Trader’s Narrative

Last Friday Nightly Business Report interviewed James Stack, the editor and founder of InvesTech Research. I found out about InvesTech some years ago after reading Fleckenstein rave about their insight. Since then I’ve kept a semi-close eye on it. To be honest, compared to the plethora of newsletters our there, it does seem to be quite good.

InvesTech made a bullish call at the 2002 bottom which won them a lot of kudos and I’m sure many new subscribers. Stack’s approach is a combination of fundamental, technical and liquidity analysis. He doesn’t outright make market calls but you get a sense of his timing by how he allocates his stock and mutual fund portfolios.

He was slightly early but adamantly bearish on the housing bubble and their stocks. Here is a chart that he has kept on his website and updated frequently:

Here are some salient excerpts from the short NBR interview :

• in the past 5 months he increased to 60% cash
• the bull market is very long in the tooth
• believes a cyclical bear market is upon us
• flat yield curve means a high probability of recession
• believes Fed will pause on August 8th meeting
• historically, after the last hike, stocks don’t do well
• he likes Pepsi (PEP) and Johnson & Johnson (JNJ)

If you prefer, you can watch the video of the Market Monitor interview here. But get a move on because it will be replaced by the next interview soon.