GOT TO KNOW THE FACTS!!! Built By Advisors For Advisors BIGFOOT INVESTMENTS OPEN FORUM Apr 11th, 2013 WELCOME! Built By Advisors For Advisors AGENDA WELCOME! ADMIN NOTES
QUOTE OF THE DAY OPTIMISM GAUGE CHARTS OF INTEREST SO WHATS UP WITH: TRADING SYSTEMS A CLOSER LOOK AT: LUV DAVIDS CORNER SWAPS AND SPREADS LEES COMMENTS QUESTIONS/COMMENTS Built By Advisors For Advisors NOTES
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QUOTE OF THE DAY: In investing the winner is not the person with the most hits.. it is the person with the fewest errors! Doug Short Built By Advisors For Advisors Optimism Gauge As of: 4/11/2013 Built By Advisors For Advisors
Measuring Our Economy Indicator Current Value Prior/Metric Value Current Value -0.666 -0.646(Revised)
+1.0 Chicago Fed National Act Index (3 Mon Mov Av) 0.09 0.28(Revised) Unemployment 7.7
7.9 (Revised) +.50 358,000 355,000(Revised) -.50 ECRI Weekly Index
Weekly Data Points >50-day MA/>100-Day MA St Louis Fed Financial Stress Index Weekly Jobless Claims (4Wk Mov Av) University of Michigan Sentiment - Final ISM Manufacturing S&P Case-Shiller 20 City Comp Index
N/A -.50 +.50 146.14 145.95 (Revised) +.50
Last Update: 4/11/2013 Total +3.75 Measuring Our Economy READING AS OF: 4/11/2013 Economic Optimism Index 45
9 OF 13 INDICATORS POSITIVE 25 85 67.7% 15 95 Current Reading POSITIVE AS OF: 8/17/2012
Prior Reading TREND - Neutral Charts of Interest! Built By Advisors For Advisors Federal Reserve Slides Built By Advisors For Advisors
LATEST DATA ( REPORTED APR 2013) COMPARED TO PREVIOUS Source: Federal Reserve Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lee Johnson Capital Management, LLC (LJCM). LJCM is an independent Registered Investment Advisor and is not affiliated with Triad Advisors. GDP FORECAST Source: Federal Reserve Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lee Johnson Capital Management, LLC (LJCM). LJCM is an independent Registered Investment Advisor and is not affiliated with Triad Advisors.
UNEMPLOYMENT FORECAST Source: Federal Reserve Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lee Johnson Capital Management, LLC (LJCM). LJCM is an independent Registered Investment Advisor and is not affiliated with Triad Advisors. INFLATION FORECAST Source: Federal Reserve Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lee Johnson Capital Management, LLC (LJCM).
LJCM is an independent Registered Investment Advisor and is not affiliated with Triad Advisors. FOMC PARTICIPANT ASSESSMENTS Source: Federal Reserve Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lee Johnson Capital Management, LLC (LJCM). LJCM is an independent Registered Investment Advisor and is not affiliated with Triad Advisors. Maybe Not All Bad! A CLOSER LOOK AT THE CURRENT EMPLOYMENT STATISTICS (CES) Current data
Source: BLS Looking at the long-term! Built By Advisors For Advisors LOOKING AT THE RAW DATA Source: dShort Built By Advisors For Advisors
S&P Inflation Adjusted! EVEN with 1997 Source: dShort Built By Advisors For Advisors How Low Can You Go? Source: FRED
Built By Advisors For Advisors Gnawing Reality! Source: Calculated Risk Built By Advisors For Advisors Of Tulips and Bitcoins! Source: Business Insider
Built By Advisors For Advisors If You Believe Go Mining Have Been $250 each! Aug 2012 = $10 arly e N g n shi 013) a r
r C 10/2 e Aft (4/ k c Ba $200 s ce s at n u o lose B n
C coi 0% t i B 6 Source: Business Insider Built By Advisors For Advisors Your Wallet! Source: Business Insider
Your Money! Built By Advisors For Advisors E? N O NY A IPS Virtual L
TU AN ASSESSMENT
Currency has a BAD SOUND First in win last in lose Not really that liquid It will lose its pure purpose Like Bearer Bonds Once gone theyre gone - Estimated 10% have been stolen NO stable exchange rate NO physical nexus THE GOVERNMENT WILL BE WATCHING Built By Advisors For Advisors SO WHATS UP WITH:
UNDERSTANDING A TRADING SYSTEM Built By Advisors For Advisors THE PRICE IS FALLING ! TRADING OR TRADING SYSTEM? TIME IS YOUR FRIEND.IMPULSE IS YOUR ENEMY Jack Bogle Source: AAII THE PRICE IS FALLING
DISCUSSION TOPICS 1 2 3 4 5 INVESTING TRUISMS THE BASICS MARKET/STOCK DYANAMICS INDUSTRY CONSIDERATIONS FIRM SPECIFIC FACTORS
1 INVESTING TRUISMS THE PRICE IS FALLING TRUTH #1 AT SOME POINT A STOCKS PRICE WILL FALL TRUTH #2 DO NOT OVERREACT TO PRICE FLUCTUATIONS TRUTH #3 NEVER BECOME EMOTIONAL ABOUT A STOCK TRUTH #4 NEVER FALL IN LOVE WITH A COMPANY THE PRICE IS FALLING
2 THE BASICS THE BASICS ARE ESSENTIAL
PRICE PAID IS NOT A PRIME FACTOR IN SELLING ENTRY PRICE IS NOT ALWAYS AN EXIT FACTOR REASONS TO SELL ARE ONCE YOU BUY A STOCK STAND ON YOUR HEAD REALLY THEFUNDAMENTALS
SAME AS BUYING COMPANY COMPANY FUNDAMENTALS MATTER NEED TO BE REVIEWED OFTEN ALWAYS CONSIDER THE NEXT FUTURE PROSPECTS ARE CRITICAL STEP FOR A COMPANY REMEMBER THEDECISIONS BUGGY WHIP EMOTIONAL DECISIONS MUST BE NON-EMOTIONAL ARE USUALLLY
WRONG COMPANIES FOLLOW PATTERNS RECURRING THEMES ARE IMPORTANT KNOW MARKETS HAVETHEM! IMPACT BUT DONT AFFECT ALL STOCKS MARKETS HAVE IMPACT EQUALLY INDUSTRY
KNOW MATTERS THE DYNAMICS SOME SAY UP TO 50% OF A STOCKS INDUSTRY MATTERS FIRM-SPECIFICS ARE PRICE IS RELATED TOCRITICALSECTOR THINK AIRLINES FIRM-SPECIFICS WARRANT CONCERN
3 MARKET DYNAMICS THE PRICE IS FALLING TRADING ON MARKET WEAKNESS BY ITSELF NEVER A REASON TO SELL TAKE A LONGER-TERM PERSPECTIVE ON THE COMPANY KNOW THE STOCK VERSUS THE MARKET BE AWARE OF PRICE/VOLUME INCONSISTENCIES
EXTREME VOLATILITY IS USUALLY A NEGATIVE HAVE AN EXIT STRATEGY 3 STOCK DYNAMICS THE PRICE IS FALLING THE TECHNICALS CAN NOT BE IGNORED OFTEN MORE OF A TRADE THAN A POSITION
SHORTER HORIZONS IF NOT A TRADER DONT OVERREACT FUNDAMENTALS CAN DRIVE TECHNICALS THEY CAN BE SUBJECTIVE IN A SENSE THEY ARE LAGGING INDICATORS WE ARE NOT TECHNICAL TRADERS 4 INDUSTRY CONSIDERATIONS THE PRICE IS FALLING
SECTOR/INDUSTRY FACTORS STRUCTURAL CHANGES DO OCCUR SECULAR PATTERNS CAN BE TOUGH BE AWARE OF CYCLICAL TRENDS REGULATORY CHANGES MEAN THINGS INDUSTRY LIABILITY ISSUES GET EVERYBODY COMPETITOR ANNOUNCEMENTS CAN MOVE STOCK PRICES FRANCHISE DAMAGE IS HARD TO OVERCOME PRICING POWER AFFECTS MARGINS 5
FIRM-SPECIFIC ISSUES THE PRICE IS FALLING THINGS GO WRONG EXTRAORDINARY EVENTS Natural Disasters Product Recalls Product Liability EARNINGS REPORTS Dont Bet on earnings
Dont Overreact Listen/Read Bad Earnings Take a Quarter to Recover MANAGEMENT ISSUES AUDITOR CHANGES BUY OR BUY/OUT PRICE CANT GO UP ANY FURTHER!? PRICE MOVING DOWN THE PRICE IS FALLING CONCLUSIONS BIGGEST PROBLEM FACING INVESTORS: EMOTION
SCREEN MONTHLY CAN CATCH LAGGARDS STOCK PICKING GETS MORE CRITICAL AS MARKETS MOVE UP TO BE SUCCESSFUL TRADING PLATFORMS MUST: Be quantifiable
Avoid interpretation Be consistent/repeatable Test expectancy Specify exact entry/exit points Have a reasonable level of complexity Be explainable Have disciplined users STAY RATIONALE A CLOSER LOOK AT: LUV Built By Advisors For Advisors
Enters Portfolio Built By Advisors For Advisors Southwest Airlines Co. (LUV) Southwest Airlines Co. operates passenger airlines that provide scheduled air transportation services in the United States. As of December 31, 2012, the company operated 694 aircraft, including 606 Boeing 737 aircraft and 88 Boeing 717 aircraft. It served 97 destinations in 41 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as 6 near-international countries, including Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, and Bermuda. It also sells frequent flyer points and/or credits and related services to business partners participating in the
Rapid Rewards frequent flyer program, including car rental agencies, hotels, restaurants, and retail locations. The company was founded in 1967 and is headquartered in Dallas, Texas. Source: FinViz.com, April 2013 Southwest Airlines Co. (LUV) POSITIVES: Preying on weaker competitors, Southwest has used the downturn to expand service offerings to Minneapolis-St. Paul, New York LaGuardia, and Boston Logan airports. If successful, these new markets will provide ample growth opportunities going forward. Possible concerns: Airlines for America estimates that the tax percentage on airfare has tripled to roughly 20% of the price of a ticket today, up from 7% in
1972. Analysts don't expect the amount of taxation to decrease going forward, especially as the government contemplates ways to pay for increased security measures, so Southwest and the industry likely will receive a smaller share of future ticket proceeds. Source: Morningstar, April 2013 ENTERS PORTFOLIO 4/1/2013 Buy 4/1/2013 $13.29 Built By Advisors For Advisors Trade Data
Built By Advisors For Advisors April 2013 Stock Picks Industry: Airlines As of March 28, 2013 - Subject to change. Dow Transports Looking for stability
Built By Advisors For Advisors Dow Airline Index All airlines are not created equal Built By Advisors For Advisors FINVIZ SUMMARY Built By Advisors For Advisors
VALUE LINE Built By Advisors For Advisors VALUE LINE Built By Advisors For Advisors DEUTSCHE BANK Deutsche Bank upgraded Southwest Airlines Company from Hold to Buy and raised the
price target from $11.00 to $15.00. Deutsche Bank noted, "We are raising our rating on Southwest shares from Hold to Buy as we now believe the company is well-positioned to meaningfully improve its pretax ROIC. We think the company has turned the corner on its AirTran acquisition and should start to enjoy the fruits of various revenue (e.g. AirTran code sharing) and cost initiatives (e.g. growth of 737-800 inductions). Accompanying the P&L improvement, we think there will be further debt pay-down and share buybacks. For the twelve months ended 9/30/12, Southwest's pretax ROIC was 7%." RETURN ON INVESTED INCOME All Capital Invested: Long-Term Debt; Common Stock; and Preferred Stock
Built By Advisors For Advisors STANDARD AND POORS Built By Advisors For Advisors NED DAVIS RESEARCH Built By Advisors For Advisors Built By Advisors For Advisors
Built By Advisors For Advisors Built By Advisors For Advisors Built By Advisors For Advisors Built By Advisors For Advisors Built By Advisors For Advisors Built By Advisors For Advisors Built By Advisors For Advisors
THE CHARTS PLEASE! Built By Advisors For Advisors DAVIDS CORNER Built By Advisors For Advisors SWAPS & SPREADS IGNORE AT YOUR PERIL Built By Advisors For Advisors
CREDIT ANTICIPATES EQUITY CONFIRMS SWAPS AND SPREADS RATE PRIOR CURRENT Libor/OIS 14.81
14.55 Euribor/Eonia .138 .133 DTCC Repo Index Agen
cy .146 .209 MBS .155 .228 Treas
.138 .202 High Yield Federal Reserve Currency Swaps (ECB) USD million 2-Year Swap Spread
4.87 4.87 7 Day 300 505 Open
7,963 7,551 .17 STATUS* .146 *Note: Status Status
As Of: 4/10/2013 = No impact = Negative Impact Built By Advisors For Advisors LEES COMMENTS Built By Advisors For Advisors UNDERSTANDING EMOTION IN THE MARKET
PROCESS DESIGNED IN 1995 TO CYCLES IN THE TECH MARKET IDEA WAS TO EXPLAIN PRODUCT CYCLES AND DETERMINE IF A PARTICULAR TECHNOLOGY WAS READY SINCE THEN APPLIED TO DIFFERENT INDUSTRIES COULD WELL BE APPLIED TO MARKETS
GETS TO THE HEART OF OVER-ENTHUSIASM POINTS TO PROCESS Source: Gartner Research Built By Advisors For Advisors UNDERSTANDING EMOTION IN THE MARKET Source: Gartner Research Built By Advisors For Advisors QUESTIONS & COMMENTS
THANKS FOR JOINING US! Built By Advisors For Advisors IMPORTANT DISCLOSURE INFORMATION Content is intended for investment professional use/review only. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot Investments.com), or any non-investment related content, made reference to directly or indirectly in this presentation will be profitable, equal any corresponding indicated historical performance level(s), be suitable for any investment professionals clients portfolio or individual situation, or prove successful. The investment professional retains all decision making authority as to whether or not to follow and/or implement any of the presentation content. BigFoot has absolutely no responsibly for any suitability determination pertaining to any of the investment professionals clients, such
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