AAII Silicon Valley Meeting Saturday November 13, 2010
Presented by: Tom Kopaswww.pringturner.com
Since 2000 a “Lost Decade” For Investors…
Are you Prepared for Another “Lost Decade?”
The Secular and Cyclical Outlook for Stocks, Bonds, and Commodities
1
2
3
4
19-years/ 69% decline/ 6 recessions
19-years/ 67% decline/ 4 recessions
16-years/ 62% decline/ 4 recessions
10-years/ 38% decline/ 2 recessions
?
?
Halfway Through Secular Bear
2016-2020
Completed Secular
Bear Target Area
U.S. Stock Prices (Inflation
Adjusted)
U.S. Commodity Prices
Commodity Oscillator
1 2
3
4
(72/240)
1901
1929
1966
2000
1 5
6
7
2
3
4
15
6
7
2
3
4 1
5
2
3
4
1
2
3
4
Key Points: Secular Trend for Stocks
Long Periods of Alternating Good and Bad Performance
Secular Trends Change at Extreme Valuation Levels
Currently Halfway through our 4th Secular Bear Market
Be Aware of Commodity Secular Bull Market
Capitalize on Cyclical Stock Market Opportunities
Understanding Secular Environment is Key to Success
Financial markets are linked in a logical, rational, and sequential relationship to
business activity. Financial markets have tracked these business cycle sequences for
over 150 years.
Pring Turner Investment Approach
The Random Noise of Economic News!
Money Supply
Commodities
Bond Prices
Stock Prices
Economy
?
Secular Bear Secular BearSecular Bull
4 to 5 YEARS
Bonds
StocksInflation Sensitive
Utilities
Food Producers
U.S. Treasuries
Banks
Technology
ConsumerDiscretiona
ry
Technology
Transports
Oil Drillers
Diversified Metals
Energy
Oil Drillers
U.S. Treasuries
Diversified Metals
Healthcare
Markets are Linked in a Logical, Rational, Sequential Relationship
For over 150 Years, Markets have Tracked Business Cycle Sequences
During Secular Bear Markets Economy in Recession More Often
Pring Turner Organizes the Business Cycle into 6 stages
Currently in Stage 4 Good for Stocks and Inflation Sensitive Securities Bad for Bonds
Business Cycle Drives Profitable Asset Allocation Decisions
Key Points: Investing Around the Business Cycle
…Uptrend still intact.
Oscillator registered sell signal but…
Green/Red highlights show when KST is above/below its 12
Month Moving Average
Green highlights show when our secular model is
bullish
Green highlights show when this cyclical model is bullish
Trading Range likely to be broken
this cycleEarly phase
of Commodity Outperforma
nce over Bonds
Key Points: Secular Trend Bonds/Commodities
Bonds have been in a Secular Bull Market for nearly 30 years
Bond Owners Beware: Secular Trend is at a Critical Juncture
Cyclically Bonds are Vulnerable to Interest Rate/Inflation Risks
Small Rise in Interest Rates Leads to Substantial Losses in Bonds
Commodities Continue Secular Uptrend Risky for Bonds
Opportunities in Inflation Sensitive Securities
Class Secular
Cyclical
Tactics
Stocks Bear Bull
Use Business Cycle to Tactically Allocate Assets
Inflation Themes are in Secular BullResourced Based, Foreign-Emerging
MarketsQuality with International ExposureIncome Producers
Bonds Bear?
Bear
Review and Reconsider RisksLower Bond AllocationReduce Bond MaturitiesSet up Short-term Bond LadderHedge Bonds with Inflation Sensitive Securities
Inflation
Sensitive
Assets
Bull Bull
Favor Natural Resource Companies“Chindia” Theme, Global Resource DemandPrecious Metal ExposureResource Based CountriesCanadian Royalty Trusts
Pring Turner Capital Group
Tactics to Protect and Grow Your Wealth
www.PringTurner.com
Secular Trend at Critical Juncture
Thank you for Listening…
You are welcome to visit our website www.pringturner.com for research updates
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