Monthly Commentary
November
2008
Amidst all the
gathering dark clouds of market performance and worsening economic
news there is a bit of good news that may help bring us out of the
recession that we find ourselves in. We are seeing inflationary
numbers as measured by the consumer price index falling to the
range most preferred by the Federal Reserve. This is not only
evident here in the US but abroad as well.
(read more)
October
2008
Another horrible
month comes to an end, but at least we saw some relief at the end
of the month from the constant downward pressure we have been
living with. All three major indices finished strongly higher in
last week's trading. The S&P 500 gained 10.5% (Year-to-date down
34.0%), the Dow Industrials jumped 11.3% (YTD down 29.7%) and the
NASDAQ Composite moved ahead 10.9% (YTD down 35.1%). Six of 10 S&P
sectors outperformed the Index and all 10 managed to gain ground
on the week. The best performing sectors were Consumer
Discretionary (up 16.9%), Materials (up 14.4%) and Energy (up
13.0%). The worst performers were Health Care (up 5.3%), Utilities
(up 6.2%) and Consumer Staples (up 8.3%).
(read more)
September
2008
The bailout plan is
the topic of the month. While the headlines and the press give
the impression that this is yet another gift to business to
forgive them for their sins of greed, the actual terms of the plan
paint another picture. The simple details of the plan are that
funds will be made available to purchase troubled assets on the
books of financial firms. The funds will come from the increase
in the debt ceiling and an oversight board will be established to
watch how the funds are applied. While the total package may be
$700 billion, the funds won’t be made available all at once. Two
other important elements of the plan cover the pricing of the
assets and the destination of the proceeds from the sale of the
assets when they economy begins to recover.
(read more)
August
2008
Investors are increasingly concerned about the
health of the U.S. financial system. The Federal Deposit Insurance
Corporation (FDIC) recently indicated that 117 financial
institutions are now on the Trouble List, up from 90 previously.
Not all of these financial institutions are going to fail, but
some will. In his comments last week Fed Chairman Bernanke
discussed the issues of regulation in our financial system. While
many investors look to the Federal Reserve as the ultimate
regulator, Bernanke said that the Fed has some regulatory power
over the financial system but not complete power. Our regulatory
system is primarily designed to keep an eye on individual
institutions like banks or brokerage firms and until now has
worked quite well. However, when you have problems throughout the
system caused by easy lending, the failure of one has the
potential to set off a chain reaction for other institutions.
(read more)
July 2008
With 2008 now more
than half over let’s take stock of where we are. First unless you
just landed on earth after spending a year in space you would know
that we are in the clutches of a bear market. Don’t worry about
hanging the “recession” label on this economy as market conditions
can rarely be described with one single word. Suffice it to say
the economy has slowed considerably from this time last year and
many sectors have been dealt a near knock-out blow. On July 15 the
Dow hit a new 52 week low of 10, 962 taking out the support level
of 11,000.
(read more)
June 2008
OUCH!!! The month of
June is over and the DJIA closed out the month with the worst
performance for June in 78 years. For the year the S&P 500 is down
12.8; the Dow is off 14.4 and the NADQ is 13.5 in the red. With
half of the year out of the way, we can hope the second half goes
much better.
(read more)
May 2008
In my mid month
email I commented on how the price of oil has largely been
affected by the speculators who are using the commodity as a means
to hedge inflation. The once powerful US Dollar has been losing
its luster for some time and in a rush to find a replacement for
it, large institutions have settled on the price for a barrel of
oil as the means to protect their portfolios. Even more
attractive to them is that the price of oil is much easier to
manipulate than the dollar is. As I mentioned in my comments,
more and more institutional money is entering into this activity
and this increased activity and demand is playing a large part in
driving up the price of oil as well as other commodities. The
commentators on CNBC would have us all believe that it is the
increasing demand and shrinking supply that is driving the price
up. This is of course a factor, but so far, with few exceptions,
the story of the oil speculators is not getting much attention at
all.
(read more)
April
2008
I guess we can blame
this one on the Feds. Before the announcement of their current
interest rate strategies the markets were moving along nicely.
The final week of April was filled with a number of important
economic reports and investors had plenty of reason to hold their
breath. Early on in the day the markets reacted positively to the
first batch of reports and were up nearly 1% across the board.
The Labor Department reported a five-year low in April consumer
confidence, although the index was modestly higher than
expectations (reported 62.3 v. estimated 61.0). The April ADP
Employment report showed private-sector jobs increasing 10,000
versus an estimated loss of 60,000 jobs and the first reading on
1Q GDP showed growth +0.6%, which was slightly greater than the
estimate of 0.5%.
(read more)
March
2008
Uncertainty
continues to dominate the market outlook as the major indices
trade in a choppy fashion. According to an S&P study of daily
swings, the U.S. stock market is the most volatile in 70 years.
The S&P 500 benchmark for American securities has advanced or
declined 1% or more on 28 days this year. That's 53% of the
trading sessions so far. Trying to find rationale to explain this
volatility is a tough task but suffice it to say most of the blame
lies at the feet of the investors themselves.
(read more)
February 2008
There is a bit of
irony in the market performance for the last day of February in
2008. The major stock averages fell sharply. The Dow and the S&P
500 finished with their fourth straight monthly losses for the
first time since 2002. The S&P 500 dropped more than 3% during the
month. Weak economic reports, an early decline in the dollar,
credit worries, and disappointing earnings all contributed to the
selling pressure. Since we only have 29 days in February every 4
years, let’s be hopeful we won’t see another month like this for
at least four more years.
(read more)
January 2008
A volatile January
ended on a positive note with the major indices all moving up and
on strong volume for the last trading day of the month. How can
this be in the face of near recession? It’s pretty simple
actually. There is still a great deal of fear out there. Fear
and Greed are the two major tools of Wall Street and both are
designed to make them money. Fear and Greed cause people to do
things. It is nearly impossible to sit idly by when all the
talking heads are spewing non-stop data at you, all designed to
get you to make moves. It doesn’t matter in which direction as
long as you feel compelled to buy or sell something. That’s when
they make money, not when you sit quietly observing the
happenings.
(read more)
December 2007
As we leave the
month of December allow me to bring a little Roman history into
the year end discussion for perspective. In 46 BC, Emperor Julius
Caesar instituted a new calendar to better track the year in line
with the seasons and in doing so gave us the months and days that
we still use today. This calendar remained in use until the 16th
century when Pope Gregory XIII gave us our current calendar that
bears his name. The first month of the Julian calendar was named
after the double-faced Roman god Janus. Janus was the god of gates
and doors, beginnings and endings, and is the reason why at this
time of the year we look ahead to the near year while still
remembering the year just ended.
(read more)
November 2007
November was some
kind of month, bringing new meaning to the definition of
volatility. From a S&P 500 high on November 1 of 1,545.79 to the
monthly low of 1,406.10 on the 26th, investors experienced a ride
unlike any other November. Wide swings in daily numbers gave one
the impression that if you didn’t like the numbers that day, all
you had to do was to wait until the next day for totally different
ones. These conditions are certainly not for the faint of heart by
any means.
(read
more)
October 2007
Now they have done it! Citing a need to “forestall some of the
adverse effects on the broader economy that might otherwise arise
from the disruptions in financial markets and promote moderate
growth over time,” the Feds gave the markets what they wanted:
another interest rate cut of .25%. The markets greeted the news
with a modest bump in the closing numbers. There was some
downside to the Fed’s statement in that they noticed “recent
increases in energy and commodity prices, among other factors, may
put renewed upward pressure on inflation.” You don’t have to look
far to see evidence of that in commodity prices.
(read
more)
September 2007
As Lewis
Carroll once wrote, “It’s a poor sort of memory that only works
backward.” While we have all wished for the foresight to know what
to invest in, before the market moves, we feel it’s best to
look ahead at what the economists are forecasting and try not to
dwell too much in the past.
That being said,
let’s take an objective look at September.
(read
more)
August 2007
The current market is in transition. We have seen
steady upward momentum for over 53 months. Markets like stability
in the economy and they prefer conditions where the road ahead is
clear and straight. It is certainly acceptable if a few storm
clouds are on the horizon, but ideally that horizon should still
be somewhat in the distance. For this market and the economy in
general, those storm clouds have moved in closer. In fact they
have moved in so close that people are seeking shelter and openly
are wondering if the storm will ever pass. Of course we know it
will, but none the less, it makes weathering the actual storm an
unpleasant experience.
(read
more)
July 2007
Many people seek their thrills by bungee jumping, sky diving or
alpine skiing. Who needs that when you have the ups and downs
of the market? While maybe not life threatening, being an
investor does have its share thrills. To illustrate that point
let’s take a look at performance of the Dow Jones Industrial
Average over the last two weeks.
(read
more)
The "Markives"
