ELUXY, Electrolux – How the Fed has changed investing to gambling!


This chart is of Electrolux, not a very familiar name on this side of the pond but very well known in Europe. In terms of household items these guys are big, on a par with Philips, Siemens , Kitchenaid and so on, very respectable and given the nature of it’s business, that is retail, more susceptible to society’s mood swings than most. Add to that the Fed. and their counterparts in other jurisdictions and you have an ideal brew that muddies the water and , at the same time, creates marvelous opportunities for some of the trading houses that are better informed than the rest of us (and use EW extensively taking care not to mention it).

Particularly for the period from about ‘97 onward during which the “maestro” was invincible, to now and perhaps a little longer, this stock started to swing like a yo-yo with an ever increasing amplitude. I count at least 10 moves larger than 50% over this 14 year period. Many moves are much larger! If you are inclined towards the buy-and-hold approach, you would have earned only the dividend for the past 12 years. If you had been able to call the major turning points you would have earned well over 3844%  (50% compounded 9x)plus the dividends. You must buy and sell.

For those that are agnostic about the applicability of EW while putting their faith in the Fed,, I would point out that every single little move in this chart follows EW rules and guidelines to a tee. Next stop is a new low!

By the way, if head & shoulders are your game the end result is equally dismal (I think, as I am not too familiar with that concept).