That’s all for July! With the 7th month of the year now in the can, let’s take a quick look at YTD performance:
Dow Jones Industrial Average +4.5%
S&P 500 INDEX +9.3%
NASDAQ COMPOSITE + 25.5%
52 week performance is a tad less robust.
When people ask why we own Tech, this is the reason: Relative Valuations and Momentum.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
"Overall household indebtedness is up from $7 trillion to almost $10 trillion since 2000. On this sum, we estimate, the American consumer has an annual interest bill of more than $500 billion; a sum, by the way, that vastly exceeds his current income growth." —Kurt Richebacher
Knowing that the vote over the weekend in Greece was really a referendum on Euro membership, a majority of the Greek Parliament said yes to staying. European Finance Ministers meet again on Wednesday to solidify the 2nd bailout package for Greece at the same time hopefully a deal is consummated between Greece and its creditors this week. The Greek 14.5b euro bond that matures on March 20th is up by 2 pts. The optimism that all will be completed and contained AGAIN to Greece has yields lower in Portugal, Spain and Italy. The iTraxx Financial Index is also narrower by...
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July 31st, 2009 at 4:36 pm
that’s cool..
a simple Buy/Write scheme w/ http://finance.yahoo.com/q/op?s=MO
would have smoked, even, the ‘DAQ’s YTD. and, without the sturm and drang of the Jan.-Mar.-July “V”
July 31st, 2009 at 4:46 pm
Very good.
Looks like FusionIQ was shrewd to stick with large cap techs. Who’d-a-thunk-it.
Time to bail yet?
July 31st, 2009 at 4:50 pm
Clicking the 5-year performance indicator don’t look so hot either. And the 10-yr is worse.
July 31st, 2009 at 4:55 pm
Let’s see … 10 yr sucks, 5 yr also bad, 1 yr too, YTD looking positive across the boards …
IT’S BUY AND HOLD TIME AGAIN! WA-HOO!!
July 31st, 2009 at 5:02 pm
My comment from previous post…….
Let’s play a game….. Let’s call it “Where’s the Bubble”.
Have a great weekend everyone,
Econolicious
July 31st, 2009 at 5:59 pm
Volatility Rules.
July 31st, 2009 at 6:05 pm
@BR “When people ask why we own Tech, this is the reason: Relative Valuations and Momentum”
Another way to interpret the elephant is that Tech is typically on the low side of debt burden, as compared to most other things. And in a deflationary environment, that would definitely give an edge to Tech, other things being equal.
Perhaps that might account for the observed relative value and momentum. Just another way to look at this, more from a fundamental than technical perspective.
Of course, the fundamentals perspective and the TA perspective don’t always align, but when they do, it should offer a lot of confidence in the position. The warning signal here would have been if revenues started to fall more in Tech than in other areas. That seems not to have occurred.
July 31st, 2009 at 8:20 pm
No offense, but I’ve never been a big fan of ‘momentum’ as a reason to buy anything – just sounds like a good way to pile in late and lose a lot of money.
I’d much rather look for contrarian plays based on fundamentals, stick to my guns while getting hammered in the firm belief that things will turn around, and lose a lot of money THAT way.
To each his own, I guess.
August 1st, 2009 at 7:03 am
[...] YTD Index Performance [...]
August 1st, 2009 at 8:54 am
A picture is worth a thousand words dept. Hugh Hendry’s video tour of vacant skyscrapers in China, POP!
http://www.youtube.com/watch?v=ektMQGbW3wk
August 1st, 2009 at 10:32 am
Channeling a shoalin monk – Think like the ball. Move to where the ball is going, not where it is.
It looks like the bounce is about to end for this ball.
August 1st, 2009 at 10:37 am
Constantnormal, I believe that same idea is what has made the conglomerates popular of late. But if it is deflation, why am I hearing and reading about reinflation? Could it be because the big boys and girls want out of there reinflation plays? One more thought, if it is deflation, and if there is any hint of Big Ben taking back ie. shinking the monetary base, would that not send the greenback higher? The 74-75 handle looks about to be the dollar bottom to me. Any thoughts anyone?
August 1st, 2009 at 11:08 am
Funny, all this is written as though last +/- 2yr raping & pillaging of $USD/savings/pensions/securities never happened, along with convincing (at least to me) evidence current run-up is a rinse-and-repeat suckerz rally.
Given virtually none of mechanisms (or people) used to execute this plunder have been addressed or corrected, I’m rather dumbfounded at vapid national mentality that grasps onto these “profits” as indicators while larger health of society deteriorating much faster than DOW running up.
August 1st, 2009 at 11:14 am
@JustinTheSkeptic
Bernanke cannot raise rates, despite the saber-rattling from the Fed’s inflation hawks, because …
1) that would draw down the growth(?) in the money supply, and further empower deflation, which still has a small edge over inflation (IMHO)
2) a near-term bumping of the U3 unemployment numbers from near-10% to 12%-and above would be the likely result, and that would spell the end of so many political careers that such a thing will not be seriously contemplated, let alone acted upon. Raising rates with the capacity utilization as low as it is would only drive utilization lower, send even more businesses into bankruptcy, and in general, put us firmly and deeply into a Greater Depression.
But on the other hand (the economist’s favorite phrase), they also cannot lower rates and further (zero IS the bottom), and their ability to print money is hampered by the impact on the dollar, and the international implications (spurring protectionism, killing off any possibility of foreign lending to the US, which raises rates on Treasuries, taking us back to the points made above).
So the Fed and Treasury have pretty much boxed themselves in. All they can do now is talk.
At best, we will follow the muddle-through game plan, with a lengthy period of stag-deflation. A little further toward the worse end of the scale, and we follow the Japanese into economic hell for a decade or more. And at the far end of the badness spectrum, things fall apart, they lose what little control they have, and we proceed into the Greater Depression, with the US dollar collapsing, unemployment soaring to 15%, and social unrest rapidly rising.
That’s my view of things.
August 1st, 2009 at 11:29 am
@constantnormal: agree.
August 1st, 2009 at 12:05 pm
@Cursive 10:32 am
“It looks like the bounce is about to end for this ball.”
I would agree, except that the ball is being suspended by every power that the government can muster. Who woulda ever thunkit that they would abolish the mark-to-market rule? Recognize that if it were to be reinstated, the glamorous bankster profits would vanish like the mirage they are, as would the “profits” from many other firms. And there are not all that many “profits” even with the bogus accounting rules (recognizing that mark-to-market effects balance sheets more than earnings statements, except where losses must be written down).
http://www.ritholtz.com/blog/2009/07/inflation-adjusted-spx-earnings/
Eventually, I think you will be correct, and we will take that next big step downward.
http://www.businessinsider.com/chart-of-the-day-history-repeating-2009-7
(Nov’29-Apr’30 in a larger context)
http://www.amateur-investor.net/Stock_Market_Crash_of_1929.htm
But I’m afraid that cannot occur so long as there are as many confirmed bears still alive (and that would be me and thee). I’m just trying to hang on until that time, without accumulating too many losses along the way.
The entire history of this calamity has been a real eye-opener for me, and the only story I can make up to explain why the equities markets have not completely collapsed is that they are the last spot of dry land for money to flee to, providing considerable price support for stocks, even while there are (supposedly) trillions in money markets, short-term Treasuries, and CDs. Real estate, bonds, and commodities are all devastated wastelands at this point.
Maybe equities will eventually follow, but we are in uncharted waters from my perspective. I just do not know what will happen next.
August 1st, 2009 at 12:09 pm
“So the Fed and Treasury have pretty much boxed themselves in. All they can do now is talk.”
Agree with this statement but I’m betting on inflation, maybe not today or tomorrow, but soon, and with a vengeance.
1. How else other than currency debasement will the USG get historic debt levels under control?
2. Chinese govt will in all likelihood seek to reduce their enormous dollar reserves and protect themselves from dollar devaluation by investing in resources/commodities.
3. Round 2 of TARP seems likely as does some form of universal health care (or close to it) which will be expensive anyway you cut it – more debt.
Lets see what happens when the markets dive in a month or two – if there’s a disconnect with gold maintaining or going higher, I would take that as a sign that the above scenario might play out. If it does I’ll be loading up on gold and oil ala Peter Schiff/Stephen Leeb.
Also don’t think you can go too far wrong parking dough which would otherwise be in low yielding cash instruments in VIPSX.
August 1st, 2009 at 1:56 pm
..I, really, hope People will read this thread, at least, Once..
~~
past that, this:
a blast from the MSM’s weblogs __–__
(AP Photo/Yuri Gripas)A struggling Hawaii bank received a $135 million federal bailout last fall two weeks after staff from the office of Sen. Daniel K. Inouye, a big investor in the bank, called federal regulators about the aid application, according to a report in ProPublica Tuesday.
Bank regulators had designated Central Pacific Financial as a marginal candidate to receive federal assistance, according to documents cited in the report. But soon after the phone call from Inouye’s office, the Treasury directed millions of dollars to bolster the bank’s capital reserves.
Inouye, D-Hawaii, owns shares in the bank that totaled between $350,000 and $700,000 at the end of 2007, according to the report. That amounts to roughly two-thirds of the senator’s personal wealth.
Since 2007, the bank’s stock has lost 79 percent of its value.
While it’s not unique for a senator to have a stake in a local bank, it was unusual for Inouye’s office to contact regulators about the bank’s application, the report states.
Inouye acknowledged in a statement that an aide did contact the Federal Deposit Insurance Corporation about Central Pacific’s application, but denied trying to influence any decision. He didn’t mention whether the aide contacted regulators at his request.
Such involvement wouldn’t violate Senate rules, the report cites experts as saying.
The FDIC and Treasury said the decision to bail out the bank was not related to the communication with Inouye’s office, according to the report.
The story was worked on jointly by ProPublica and the Washington Post. It appeared in the Post Wednesday.
http://www.cbsnews.com/blogs/2009/07/01/politics/politicalhotsheet/entry5127112.shtml
Inouye has long been a pustule on our Body Poltic..
http://medical-dictionary.thefreedictionary.com/pustule