August 6, 2007 Update

Not many folks had profits over the last 30 days, like us.

Since our start in February 2006 our Index is down 4.6% (the toughest small tech index for a professional to beat, up or down), the Lux Index is down 4.7% and the Merrill Lynch Index is down a whopping 20.2%!

In the same time frame The Small Tech Prospector Track Record is UP 8.3% . . . crushing our comparative bogie! (risk-adjusted, MUCH MORE, given the fact that we are often totally or somewhat OUT of the market)

But there is more.

We’ve tried to keep you in the general stock market, while warning to tighten stops dramatically as our targeted, mid-2007 target top for the overall market approached.

December 4, 2006

“Now, the odds that the top will be made between now and July 15, 2007 are 75%. So, there is a 90% chance that that very important top has been or is about to be made in the not too distant future.” – What happened? A major top was put in place the week ending July 13, 2007, and the decline since has been significant.

(Here are 3 Big Picture predictions for 2007 that are completely minority views as of 12/4/06)

“Housing – Despite what you are hearing recently on TV, you have seen NOWHERE
NEAR THE WORST OF IT! Although there will be no general nationwide “crash”, for
Miami, Phoenix, Las Vegas, San Diego and 10 or 20 other places - - especially condos. . . watch out below! “You ain’t seen nothing yet”. The rest of the country will be mostly down 5-15% more from here over the next 1 to 3 years.” What happened? Over the last 60 days the world has come round to my view and the declines and market have worsened, dramatically, as predicted.

“China – No room for upside surprise means a top is in place. Look, China is going to
seem like it’s booming for decades, but the real story behind their red-hot economy is
the growth of the middle class – Now look, how many well-educated Chinese over the age of 23 do you think or either not in the middle class already or well on their way? Darn few. How quickly will the large remaining completely illiterate population take to get into the middle class? Never! So, the real growth going forward comes from a decreasing percentage of the population (relative to the last 15 years) – basically new university grads. Look for this story to catch on big within 18 months, as cracks in their banking system, market transparency, corruption and speculative excess take center stage for a couple years.” What happened? Cracks in their banking system, market transparency, corruption and speculative excess HAVE taken center-stage . . . lead paint, extreme poverty of the masses, slowing commodity demand . . . that’s the China story today. Meanwhile, the 9 year bull market in their stocks might not be over yet, but the recent top in them in late July could easily be the start of a major correction.

“The US Economy – still at risk for a mild recession to start in first half of 2007. Assuming it avoids that harsher environment, still look for the slowdown in growth to actually accelerate. Everything important, that an economist measures, will be worse or trending even lower than now by September 30, 2007 and be clear to all but the most starry-eyed observer.” What happened? We are already seeing the slowdown accelerating as the consumer is finally pulling back. Wait until the numbers between now and September 30^th.

December 18, 2006

“Our new and last big picture call for 2007 is about REITs. After a more than six-year bull market, it is looking long in the tooth to us. Ranging around $85.50 the last few weeks, the REITs, as measured by the IYR, are set to start tumbling soon, in what could be a huge, 14-30 month sell-off. If you own these (and most investors do), start using a protective trailing stop about 5% below the market. Many are going to drop 30% or more from their 2006 highs and they will almost certainly under-perform the overall market from this point forward.” What happened? In February 2007 the IYR topped above 94. Last week it was below 69!

February 6, 2007

“I continue to look for an important top in the markets . . . as represented by the SPY by mid-2007.” What happened? Again, we now know, but it is so hard to remember . . . A. how long I’ve been saying these things, B. how often and C. how against the general consensus of the time they were when I said them.

March 3, 2007

“A rally to the 148 -153 area over the next 2 - 12 weeks that trapped the last bulls before collapsing would be more in line with my original ideas and the normal market practice of frustrating every known participant. . . LOL.” What happened? Within 12 weeks the SPY went to the 151-154+ area – less than 1% from the all-time SPY high.

APRIL 16, 2007

“I still look for the collapse to begin before July 15, 2007.”

“Last year, EVERYONE was talking about “Sell in May, and go away”, and that turned out to be the “dumb” move. This year, please note . . . NO ONE is talking about that old chestnut. This is probably the year it pays off in spades.” What happened? The May high in the SPY at above 153 or anywhere near it, WAS a perfectly sensible place to have sold ALL stocks for the year.

May 7, 2007

“Let’s analyze this . . . I believe there is a nearly 90% chance that the market has a short-term, upside move of 3 – 13% left in place. This is a VERY BIG MOVE in such a short period of time, especially in light of the fact that I am intermediate term (the next 6-18 months) BEARISH.” What happened? The market rallied a bit over 3%.

“With the SPY at 150.99 (dead in the middle of the target range we pointed to last month) that market looks all but certain to move to a new all-time high before beginning to collapse before mid-July.” What happened? Exactly that.