New Column up at Real Money (01/20/05)



My latest column, "Watching for the Wonderful Washout is up at RM. It is loosely based upon Reasons to be Cheerful from earlier this week.

Here’s an excerpt:

"The bottom line is that the 2004 rally stole some gains from 2005. We got way ahead of ourselves last month, and the past few weeks have been a process of working off that excess bullishness. Today could quite possibly be the denouement of that process.

These factors — plus too much salivation over the impact of Social Security money (for the fees but more importantly for the rich inflow of funds) and its positive impact on the market — should be heartening to the bulls.

The next leg up can begin once this consolidation runs its course. I’m looking for 1166 on the S&P, 10,370 on the Dow and a possible drop to 1975 on the Nasdaq. I am advising clients to begin scaling into long positions as we approach those levels. Scaling in avoids "picking a point," which is somewhat random. Deploying all your capital at once is a win-lose proposition. Scaling allows you to be wrong or early, just not fatally so. So we scale into the market in stages. By doing this, I try to capture much of the upside, but with as little risk as possible."

Note that this is a shorter term (3 – 6 months) forecast; For a longer term (and rather bearish) perspective, see our 2005 Market Forecast


UPDATE:  JANUARY 21, 2005  6:31 AM
Real Money has made the full article available at Yahoo!

I like when they do that . . . Time sensitive Information shoujld be freed up on a delayed basis.


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Ed Jones: Worse than you thought . . .

Last month, Jim Cramer ripped Edward Jones a new one; While I agreed with what he said, I didn’t bother to follow up because I assumed Ed Jones had come clean.

Apparently not.

From today’s WSJ:

"Edward D. Jones & Co. received $82.4 million in secret payments from seven mutual-fund firms in the first 11 months of 2004, through a lopsided fee structure that in some cases gave the brokerage firm more compensation for selling poorly performing funds than for selling stellar performers.

The disclosures were posted yesterday, on Jones’s Web site as required by its $75 million agreement to settle regulatory charges that it failed to adequately disclose the payments to investors. They are by far the most detailed figures ever made public on the industry practice of mutual-fund companies paying brokerage firms to induce them to sell their products, an arrangement known as revenue sharing. Unlike front-end sales commissions, which are widely disclosed to consumers, revenue sharing has been largely secret."

That’s pretty egregious behavior. I used to think well of Edward Jones as a firm. Non mas. . .


Here’s Cramer’s comments:

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Category: Markets, Trading