltenberg

(Article in English, links to sources in Norwegian)

Prime Minister of Norway Stoltenberg is worried about the massive debt accumulation in many countries, and fears it might trigger increased turbulence around the world.

“The crisis is not over,” he says in a new year interview with the Norwegian news agency Norsk Telegrambyrå (NTB),

It is the massive debt accumulation in many countries, the prime minister fears could trigger increased turbulence around the world.

He points out that many countries have built up huge deficits and huge debt. “It is not sustainable and can not continue,” he says.

“When these countries begin to tighten in order to bring down the deficits, it can lead to a decline in the global economy.”

Mr. Stoltenberg underline the fact that Greece, who is struggling with its debt obligations,  is not alone. Most European governments borrowed large sums of money for one billion to offer rescue packages for their banks and firms during the financial crisis the worst months last winter. These  countries can find themself in a serious squeeze as loans has to be repaid, according to the Norwegian Prime Minister.

Even with so much uncertainty on the horizon, Mr. Stoltenberg do not belive it’s his responsibility to ask people to build up a buffer by curbing consumption.

“But it is important to be prepared because it may be difficult times ahead,” he adds.

“Moreover, Norway’s Central Bank has warned of higher interest rates. We currently have an abnormally low interest rates, and we can not expect that it will last.”

“2010 will be an uncertain year. How this will turn out in 2011, we must  come back to. I can not be more precise, or concrete, today. A lot of depends on how the global economy evolves.”

“A Dichotomy Of The Economy”

Mr. Stoltenberg is also worried about the Norwegian labor market that currently has an unemployment rate of only 3%.

“The crisis is not over. Norway has a small, open economy. Half of what we produce, we sell abroad. When it is up to 10 percent unemployment in our neighboring countries, there is no guarantee that we can still succeed in having 3 per cent,” says the Prime Minister.

“Although the acute downturn in production might be over with, we see that unemployment is growing in all of our neighbors.”

Mr. Stoltenberg says that the strong public stimulus to the economy, through road construction, extra maintenance and construction activities, will decline as the normal growth returns.  Both he and Finance Minister Sigbjørn Johnsen has announced that the extraordinary use of petroleum revenues in 2009 and 2010 will fall back to the level of the Norwegian fiscal rule of maximum 4%.

“Anyway, we are not talking about reducing public expenditure, but less growth. Much of public spending is bound up in social security payments, so it may be necessary with stricter priorities in other areas.”

He adds, however, that the vast majority of Norwegians next year will have a secure economy and a favorable trend in purchasing power.

“It is due to the fact that Norway will continue to have low unemployment compared with other countries, and overall a strong economy.”

“But I’m afraid of a dichotomy of the economy, where those who are addicted to selling goods to foreign countries, is vulnerable to that it is not going well internationally.”

“The strength of this government is that we can handle disagreement.”

“My experience is that when we sit down and spend some time, we find good solutions. Sometimes there will be a compromise, sometimes an entirely new way to handle a case.”

Here’s a Google-translated news report on the interview by the Norwegian web site,

Update: 1920-similarities


2010 Analysis: ECB Increase Bank Loss estimates

2010 Analysis: Warns Against Social Unrest

Central Bank of Norway raise interest rate again

2010 Analysis: Collapse of Credit

Norway: Most Banks Fail In Stresstest

Reason To Worry

Norges Bank urges banks to reduce liquidity risks

Norway’s New Bubble

“The Norwegian syndrome

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Organizing Financial Rebellion

A group of international economist and finacial expert has set up a project called “World Wide Initiativ to End Financial Fraud”. The project has one goal; to end the global central bank system. The group has one weapon; knowledge.

“At this current time, legislation is being proposed by various heads of states to consolidate the powers of Central Banks. Central Banks are using this crisis to forcefully and rapidly enact laws that will ensure that there is no opposition to their powers for decades to come. We founded this project because today, millions of people desire the truth about this crisis, yet there is a near vacuum in the mass media in reporting the truth.”

(Article in Norwegian, links to sources in English)

En gruppe økonomer og finansfolk har i løpet av året organisert et prosjekt de kaller “World Wide Initiativ To End Financial Fraud”. Prosjektet har ett mål; å avskaffe det globale sentralbanksystemet, Gruppen har ett våpen; kunnskap.

Ifølge nettsiden har 327 fagfolk og studenter innen økonomi og finans sluttet seg til prosjektet.

Prosjektets grunnlegger og administrative ledere er anonyme fordi de frykter represalier, men flere deltakere har i det siste gått ut i full offentlighet og erklært “krig” mot det de mener er vår tids farligste organiserte bande av okonomiske kriminelle – sentralbankene, i særdeleshet USAs Federal Reserve.

Grunnleggeren av World Wide Initiativ To End Financial Fraud skriver på organisasjonens hjemmeside :

“It is said that from dire, dark times, the greatest light can emerge. This is our opportunity and we must seize it. This is our chance to give voices to those that have remained voiceless throughout this crisis. Knowledge is power, especially in a world of misinformation, and by spreading knowledge, we can create a brighter future for every citizen in this world, rich and poor, young and old. If we don’t take action now, we’ll settle for nothing later.”

Kunnskap er makt

Organisajonen anslår at kun cirka 1 prosent av jordens befolkning forstår hvordan vårt finanssystem fungerer.

Alle som har melder seg til tjeneste forplikter seg til å spre kunnskap om bank- og sentralbanksystemet med hensikt å skape nok engasjement i den brede befolkningen til at sentralbanksystemet blir avskaffet.

– Akkurat nå foreslår statsoverhoder i flere land å innføre nye lover og regler for å konsolidere makten til sentralbankene. Sentralbankene bruker denne krisen hardt og effektivt til å få gjennomført lovendringer som sikrer at de ikke møter noen motstand mot sin virksomhet i lang tid fremover. Vi har startet dette prosjektet fordi det i dag er millioner av mennesker som ønsker sannheten om denne økonomiske krisen, men det er et tilnærmet vakuum i massemediene i forhold til å rapportere sannheten, skriver WWIFF i sitt manifest.

– Uten et nytt monetært system, er alle forsøk på fred, velstand, frihet og felles innsats for å løse den vanskelige situasjonen for hundrevis av millioner av flyktninger, og håndtere den truende sultekatastrofen, umulig, mener denne gruppen av økonomiske fagfolk.

– Ettersom sannheten alltid er sensurert fra toppen og ned, må dette unike initiativet utdanne verdens befolkning om de sanne røttene til finanskrisen, og det må bygges opp et momentum fra bunnen opp på en organisk måte. Vår inspirasjon i prosjektet er den øredøvende stillheten i massemediene om de virkelige opphavsmenn, og den virkelige historien bak den globale økonomiske krisen. Det faktum at de globale aksjemarkedene kan stige samtidig som verdens ledende økonomier er dødelig syke, er et symptom på at dette er svindel. Denne situasjonen vil ikke ende seg, med mindre verdens borgere tar affære nå.

En innsiders bekjennelse

En av dem som nå deltar i opprøret mot sentralbankene er den kjente finanseksperten og forfatteren J.S.Kim.

Kim har studert neurobiologi ved University of Pennsylvania og har to mastergrader fra University of Texas – en MBA og en i statsvitenskap.

Etter utdannelsen begynte han å jobbe for The Private Wealth Management division hos storbanken Wells Fargo. Senere i flere år hos Wall Street-firmaet Smith Barney.

I 2005 startet han sitt eget uavhengige analyse- og investerigsselskap, SmartKnowledge.

Han er i tillegg en av USAa mest leste finansbloggere, og en respektert bidragsyter/kommentator på nettsidene til Reuters, The New York Times, USA Today, The Wall Street Journal, Financial Times og The International Business Times.

Tidligere i år ga han ut boken “Confessions of a Wall Street Insider, a Zen approach to making a fortune from the coming global economic crisis.

I et intervju som ble publisert på finansbloggen Phil’s Favourites nylig forteller han blant annet om sin egen erfaring med bankvesenet.

“I was seeing an unsettling picture of industry excesses. I saw problems developing, for example, with mortgages – no document loans or liar loans. If the loan application didn’t support a mortgage, the loan might be denied at first, but then it was sent through a special process to convert it to a no document loan. Every bank did it. This was not specific to Wells Fargo. All the major U.S. banks had this “don’t ask, don’t tell” policy, so they could say they didn’t know. They either should have known from the start that the mortgages couldn’t be paid back, or they didn’t care because they were making huge commissions up front. So they would make the loans and then slice and dice them up and quickly sell them off.”

Moralsk hasard

J.S. Kim hevder at bankene bevist lot gjeldsboblen utvikle seg fordi de visste at myndighetene ville komme dem til unnsetning når det gikk galt.

– Det har skjedd før – i 1920 – og jeg tror de visste det ville skje igjen. Prosessen med å ta kundenes penger og gjøre dem om til lån som kan gambles med (heads I win, tails taxpayer pays) har en historie som går tilbake til Den Store Depresjonen. Den har det beste fra begge verdener. Belønningen for risiko blir hos bankene toppledere, mens tap blir skjøvet over på skattebetalerne. Dette er et mønster som skjer om og om igjen – nasjoner blir robbet for rikdom til fordel for bankvesenets elite, sier han.

“People do not understand that central banks are formed solely to enrich its owners and that they cause great harm to all citizens of the nations in which they operate. Central banks are a scam a million times greater than Bernard Madoff‘s ponzi scheme.”

J.S.Kim avviser at det hele er en av mange konspirasjonsteorier.

– Jeg er ingen tilhenger av konspirasjonsteorier. Dette handler snarere om at systemet tillater bankfolk å gjøre hva de vil. Banknæringen og media bruker taktikken å kalle folk som mener at “boom and bust“-sykluser er tilsiktet for “konspiratører”. Den enkleste måten for bankfolk å beholde sin makt på er å kalle alle som eksponerer deres umoral og grådighet for gale konspirasjonstullinger.

– Obama er kjøpt og betalt

Her er flere kraftige utsagn fra J.S. Kim:

“President Obama owes the central bankers because they contributed to his campaign and they were responsible for his present position. Obama pulled his cabinet members from Wall Street. His cabinet consists of more power players from Wall Street than any administration in the past several decades.”

“Men like Ben Bernanke and Alan Greenspan are just the face of the U.S. Fed but ultimately not the real decision makers. The owners of the central banks influence global economic policy at meetings such as the G-8, G-20 and Bilderberg group meetings. They get together and make decisions that affect the entire global monetary system.”

“It’s impossible to have free markets and central banks at the same time. The free market will dictate what the interest rate should be, but central banks keep altering it and causing boom bust cycles. They created the housing bubble because interest rates were so low for too long. Whenever central banks artificially suppress interest rates to serve their purposes, a real estate or stock market bubble is inevitable.”

“Fundamental analysis in certain industries, such as the banking industry, is practically useless, since mark to market principles have been suspended and banks are allowed to hide bad assets that literally would expose many of them as bankrupt off-balance sheet.”

“If one truly wants to consider oneself “educated” in matters of our monetary system, one must dig for the truth. I guarantee what one discovers would be shocking to most people.”

Link to originale interview with J.S. Kim.

(Her er en Google-oversettelse til norsk)

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