Joined Nov 11, 2007
1,458 Blog Posts

Who Do We Blame for the Connecticut Tragedy?

The answer to that question is not easy.

By the way, I make sense of misery, tragedy, and otherwise unfortunate circumstances by analyzing data. So before the attacks begin, consider that this post may be me grieving.

As much as I can’t stand his politics, Ezra Klein has a decent post that was updated today, in light of today’s tragedy. It is called Twelve facts About Guns and Mass Shootings in the United States.  I will use it as a jumping off point for what I’m about to write, but it should in no way be considered an end-all and be-all for research on this topic. Like all journalists these days, Klein has an axe to grind, or more likely a semi-automatic firearm.

Gun Ownership in America Has Declined Over the Last 50 Years

Ownership of firearms is at or near all-time lows,” writes political scientist Patrick Egan.

America Is Violent, But Much Less So than 30 Years Ago

These are deaths by assault, not only by firearms.

So yes, America is violent and loves guns, but this reality has been waning for more than a generation, yet the most recent generation has seen more gun related mass killing than any generation before it.

Of the 11 deadliest shootings in the US, five have happened from 2007 onward.

That doesn’t include Friday’s shooting in Sandy Hook, Connecticut. The AP put the early reported death toll at 27, which would make it the second-deadliest mass shooting in US history.

While there is ample research showing a correlation between firearm ownership and homicide, one has to be careful when only considering total deaths by firearms as over half of these deaths are due to suicide. In fact, the majority of gun-related deaths in the United States are suicides. And, suicide is twice as prevalent in the U.S. as murder. The gun control lobby would likely gain more traction would it focus on suicide by firearm rather than homicide.

Even though gun ownership in America has been declining, there is new data out from Virginia showing that as gun sales have skyrocketed, gun related violent crime has fallen:

The total number of firearms purchased in Virginia increased 73 percent from 2006 to 2011. When state population increases are factored in, gun purchases per 100,000 Virginians rose 63 percent.

But the total number of gun-related violent crimes fell 24 percent over that period, and when adjusted for population, gun-related offenses dropped more than 27 percent, from 79 crimes per 100,000 in 2006 to 57 crimes in 2011.

With gun ownership and assault decreasing and the majority of firearm deaths being due to suicide, is there an increase in anything that could be related to these types of tragedies? My initial thoughts turned to Hollywood, music, and video games. Strangely, I could not easily find research on this topic. While it is anecdotal, I think most Americans would agree that violence, gun violence, and celebration of gun violence, have been increasing in our movies, our music, and our video games. The lack of research on the relationship between violent movies, music, and video games strikes me as odd.

Oddly enough, Roger Ebert recently sought to distance Hollywood from gun violence:

I’m not sure there is an easy link between movies and gun violence. I think the link is between the violence and the publicity.

His attempt was a failure, since he blamed it on “the publicity” which is itself a product of the mainstream media and Hollywood. Indeed, Ebert was being a good Democrat. Hollywood is, for the most part, comprised entirely of Democrats, as is the entirety of the mainstream media. It should not come as a surprise that Democrats aren’t blaming their own very successful and extremely influential product for its affect on American culture, which may be the increase in mass shootings and gun violence.

What Will Stop the Madness?

While an increase in gun control laws may indeed lower rates of homicide and gun violence, nothing except for an all out ban and confiscation of  all guns will stop a future Connecticut Tragedy from happening. Since many Americans believe that owning a firearm is their last and only defense against a tyrannical government, any talk of government confiscation or banning of guns will only increase the overall number of firearms.

Banning and confiscating firearms is unlikely. Strict gun control laws are a possibility but do not prevent mass murder. Firearm ownership and assault are on the decline. Yet the phenomena of mass murder by firearm is increasing catastrophically. So who is to blame?

I am of the mind that the American media is the primary and most influential agent of change in our culture. Hollywood was quick to dismiss that the Aurora Tragedy occurred in a movie theater. Was that because they know that life is imitating art? Indeed, our lives imitating their art is what has driven the explosion of consumerism. Hollywood and the media tell us what to buy, what to be, and what to think. Over the last generation, this message seems to increasingly be one that promotes violence, and like sex, violence sells.

Instead of our institutions of research, our government, and our politicians keeping Hollywood in check, and instead of mass media keeping our government in check, we have developed a parasitic relationship where Hollywood, mass media, our colleges and universities, and the government are all too eager to promote and protect each other.

Or maybe I’m just paranoid and we blame the failure of our mental health system.

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High Tight Flag for Thursday

The High Tight Flags are scarce lately. $HGSH continues to be the only candidate.

The HTF screen has identified $HGSH as a HTF before, just before it surged.

$HGSH is consolidating nicely. Keep a close eye on it as I think it will make a move again soon.

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ROC Indicator: Still Long and Strong

I last wrote about the ROC Indicator on August 3rd: ROC Indicator Has Been Cleared for Liftoff.

Indeud, it did liftoff and has stayed elevated since August. This means the very simple system that trades the indicator (read  much more about it here) has stayed long since August.

We are looking at the bottom pane. As you can see, the indicator never really got close to switching to a short position.

For the year, trading both long and short, the indicator applied to $SPY has generated a net profit of 18.84%.

I am trading this system in order to get some long-term trendfollowing type exposure in my account. It doesn’t typically whipsaw back and forth long/short as it did for the first half of 2012. Usually once the ROC252 gets well above the ROC5 (blue and red lines, respectively), the market has embarked on a long-term trend.

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Top Short Setups

I would rather be seeing several new High Tight Flags. There is still only one: HGSH. Until we see more HTFs, we will look at shorts.

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Cup With Handle Screen for Monday

The following charts are the results of my cup with handle screen.

Have a great week trading!


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Top 5 Fidelity Select Sector Funds

With the $SPX closing above its 50 day moving average, the Fidelity Select Sector Fund Rotational System will move out of cash tomorrow by buying the top 3 funds at the close.

Here are the top 5 funds, based on my ranking system.

FSHOX (Construction and Housing)

FSPCX (Insurance)

FSAVX (Automotive)

FBMPX (Multimedia)

FSDCX (Communications Equipment)

The system is showing a net profit of 6.54% for 2012, assuming one started trading it on January 1st. If we assume the system was traded in 2011 and those trades were held into 2012, it is showing a net profit of 9.9%.

One interesting thing to note is that when the system goes back into the market after being in cash, the equity curve typically begins to climb within a short period of time. See below.

The flat areas of the equity curve represent periods when the system was holding only cash. Recently, the system went to 66% cash on October 22nd and has been 100% in cash since November 19th.

Below is a profit table which shows system performance by month and year for the past 5 years.


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