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“Best Tip You’ll Ever Get”

Posted by Larry Doyle on April 16, 2012 7:24 AM |

Who would not want to have some sort of forewarning regarding major market moves? While many brokers and financial planners are keen to offer insights as to what their in house strategists think of the market, remember these individuals and their firms ultimately and primarily get paid when they sell you products. How about an independent and insightful tip from an industry insider whom I have come to respect for a wide variety of reasons?

With the markets having recently experienced some indigestion, over the weekend this individual sent me what he kindly described as “the best tip you’ll ever get.”

Given the respect and admiration I have for him I am happy to pass this along. Please be mindful though that I am not offering his “tip” as an investment idea but rather merely as a barometer of conditions within the economy and their impact on the markets overall. On that note, what does this friend of Sense on Cents advise?

Follow FCT with a 50 day moving average. Why ?

FCT represents senior debt. Since it is a closed end fund it is one of the most sensitive barometers to that market. Senior debt are senior bank loans that are collateralized by company assets and are floating rate. Senior debt is a critical part of the real economy.

FCT is not interest rate sensitive so when it moves down it is purely reflecting deteriorating debt market conditions in the mid-size business world that does not have access to the public markets for funding.

Look back to 2007 and it reflects early on the poor conditions that the stock market didn’t seem to pick up until 2008.

I welcome providing a graph of this closed end fund going back ten years so readers can see the move by this fund in 2007.

Let’s watch and learn. I thank the reader again for offering this “best tip we’ll ever get.”

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

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