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  1. Common Cents Investment Group Monday January 27th Market Cycles & Investment Ratings

  2. Agenda • Macro Update – Weiyi • Market Updates • Market Cycles – Max • Investment Ratings – Lindsey

  3. Market Update • http://www.cnbc.com/id/101365510 • http://www.cnbc.com/id/101361746

  4. Market Cycles Max Layman Disclaimer: past performance does not indicate future success

  5. Market Trend • Movement in a certain direction over time • Secular – Long time frames • Primary – Medium time frames • Secondary – Short time frames • Identified with technical analysis of charts

  6. Secular Trend • Lasts 5-25 years • Consists of a series of primary trends • Example: Secular Bull Market • Larger primary bull markets • Smaller primary bear markets

  7. Primary Trend • Lasts 1 year or more • Broad support from entire market • Time frame typically talked about in media (i.e. CNBC) • 2013 was a bull market SPY +30%

  8. Secondary Trend • Lasts few weeks to few months • “Market correction” • Markets down 4% in last week

  9. Secondary Trend Cycle http://www.investopedia.com/articles/technical/04/050504.asp

  10. Sector Rotation • Money moving from one industry to another http://blogs.stockcharts.com/.a/6a0105370026df970c01538decb605970b-pi

  11. Full Recession • Bad time to be unemployed • Interest rates falling • Profitable Industries • Cyclicals & Transports (near the beginning) • Technology • Industrials (near the end) http://www.investopedia.com/articles/trading/05/020305.asp

  12. Early Recovery • Rising Expectations • Interest rates bottomed out • Profitable industries • Industrials (near beginning) • Basic Materials • Energy (near end) http://www.investopedia.com/articles/trading/05/020305.asp

  13. Late Recovery • Expectations decline • Interest rates rise rapidly • Profitable industries • Energy (near beginning) • Staples • Services (near the end) http://www.investopedia.com/articles/trading/05/020305.asp

  14. Early Recession • Bad for overall economy, low expectations • Interest rates peaked • Profitable industries • Services (near the beginning) • Utilities • Cyclicals & Transports (near the end) http://www.investopedia.com/articles/trading/05/020305.asp

  15. Kandi Technologies [KNDI] • Electric Vehicle (EV) technology • Renting cars • Cheaper than a taxi • Return to garages • Similar to Car2Go • Car vending machine http://www.youtube.com/watch?v=fiEJPbxL2hI

  16. Kandi Technologies

  17. Investment Ratings Lindsey Kathmann

  18. Warnings of Investment Ratings • Quantity is no guarantee of quality! • Analysts opinion is not the end all be all. • 2 Warnings: • Analysts' ratings do not have clear, standardized meanings. • Potential conflicts of interest that you, as an investor, should be aware of in assessing the usefulness to you.

  19. Understanding the LanguageDifferent terms mean different things to different analysts http://www.marketwatch.com/tools/guide.asp

  20. Understanding Analyst Loyalty • Some analysts can be unaffiliated but most are affiliated with financial institutions • Mutual Fund/Hedge Fund • Provide financial advice for intuitional clients whose investment decisions are usually much different than ordinary investors. • If the fund has a large holding in a particular stock, they do not want a “Sell” rating, so an analysts may put a “Hold” rating on it. This can cause inflation. • Analyst Compensation • Compensation can pressure analysts to report positive research • Ownership Interest in the Company • Analysts may hold stock in the company and do not want to see the rating go down.

  21. Key Tips • Never rely on a rating alone. • Look at the entire report-not just the one word. The report will include risk factors you can use to help you make a decision. • Analysts differ in quality. • Not every analyst is the best. You can look up different analysts records online. • Is it right for YOU? • Your individual financial need is what matters most. Make sure you view each rating in terms of your unique financial situation. Bought:$10.56Sold: $13.87 Gain: ~31% over 2 yrs. Bank of America (BAC)

  22. Stock Analysis Soda Stream

  23. Questions???