Since late April, U.S. stock assets have labored in an extensive period of corrective activity. Bulls believe that the pullback is helping to restore health to the markets. They contend that the ”weak” always run for the hills, providing opportunity for savvy shoppers to buy great bargain companies at discounted prices. Bears explain that the lengthy period of [...] Continue Reading...
You can fall in love with your wife, your children, your dog… even your New York Giants football team. But you should never fall in love with any of your investments. I can’t say that any one person gave me this advice. I can say that I’ve adhered to its core message since the ‘87 crash. It [...] Continue Reading...
The Institute for Supply Management (ISM) released its survey of manufacturing activity on 9/1/10. The August Manufacturing Report on Business gave us its thirteenth consecutive month of expansion with a surprisingly robust reading of 56.3. Index readings higher than 50 indicate growth. “Boo-bears” are busy scouring the report for negative headlines to embrace. Construction spending decreased [...] Continue Reading...
Permabears love to talk about a “lack of conviction” on the part of the share purchasing public. Specifically, when upward momentum in stocks occurs on “low volume,” they dismiss the price movement outright. On Monday, 8/30/10, Dow stocks experienced a triple-digit pullback. Meanwhile, the S&P 500 and the NASDAQ both gave up more than 1.5%. However, with the trading [...] Continue Reading...
When the Beatles sang, “Can’t Buy Me Love,” who would have thought that the chorus might some day apply to U.S. stimulus spending. Indeed, the $862 billion hasn’t purchased much in the way of love for new employees. And as it currently stands, longer-term economic growth hinges on love for human resources. Consider an example that involves actual dollars. As part [...] Continue Reading...
In the best of times, stock prices of different economic segments behave differently. So it isn’t surprising to find Sector ETFs travelling unique paths in ”challenging times.” For instance, if we are heading for the dreaded “double dip,” one might expect relative strength in consumer staples and health care. Staples (XLP) is currently showing relative strength, yet [...] Continue Reading...
The American Association of Individual Investors (AAII) conducts a popular bull-bear survey. The most recent results? Only 1/5 of respondents expect stocks to rise over the next 6 months. When’s the last time that the AAII survey only found 20% bullishness among its participants? Just 4 days before the March 9, 2009 bottom for the U.S. market. It’s a [...] Continue Reading...
It’d be irresponsible to suggest that the U.S. is staring down the barrel of a second credit crisis. The 3-month LIBOR rate has dropped from a 2010 peak of .055% to .031% in less than 2 months, suggesting that banks are loaning to one another and that credit may be easing. With that noted, 3 of the most prominent [...] Continue Reading...
The financial media continue to perpetuate a “risk trade on, risk trade off” myth. Yet a better representation of what’s taking place in market-based securities is “developed market risk off, emerging market risk on.” Is it true that nearly every U.S. Treasury Bond ETF has been hitting 52-week highs on a daily basis? Absolutely. Yet you shouldn’t [...] Continue Reading...
Is it the never-ending, “New Normal” correction? Or is it the beginning of the bear’s salmon dinner? Ironically, the financial media have decided that there are only two choices — a “new normal” or a bear market. There’s no room for bullishness in the hot August heat. Trailing P/E ratios, forward P/E ratios… does it even matter how [...] Continue Reading...
