Market Strategist Jeff Saut on Gaining Street Smarts

Market strategist Jeff Saut has released his latest weekly investment strategy piece entitled "Street Smarts."  The title sums up exactly what his piece is about as he begins by quoting Confessions of a Street Smart Manager by David Mahoney:

"Some people can have a lot of experience and still not have good judgement. Others can pull a great deal of value out of much less experience. That’s why some people have street smarts and others don’t. A person with street smarts is someone able to take strong action based on good judgement drawn from hard experience. For example, a novice trader once asked an old Wall Street pro why he had good judgement. “Well,” said the pro, “Good judgement comes from experience.” “Then where does experience come from?” asked the novice. “Experience comes from bad judgement,” was the pro’s answer. So you can say that good judgement comes from experience comes from bad judgement."

We've said before that investing is a continual education, you never stop learning.  And while you can read all the investment books out there and learn from the mistakes of others (which is highly beneficial), sometimes you just have to make a mistake yourself to truly learn from it.

Saut's weekly strategy piece "Street Smarts" is embedded below:



You can download a .pdf copy here.

Market Strategist Jeff Saut on Being Wrong and Still Making Money

Raymond James market strategist Jeff Saut is out with his latest commentary entitled, "Being Wrong and Still Making Money."  It's been a while since we checked in with Saut, so here's what he's saying these days.

He has been cautious over the past month or so and admits his stance has been 'too cautious.'  Saut then dove into the concept of being wrong and still making money.  He quotes Peter Bernstein, who wrote:

"The trick is to survive!  Performing that trick requires a strong stomach for being wrong because we are all going to be wrong more often then we expect. The future is not ours to know. But it helps to know that being wrong is inevitable and normal, not some terrible tragedy, not some awful failing in reasoning, not even bad luck in most instances. Being wrong comes with the franchise of an activity whose outcome depends on an unknown future (maybe the real trick is persuading clients of that inexorable truth)."

Saut then goes on to reference a piece that divides investors into three categories: Rabbits, Hunters, and Assassins, based on how they act in the market.  Written by Lee Freeman-Shor, it states:

"My findings suggest the odds are that an investor's great ideas will lose money. As such, before you invest a cent into an investment idea, it is imperative to have a plan of action as to what you will do if you find yourself in a losing position. When losing, the successful investors I worked with planned to become either Assassins or Hunters. Assassins sold losing investments that fell by a certain percentage or that declined by any amount and showed no signs of recovery after a certain period of time. Hunters invested a lesser amount at the outset and with a plan of buying significantly more shares if the price fell. Hunters were also unafraid to sell if it became clear that they had made a mistake. The bad investors didn't have a plan and consequently turned into Rabbits. When losing money, Rabbits neither bought more shares nor sold their holdings. Once forming an initial perception, Rabbits were achingly slow to change their opinion of a stock. Which tribe will you become a member of?"

As to where Saut is looking to put any money to work on pullbacks, he recommended Hilton (HLT), Flexion Therapeutics (FLXN), Nvidia (NVDA), Iridium (IRDM), and Texas Capital Bancshares (TCBI). 

Embedded below is Jeff Saut's latest market commentary: Being Wrong and Still Making Money



You can download a .pdf copy here.

Jeff Saut's Latest Market Commentary: Darvas Discipline

Market strategist Jeff Saut is out with his latest commentary entitled "Darvas Discipline."  He titles it so because he references Nicolas Darvas in a passage from his book, How I Made $2,000,000 in the Stock Market.

Darvas wrote,

"I knew that I had to adopt a cold, unemotional attitude towards stocks; that I must not fall in love with them when they rose and I must not get angry when they fell; that there are no such animals as good or bad stocks.  There are only rising and falling stocks - and I should hold the rising ones and sell those that fall.  I knew that to do this I had to achieve something much more difficult than anything before.  I had to bring my emotions - fear, hope and greed - under complete control ... I started to see that stocks have characters just like people.  This is not so illogical, because they faithfully reflect the character of the people who buy and sell them."

He then touches on the concept of tracking stocks with favorable technical setups but then only buying when they give a fundamental reason for doing so: improving earnings power.


Embedded below is Jeff Saut's latest market commentary: Darvas Discipline



For more, check out Saut's other recent commentary where he noted Steve Eisman thinks the US is destined for slow growth.

Steve Eisman Thinks US Destined For Slow Growth: Jeff Saut Market Commentary

Market strategist Jeff Saut of Raymond James has put out his latest piece entitled, "Schadenfreude."  In it, he talks about his recent meeting with Steve Eisman.

Here's what Eisman is thinking these days, according to Saut:  "Steve concluded that Europe is currently sick, the U.S. is likely destined for slow growth because there is not a big enough mortgage refi pipeline to boost the economy, and that Italy is in big trouble.  Steve said to bea short seller you need to embrace 'Schadenfreude.'"

Eisman, of course, was famously profiled in the book The Big Short that subsequently was turned into a movie where he was played by Steve Carrell.

Eisman also walked Saut through the financial crisis, noting that for a crisis like that to happen, you need 3 things: too much leverage, a big asset class that blows up, and then large institutions holding most of the asset class that blows up.

Embedded below is Jeff Saut's latest market commentary, Schadenfreude:



You can view Saut's previous market commentary here.

Jeff Saut's Latest Market Commentary

It's been a while since we checked in on Jeff Saut, market strategist at Raymond James.  His latest investment commentary is out.  He writes,

"Speaking to higher interest rates, while a quarter point increase in the Fed Funds rate would likely cause a stutter-step in the equity markets, the impact on the overall economy should be de minimis."

Embedded below is Jeff Saut's latest market commentary entitled "I Should Have!?"



You can download a .pdf copy here.

Market Strategist Jeff Saut's Latest Commentary: "Deja Vu"

It's been a while since we checked in on market strategist Jeff Saut of Raymond James.  His latest piece is entitled "Deja Vu."  In it, he touches on the fact that many market participants are flagging various bearish signals and expecting a big pullback.  He lays out his response given that he's been bullish since the February low this year.

Embedded below is Jeff Saut's latest market commentary, Deja Vu:



You can download a .pdf copy here.

Market Strategist Jeff Saut: "We're Trying to Stay Constructive, But Negative Evidence Mounting"

It's been a while since we checked in with market strategist Jeff Saut.  This week, his commentary is called "Go Opposite to Hysteria" referencing a quote from Jim Rogers in the excellent Market Wizards book.

Saut takes a look at the technicals given all of the volatility as of late.  He concludes:

"If you want to put a positive spin on things, the six other times the stock market declined by 10% in four days, like it did in August, every time the market rose within a year.  If you want to put a negative spin on things, there was a Dow Theory 'sell signal' last month.  We are trying to stay constructive, but the negative evidence is mounting;"

Embedded below is Jeff Saut's latest investment strategy:



You can download a .pdf copy here.

Jeff Saut's Latest Market Commentary: "Rescue Me"

It's been a while since we checked in on market strategist Jeff Saut, so embedded below is his latest commentary entitled "Rescue Me":



You can download a .pdf copy here.

Market Strategist Jeff Saut on Activity Versus Inactivity

It's been a long time since we checked in on well known market strategist Jeff Saut.  His latest piece entitled "Activity Versus Inactivity" is a look at a common dilemma for investors.

In it, Saut takes a look at human nature and writes, "Plainly there are times for investors/traders to be active.  But there are also times for them to be inactive, despite the trait of human nature to be 'active;' and, for the past few months inactivity has been the best overall strategy."

Saut then goes on to talk about some market technicals and the latest market datapoints.  They feel crude oil has bottomed and that the stock market, even if it sells off in the near-term, would be doing so "within the construct of a secular bull market that has eight to nine years left on the upside."

Embedded below is Jeff Saut's latest market commentary:



You can download a .pdf copy here.

Jeff Saut Predicts Pullback Within Secular Bull Market

It's been quite a while since we checked in on market strategist Jeff Saut's latest commentary, so we figured it's time to see what he's thinking.  This week, Saut's investment strategy piece is entitled, "Making a Market Call." In it, he predicts that the market will see the "first decent pullback of the year" in mid-July or early August.

He arrives at this prediction based on various readings and he's advising raising cash levels, comparing it to the summer of 2011 when the market dipped 18%.  But taking a step back to the bigger picture, he also believes we're still in the midst of a secular bull market that has years left to run.

Embedded below is Jeff Saut's latest investment strategy piece:



You can download a .pdf copy here.

Jeff Saut on Richard Russell's "Rich Man, Poor Man"

Market strategist Jeff Saut has published his weekly market commentary and this time around he recites the "Rich Man, Poor Man" story from Richard Russell about how making simple decisions is the path to prosperity.

Saut himself adds,

"In the world we live in, few look at risk.  Most only look at reward.  The few who do look at risk (the educated, the street savvy) make their money at the expense of the great unwashed majority who swallow the noise nonsense about getting rich quick.  Investing is a get rich slowly process.  You have to put your money at risk in the face of uncertainty.  Emotions run rampant before the uncertainty of floating, fluctuating, often violent and volatile markets."

Embedded below is Jeff Saut's weekly market commentary: "Rich Man, Poor Man!"




You can download a .pdf copy here.

For more from Saut, head to 6 themes for investing in a slow growth environment.

Investing in a Slow Growth Environment: 6 Themes

Strategist Jeff Saut recently released a slideshow from Raymond James entitled 'Gleanings' where he touches on how to invest in a slow-growth environment.  He recently held a conference call with Tom O'Halloran who runs Lord Abbett's Growth Leaders Fund and they both agree on many of the same themes.


6 Investing Themes in a Slow Growth Economy

O'Halloran outlines his 6 rivers of growth as follows:


1. Ongoing Digitization of Society - "Driving that revolution are such growth engines as e-commerce (sales over the  Internet), hosted software (the delivery of software from a site where it is hosted  on the Internet), social networks (platforms that connect individuals and  businesses), mobility, and cloud computing (a vast network of remote servers that  have added unprecedented functionality to the technology ecosystem). Meanwhile,  the Internet has enabled a mobility boom by linking itself to telecommunications  networks. This has led to a proliferation in advanced wireless devices and has  changed the way consumers and businesses communicate."


2. U.S. Mass Consumerism - "Consumer companies are helping consumers look good and feel good. These  companies also are making people’s lives much more convenient through a  growing market in at-home products and services. Rapidly growing social  networking sites are empowering individuals to take full advantage of this market.  These trends open up big new markets for "winner take most" companies.  Affected markets and products include apparel and retailing as well as a wide  variety of beauty products, ranging from cosmetic lasers to invisible braces.  Compelling approaches to basic human needs or desires, such as sleep, beauty, and  health, are also generating significant growth. "


3. Emerging Nations - "The superior growth rates of emerging nations are giving rise to a growing middle  class in these nations. The implications for increased spending are staggering. The  Organization for Economic Co-operation and Development (OECD) believes the  middle class in the Asia-Pacific region alone could spend an incremental $25  trillion by 2030. The growth in emerging nations will shift this decade toward the  consumer sector of those nations and away from the sectors tied to Chinese  industrialization. Increasing disposable incomes in these emerging nations have  particularly benefited the consumer, healthcare, and technology areas."


4. Modern Medicine - "Three areas of innovation that have fueled growth in health care include genomics,  biotechnology, and minimally invasive devices and procedures. In genomics,  significant progress in identifying genetic defects has led to breakthrough  diagnostics, targeted drug therapies, and preventive medicine. The biotechnology  industry is a major beneficiary of the greater understanding of human genetics  and physiology. Scientists at biotechnology companies have used this knowledge  to fundamentally change the drug-discovery process and develop new drugs they  believe will be more effective and/or safer than earlier treatments."


5. Manufacturing Renaissance - "U.S. exports to China alone have accelerated a whopping 583% between 2000 and  2012. Against that backdrop, there are opportunities in leading providers of  advanced technology and training that will increase industrial productivity,  flexibility, and efficiency while lowering costs and making manufacturing  competitive globally. These include: fiber lasers used in cutting and welding  applications, a producer of vision systems and surface inspection systems, and a  provider of 3-D measurement and imaging systems that speed up the design and  development process of highly engineered products. The dramatic improvements  in 3-D software and printing technology should also help fuel the growth of U.S.  manufacturing, particularly in the medical, motor vehicle, and aerospace sectors,  where faster prototyping and time to market can become a significant competitive  advantage."


6. North American Energy Revival - "Thanks to horizontal drilling and hydrofracking technology that breaks open shale  rock by pumping high-pressure fluids into the ground, shale gas is now abundantly  accessible. According to some experts, the United States alone has a 200-year  supply of this unconventional energy source. With natural gas in abundance, the  economics of high-performance, fuel-efficient internal combustion engines that  run on natural gas have become increasingly attractive to consumers. Shale  producers have been so prodigious that they have created a supply/demand  imbalance. For now, users of the cheap natural gas are the biggest beneficiaries.  These include chemical companies and companies that make equipment used to  compress and liquefy natural gas."


For more from Saut, we posted his latest market commentary here.

Strategist Jeff Saut: Primary Stock Market Trend Remains Up & A Pitch on Weyerhaeuser

Market strategist Jeff Saut is out with his weekly investment strategy commentary.  In it, he highlights various positive economic datapoints and he thinks GDP growth will accelerate in 2014 to 3%.

Saut also points out that the Fed is on the market's side with Janet Yellen set to takeover and "that implies no tapering and plenty of liquidity."

He also touches on how housing market bulls have cooled a bit due to rising interest rates.  He notes that over the past few weeks, rates have retraced a bit.


Weyerhaeuser (WY) as a Play on Housing

Saut highlights a "second derivative way" to get access to the housing theme via Weyerhaeuser (WY).  This is one of their analysts' current favorites and here's their take:

"We believe: 1) the embedded value of Weyerhaeuser’s homebuilding platform is underappreciated relative to other  public builder valuations (most notably, the 17,700 lots it controls in California); 2) the recent underperformance of  WY shares has created a buying opportunity; and 3) in the context of our REIT coverage, there are relatively few  opportunities to find similar long-term earnings/cash flow growth stories. In our view, Weyerhaeuser’s  homebuilding platform (one of the 20 largest in the country), significant wood products business, and immense  timberland portfolio position it as a compelling alternative to pure-play homebuilders in this housing recovery.  Weyerhaeuser is targeting a payout of 75% of FAD over the cycle and is well positioned to raise its dividend as the  housing recovery gains momentum. The company has already boosted its dividend by 33% since October (WY  shares currently yield ~3%)."


Embedded below is Jeff Saut's latest market commentary:




You can download a .pdf here.

And you can catch up on some of Saut's previous commentary here.

Strategist Jeff Saut's Latest Market Commentary

Market strategist Jeff Saut's latest weekly commentary is entitled "Ashes to Ashes" and that's what he thinks the budget worries turn into by this time next week.  He then focuses on investor sentiment these days.

Saut points out views from individual investors he's been seeing:

"(They) seem to be 'frozen' like deer in the headlights, believing that you need to have a feel good environment to have a secular bull market.  The reality of the matter is that when you finally get that 'feel good' environment, it tends to be pretty late in the overall scheme of things."

Saut advises caution when it comes to fixed income as that had been the 'easy buy' and rates have increased this summer.  Regarding equities, he feels that you shouldn't worry too much about the worry surrounding Q3 earnings.

Embedded below is Jeff Saut's latest commentary:




You can download a .pdf here.

Market Strategist Jeff Saut's Latest Commentary: "Character"

It's been a while since we checked in with market strategist Jeff Saut, so today we read his latest investment strategy commentary entitled "Character."

In it, Saut details the worries of the debt ceiling and potential government shutdown.  For what it's worth, he thinks it's "noise' in the intermediate term and that eventually it will get resolved.

In such a scenario, he sees the stock market shifting its attention to an improving economy and better economic numbers out of China.  He also points out that mega cap stocks have been the weakest.

Embedded below is Jeff Saut's latest market commentary:




You can download a .pdf copy here.

For an older but long-term focused piece from this strategist, head to Jeff Saut's best stock ideas for the next 3-5 years.

Market Strategist Jeff Saut: September Historically the Worst Month For Markets

It's been a while since we checked in with market strategist Jeff Saut, so below is his latest weekly commentary entitled, "Money and Savings?"  In it, he talks about the difficulty in timing the market and how he's tried to manage risk the past few months while expecting a decline.

While things haven't quite played out as he's thought recently, he still pulls some interesting data out:

"September is truly the worst month historically.  Indeed, September has seen the worst average returns for the D-J Industrials over the past 50 and 100 years."

Embedded below is Saut's latest commentary:




You can download a .pdf copy here.

We've previously posted how Saut has raised cash in anticipation of a decline in stocks.

Market Strategist Jeff Saut: Raising Cash In Anticipation of Decline in Stocks

Market strategist Jeff Saut is out with his latest investment strategy for the week entitled "The One Chip Rule."  In it, he compares the markets to playing poker, a comparison numerous others have drawn as there are various similarities.

Saut opines,

"In the stock market’s case, while the human natures of fear, hope, and greed still play a large role, I tended  to substitute card players with the personalities of stocks, the market makers, the Fed, Washington, and politicians. Using  such strategies I found that if you do your homework, and manage the risk, the odds of success in the markets are much  better than a card game. When you lose in the markets at least you get most of your money back and the government shares  in a portion of your losses via the capital gains/capital losses tax system. In a card game it tends to be basically all or nothing  with each hand."

The '1 chip rule' basically says that for every 10 chips you accumulate, you pocket 1 to pay yourself.  In investing, the corollary is to take some profits as your investments run up higher.

Saut uses this analogy because he's been raising some cash recently in anticipation of a decline in stock prices.  While he admits this strategy has been wrong in the near-term, he points to various indicators and seasonality that has caused him to be more cautious.

Embedded below is Jeff Saut's weekly market commentary:




You can download the .pdf here.

For more of the indicators that have led to Saut's cautious approach, head to his commentary from last month.

Strategist Jeff Saut Cautious, Says To Raise Cash Levels

Market strategist Jeff Saut is out with his latest commentary entitled "Rosebud" where he outlines his slightly cautious approach to the markets this month, expecting a pullback while citing impending Bernanke testimony and rhetoric about sequestration slowing the economy.

Saut also poignantly points out that,

"Reinforcing my cautionary view is a stock market axiom I learned from an old Wall Street wag in the 1970s that states, “When  they start running the ‘dogs,’ it’s time to begin looking over your shoulder.”"

He then goes on to cite that the 50 smallest stocks in the S&P 500 jumped almost 22% in the first half of the year while the 50 largest only gained 13.3%.

Saut's recommendation for the near-term is to raise cash levels.

Embedded below is Jeff Saut's weekly commentary, "Rosebud":




You can download a .pdf copy here.

If you missed his commentary last week, Saut sees a decline followed by a higher market by year-end.

Strategist Jeff Saut Sees Decline This Month But Higher Market By Year-End

This week market strategist Jeff Saut has penned his latest commentary on how many investors are "wired backwards" and love to buy when the market has headed higher and often dump stocks when the market has declined and offered compelling entry points.

Saut writes,

"The reality is that when you have a 'fell good' environment, the game is usually in the late innings.  As often stated, 'the equity markets do not care about the absolutes of good or bad, but rather are things getting better or worse.  An, things are definitely getting better.  However, in my speaking tour last week most investors don't believe it.  Nor do they believe the stock market has been rising because things are getting better.  Indeed, many of the folks I talked to believe the only thing buoying the stock market has been the Federal Reserve."

Saut actually thinks that the market could see its first meaningful decline of the year this month.  At the same time, he feels the S&P 500 will pass the high from late May by year-end.

Embedded below is Saut's weekly commentary:




You can download a .pdf copy here.


For more from this strategist, head to Saut on characteristics of market breakouts from big bases as well as Saut on the odds of a new secular bull market.

Jeff Saut & Scott Brown: Characteristics of Market Breakouts From Big Bases

Raymond James' market strategist Jeff Saut and chief economist Scott Brown have just released their 'Gleanings' report highlighting various charts that pull together economics, fundamentals, and quantitative analysis regarding the market.

The biggest point they've highlighted is that the market has a history of making 'big bases' and then ramping higher.  Saut points out that there have been four big bases that have exceeded 12 years since 1900:

- 1906 to 1924, 18 years
- 1929 to 1955, 26 years
- 1966 to 1982, 16 years
- 2000 to 2013, 13 years

Saut notes that, "Investor behavior reflects an underlying distrust or disinterest and is characterized by underinvestment in equities.  This results in a rebound that is relentless, providing little opportunity to buy on pullbacks."

With these long built up bases and the breakouts that often follow them, Saut highlights some common fundamental characteristcis:

- Rebound from high unemployment
- High government interest payments on debt
- Low investor allocation to equities
- Extremely high/low interest rates (alternates)


Embedded below is the Raymond James slideshow presentation, 'Gleanings: June 2013':




You can download a .pdf copy here.

For more from these gentlemen, head to Jeff Saut on the odds of a new secular bull market.