u.s. global investors...2012/01/10 · (four out of 13 u.s. global investors funds received lipper...

www.usfunds.com1.800.US.FUNDS

U.S. Global InvestorsSearching for Opportunities, Managing Risk

January 201211-772

History is Key to Future Success:Lessons Learned from Investment Cycles

Jeffrey Hirsch,President of the Hirsch OrganizationEditor-in-Chief Stock Trader’s AlmanacEditor Commodity Trader’s Almanac

Frank Holmes,CEO and Chief Investment OfficerU.S. Global Investors

www.usfunds.comJanuary 2012 11-772

Today’s Presenters

2

Jeffrey Hirsch Frank Holmes


About U.S. Global Investors

3

Publicly traded company, traded on NASDAQ (GROW)

Headquartered in San Antonio, TX

Boutique investment management firm specializing in commodity-related equity strategies

Offers mutual funds focused in gold, precious metals and minerals, global resources, emerging markets and global infrastructure

Manages $2.45 billion in average AUM as of September 30, 2011


Focus on Education

4

28 MFEA STAR Awards for Excellence in Education

www.usfunds.comJanuary 2012 11-772 5

“Performance and Results Oriented”

Winner of 29 Lipper performance awards,certificates and top rankings since 2000

(Four out of 13 U.S. Global Investors Funds received Lipper performance awards from 2005 to 2008, six out of 13 received certificates from 2000 to 2007,

and two out of 13 received top rankings from 2009 to 2010.)

Investment leadership results in performance


U.S. Global InvestorsInvestment Process

We use a matrix of “top-down” macro models and “bottom-up” micro stock selection models to determine weighting in countries, sectors and individual securities.

We believe government policies are a precursor to change. We monitor and track the fiscal and monetary policies of the world’s largest countries both in terms of economic stature and population.

We focus on historical and socioeconomic cycles, applying both statistical and fundamental models, including “growth at a reasonable price” (GARP), to identify companies with superior growth and value metrics.


Government Policy Model —Precursor for Change

President Barack ObamaBen Bernanke, Chairman of the Federal Reserve


U.S. Global InvestorsInvestment Process

We overlay these explicit knowledge models with the tacit knowledge obtained by domestic and global travel for first-hand observation of local and geopolitical conditions, as well as specific companies and projects.

We use a matrix of statistical models to monitor market volatility and money flows, and as a result, we may at times maintain higher than normal cash levels.


Cycles – Principles of Continuous Revolution

Every cycle — irrespective of degree or significance — contains its own unique rhythm

From daily tides to the solar system, life is governed by the cyclical principle

Copyright © 2000-2012 by Jeffrey A. Hirsch and John Wiley & Sons, Inc. or related companies. All rights reserved. www.stocktradersalmanac.com

10

45-Years of Research


11

Almanac Investing Philosophy

“Those who study market history are bound to profit from it!”


12

3 Keys Of Cycles

• Market Cycles Are Undeniable

• Not Exact - Basic Framework Of Moves

• Use In Conjunction With Other Analysis


13

Almanac Investing Process

• Cycles, Seasonality & Recurring Patterns• Current Trends• Technical Analysis• Fundamentals• Market Internals• Economy• Sentiment• Monetary and Government Policy


14

Major Investment Cycles• War & Peace and the Markets• Decennial Pattern• 4-Year Presidential Election/Stock

Market Cycle• Best Six Months November-April• January Barometer


15

Patterns In Play Now• 4-Year Presidential Election Stock Market Cycle• Best 3 Months/Best 6 Months – October Seasonal

Buy S&P, DJIA, NAS, R2K• January Effect Missing - Small Caps Not Beating• Santa Claus Rally, First 5 Days• January Barometer, December Low Indicator• Long Copper, Oil and Gas: Winter-Summer• Early-Mid January S&P Short – Setting Up Nicely


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Next Super Boom


17

Next 15 Years DJIADow Jones Industrials 2009-2025

5000

10000

15000

20000

25000

30000

35000

40000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

DJI Up 500%2009-2025

Sideways Market Launching Pad While Inflation Rises

Actual DJIA2009-2011

Inflation Levels Off

Super Boom Begins 2017-2018

US Withdrawsfrom Afghanistan


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4-Year Election Cycle• 179-Year Saga• Gov’t Manipulates

Economy• Prime Pump 3rd Year• Most gains in

2nd half of term• Post & Midterm Bear

Markets• Dirty Work Early

* Based on annual close; Prior to 1886 based on Cowles and other indices; 12 Mixed Stocks, 10 Rails, 2 Industrials 1886-1889; 20 Mixed Stocks, 18 Rails, 2 Industrials 1890-1896; Railroad average 1897 (First industrial average published May 26, 1896)

DJIA Average Annual % Gain (1833-2011)*

2.0%

4.2%

10.4%

5.8%

0%

2%

4%

6%

8%

10%

12%

Post-Election

Mid-Term Pre-Election Election


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No DJIA 3rd Year Loss• Since War-Torn 1939

Still No Loss For DJIA• No Midterm Bottom 1986

& 2006 - Usually Bottom Pickers Paradise

• 2009 Post-Election Bottom• Election Years Weaker• Pre-Election Stronger• Financial Crisis Impact

DJIA Average Annual % Gain (1941-2011)

4.5%5.9%

16.0%

4.7%

0%

3%

6%

9%

12%

15%

18%

Post-Election

Mid-Term Pre-Election Election


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Incumbent Party Wins & Losses

Dow Jones Industrials During Election Years Since 1901

–8

–4

0

4

8

12

16

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

All Election Years Since 1901Party In Power WinsParty In Power Ousted


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2 Losses Last 7 Months


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Sitting President Up For Reelection

Year Sitting President DJIA %1900 McKinley (R) 7.0 Won1904 T. Roosevelt (R) 41.7 Won T. Roosevelt took office after McKinley death1912 Taft (R) 7.6 Lost1916 Wilson (D) – 4.2 Won1924 Coolidge (R) 26.2 Won Coolidge took office after Harding death1932 Hoover (R) – 23.1 Lost1936 F. Roosevelt (D) 24.8 Won1940 F. Roosevelt (D) – 12.7 Won1944 F. Roosevelt (D) 12.1 Won1948 Truman (D) – 2.1 Won Truman took office after FDR death1956 Eisenhower (R) 2.3 Won1964 Johnson (D) 14.6 Won Johnson took office after Kennedy death1972 Nixon (R) 14.6 Won1976 Ford (R) 17.9 Lost Ford took office after Nixon Resigned1980 Carter (D) 14.9 Lost1984 Reagan (R) – 3.7 Won1992 G. H. W. Bush (R) 4.2 Lost1996 Clinton (D) 26.0 Won2004 G. W. Bush (R) 3.1 Won

Average % Gain 9.0 %# Up / # Down 14 / 5

Wins 10.7 %Losses 4.3 %

Election Year DJIA % Change Since 1900


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2011 Near Textbook Year

• 2011 Forecast– Right On Target!

• DJIA +2.7% January– After 3 Nasty Losses

• April +4%• Best 6 Months

+15.2%

• April/May Top• 5 Monthly Losses

May-Sep• October Kills

Another Bear


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2012 Annual Forecast• Reserved Outlook Next 6-8 Years• DJIA Reclaims Waterfall -12,700 Early 2012• Limited Upside From There• Geopolitical and Macro Economic Risks

– Europe Debt, Iran, U.S. Deficits, etc.• Seasonal Patterns Track Closely Again In 2012• First Half Top DJIA 13,000-13,500 - Summer Weakness• Weak Market Early Reduces Obama’s Chance, But

Increase Odds of Stronger Yearend Rally• Average Election Year Gains of 5-10%


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Waterfall DeclinesLength DJIA

Start DJIA End DJIA Months % Change Date Months25-Jul-57 516.69 22-Oct-57 419.79 3.0 – 18.8% 11-Aug-58 9.8 Slightly longer rebound

24-Aug-60 641.56 25-Oct-60 566.05 2.1 – 11.8% 27-Jan-61 3.123-Apr-62 694.61 26-Jun-62 535.76 2.1 – 22.9% 18-Feb-63 7.9

8-Jul-66 894.04 7-Oct-66 744.32 3.0 – 16.7% 27-Apr-67 6.79-Apr-70 792.50 26-May-70 631.16 1.6 – 20.4% 30-Nov-70 6.38-Sep-71 920.93 23-Nov-71 797.97 2.5 – 13.4% 10-Feb-72 2.67-Aug-74 797.56 6-Dec-74 577.60 4.0 – 27.6% 14-Apr-75 4.3

11-Nov-77 845.89 28-Feb-78 742.12 3.6 – 12.3% 15-May-78 2.513-Feb-80 903.84 21-Apr-80 759.13 2.3 – 16.0% 14-Jul-80 2.87-May-82 869.20 12-Aug-82 776.92 3.2 – 10.6% 20-Aug-82 0.3 Small waterfall, fast rebound *6-Jan-84 1286.64 22-Feb-84 1134.21 1.6 – 11.8% Sideways for five months from

24-Jul-84 1086.57 29-Jan-85 6.3 waterfall to bear market bottom2-Oct-87 2640.99 19-Oct-87 1738.74 0.6 – 34.2% 31-Jul-89 21.7 Short/steep waterfall, very long rebound *

17-Jul-90 2999.75 11-Oct-90 2365.10 2.9 – 21.2% 17-Apr-91 6.317-Jul-98 9337.97 31-Aug-98 7539.07 1.5 – 19.3% 23-Nov-98 2.819-Jul-01 10610.00 21-Sep-01 8235.81 2.1 – 22.4% 11-Mar-02 5.7

22-Aug-02 9053.64 9-Oct-02 7286.27 1.6 – 19.5% 6-Jun-03 8.02-Jan-09 9034.69 9-Mar-09 6547.05 2.2 – 27.5% 23-Jul-09 4.5

21-Jul-11 12724.41 3-Oct-11 10655.30 2.5 – 16.3% At press time ** Not in averages. Averages 2.4 – 18.8% 5.3

Waterfall Decline Bear Market Return to WaterfallWaterfall Declines Since 1950


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Waterfalls Since 1998Dow Jones Industrials Waterfall Declines 1998-2011

6000

7000

8000

9000

10000

11000

12000

13000

14000

15000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


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Flat 2011 – So What?

Close % Chg Year Close % Chg Close % Chg Close % Chg1248.29 3.0 2006 1280.08 2.5 1270.20 1.8 1418.30 13.6

46.67 2.6 1957 44.72 –4.2 47.37 1.5 39.99 –14.3247.08 2.0 1988 257.07 4.0 273.50 10.7 277.72 12.4167.24 1.4 1985 179.63 7.4 191.85 14.7 211.28 26.396.11 1.1 1979 99.93 4.0 102.91 7.1 107.94 12.392.15 0.1 1971 95.88 4.0 99.70 8.2 102.09 10.815.30 N/C 1948 14.69 –4.0 16.74 9.4 15.20 –0.7

1257.60 –0.003 2012 — — — — — —15.20 –0.7 1949 15.22 0.1 14.16 –6.8 16.76 10.3

459.27 –1.5 1995 470.42 2.4 544.75 18.6 615.93 34.158.11 –3.0 1961 61.78 6.3 64.64 11.2 71.55 23.1

2.3 7.6 12.8

S&P 500 Performance Following Flat (+3/-3%) Years Since 1930

Averages:

Prev. Yr January June December


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62-Year Seasonal PatternS&P 500 Monthly % Performance

January 1950-2011

1.1%

– 0.2%

1.1%1.5%

0.2%

– 0.1%

0.9%

– 0.04%

– 0.6%

0.8%

1.5%1.7%

– 1.2%

– 0.6%

0.0%

0.6%

1.2%

1.8%

2.4%

3.0%

3.6%

4.2%

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC


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DJIA 1-Year Pattern (2011)

–8

–4

0

4

8

12


25-Year Pattern10-Year Pattern5-Year Pattern


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Best Six MonthsAverage % Changein DJIA Since 1950

7.5%

0.4%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Best 6 Months Worst 6 Months

$10K Invested in DJIASince 1950

– $379

$609,071

-$100,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000



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Best Six Months + TimingAverage % Changein DJIA Since 1950

– 1.1%

9.2%

-2%

0%

2%

4%

6%

8%

10%


$10K Invested in DJIASince 1950$1,581,034

– $6,383

– $200,000

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000



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Santa Claus Rally• Last 5 Days + First 2 of New Year –

S&P Averages 1.5% Since 1950• If Santa Claus Should Fail to Call

Bears May Come to Broad & Wall• First Signal• Watch Other Indicators

– First 5 Days– January Barometer– Breach DJIA December Low in Q1

• (11,766.26 - 12/19/2011)– Price & Volume Action & Internals/

New Year Santa Rally Year1994 – 0.1% – 1.5% Flat1995 0.2% 34.1%1996 1.8% 20.3%1997 0.1% 31.0%1998 4.0% 26.7%1999 1.3% 19.5%2000 – 4.0% – 10.1% Bear2001 5.7% – 13.0%2002 1.8% – 23.4%2003 1.2% 26.4%2004 2.4% 9.0%2005 – 1.8% 3.0% Flat2006 0.4% 13.6%2007 0.0% 3.5%2008 – 2.5% – 38.5% Bear2009 7.4% 23.5%2010 1.4% 12.8%2011 1.1% – 0.003%2012 1.9% —

S&P 500 % ChangeLast 5 Days Of Year + 1st 2


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First 5 Days• Early Warning• Easily Skewed• 33 of 39 Ups

Average Gain 13.6%• 12 of 23 Downs

Average Gain 0.2%• Election 13 of 15

Based on S&P 500

December January 5-Day YearClose 5th Day Change Change

1987 242.17 257.28 6.2% 2.0%1988 247.08 243.40 –1.5 12.41989 277.72 280.98 1.2 27.31990 353.40 353.79 0.1 –6.61991 330.22 314.90 –4.6 26.31992 417.09 418.10 0.2 4.51993 435.71 429.05 –1.5 7.11994 466.45 469.90 0.7 –1.51995 459.27 460.83 0.3 34.11996 615.93 618.46 0.4 20.31997 740.74 748.41 1.0 31.01998 970.43 956.04 –1.5 26.71999 1229.23 1275.09 3.7 19.52000 1469.25 1441.46 –1.9 –10.12001 1320.28 1295.86 –1.8 –13.02002 1148.08 1160.71 1.1 –23.42003 879.82 909.93 3.4 26.42004 1111.92 1131.91 1.8 9.02005 1211.92 1186.19 –2.1 3.02006 1248.29 1290.15 3.4 13.62007 1418.30 1412.11 –0.4 3.52008 1468.36 1390.19 –5.3 –38.52009 903.25 909.73 0.7 23.52010 1115.10 1144.98 2.7 12.82011 1257.64 1271.50 1.1 –0.003

THE FIRST-FIVE-DAYS-IN-JANUARY INDICATOR


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January Barometer• Devised By Yale Hirsch in 1972• As S&P Goes in January, So Goes Year• Only 7 Major Errors: 88.7%, 8 Flat Errors: 75.8%• Doubters Go Before 20th Amendment• January 2008 was a heck of a Signal• 2009 Down Jan Signaled More Drop• Every Down Jan Since 1950: New or Cont. Bear,

10% Correction or Flat Year, Including 2010• Elections 11 of 15, 4 of 7 Down Years Wrong


35

Dr. CopperDecember Low – May Peak

–5

0

5

10

15

20

25

30

35

40

45


25-Year Pattern5-Year Pattern


36

Copper (HG) Bars &Global X Copper Miners (COPX) Close

• Winter Const Lull

• Summer New Model

• Economic Indicator

• Const Up• China Soft

Landing• Feb 11 Top• Oct 11 Low


37

Oil - XOI

Seasonality Average % Return

Start Finish 15-Year 10-Year 5-Year

Dec (M) Jul (B) 13.2% 12.7% 7.3%

–6

–3

0

3

6

9

12

15

18




38

SPDR Energy (XLE)• Bottomed

Oct 3 with Market

• 65 Support• 68.57 Buy

Limit Hit 11/17

• Better @ Monthly Pivot & TA


39

Natural Gas - XNG

Seasonality Average % Return

Start Finish 15-Year 10-Year 5-Year

Feb (E) Jun (B) 19.2% 14.4% 18.3%

–4

0

4

8

12

16

20




40

First Trust Nat Gas (FCG)• Look for

Feb Low • 17 Support• Better @

Monthly Pivot & TA

• Look to Buy 17-18


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Thank YouJeffrey A. Hirsch is President of the Hirsch Organization, editor-in-chief of the Stock Trader’s Almanac, co-author of the Commodity Trader’s Almanac, editor of the Hirsch Organization flagship newsletter, the Almanac Investor, consulting editor on the Almanac Investor book series, and author of Super Boom: Why the Dow Will Hit 38,820 and How You Can Profit From It.

Over the past 45 years, the Stock Trader's Almanac has established itself as the only investment tool of its kind that helps traders and investors forecast market trends with accuracy and confidence. To learn more about Almanac suite of products, please visit www.stocktradersalmanac.com.

The Stock Trader’s Almanac brand is part of John Wiley & Sons, Inc. www.wiley.com.


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U.S. Global Investors is Mobile

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44


Thank You for Attending Today’s Webcast

Questions? Suggestions? We Look Forward to Hearing from You.

Visit Our Website: www.usfunds.com

Call Us.Investors: 1-800-US-FUNDS (1-800-873-8637)Financial Advisors: 1-800-873-3639

45


Disclosures

46

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

Past performance does not guarantee future results.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Users acknowledge that they have not relied upon any warranty, condition, guarantee, or representation made by Lipper. Any use of the data for analyzing, managing, or trading financial instruments is at the user's own risk. This is not an offer to buy or sell securities.

The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000. The Russell 3000 Index consists of the 3,000 largest U.S. companies as determined by total market capitalization. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The AMEX Oil Index (XOI) is a price weighted index designed to measure the performance of the oil industry through changes in the prices of a cross section of widely-held corporations involved in the exploration, production, and development of petroleum.


Disclosures

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Holdings in the Global Resources Fund as a percentage of net assets as of 12/31/2011: Conoco Phillips 0.00%, Exxon Mobile 0.00%, First Trust Natural Gas 0.00%, Global X Copper Miners 0.00%, Occidental Petroleum Corp. 1.57%, SPDR Energy 0.00%.

A stochastic oscillator is a technical momentum indicator that compares a security’s closing price to its price range over a given time period. Thetheory behind this indicator is that in an upward-trending market, prices tend to close near their high, and during a downward-trending market, prices tend to close near their low. The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of prices.

u.s. global investors...2012/01/10 · (four out of 13 u.s. global investors funds received lipper...

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