(B)(N) The Market

Righteous are the calculations but don’t they remember what always happens at the bottom?

Drama. Pundits of all sorts are in free-fall because they don’t know what to say about this market; they don’t know if it’s going up or going down or for how long it might just go sideways; nor do they know what investors might buy or sell with a reasonable prospect of success for which reasons they also don’t know. Some say that we should sell in May and go away. Lyrical, no?

But needless to say, we are always in the market and we don’t have a problem because we know exactly what we want in any market; we want to keep our money safe and available when we might need it – 100% capital safety and 100% liquidity – and we want a hopeful but not necessarily guaranteed return above the rate of inflation which if we don’t get it is just another way of losing our money.

Foiled again! Protest! Courtesy: Banksy

What we don’t want and don’t need is “value investing”, “volatility management” ,”technicals” or “sing-songs” because those methods don’t give us what we want and what we want is not in their agenda.

In fact, we wonder that investors expect so much more than what they give and are confused and angry when they don’t get it.

But the market is not to blame. The all cash no margin equal-weighted-by-value Perpetual Bond™ in the S&P 100 has given us +14% so far this year and we’re holding 94 of them and still collecting dividends; and in the S&P TSX 60 +17% but there are 18 of those that we don’t have right now. And those are just the big-caps.

Our estimate of the volatility-based downside is minus (7%) in the S&P 100 and minus (8%) in the S&P TSX 60 during the next three months but we’ve taken care of that with our stop/losses.

Fresh perch?

We’re done for the year if we want to be and we haven’t taken any “risks” but the market “rewarded” us anyway. What more can we ask for?

For more of the details, please click on the links (and again to make them larger if required) “(B)(N) The S&P 100 – Prices & Portfolio – May 2014“, “The S&P 100 – Portfolio & Cash Flow Summary – May 2014“, “The S&P TSX 60 – Prices & Portfolio – May 2014” and “The S&P TSX 60 – Portfolio & Cash Flow Summary – May 2014“.

And for more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more information on real “risk management” and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary.

And for more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class action, La Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in America, Big Oil, Shopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.