Will We Hold It Wednesday – Strong Bounce Edition
by phil - October 22nd, 2014 8:07 am
What an amazing recovery!
Just one week ago the World was coming to and end and now everyone has their rally caps back on. Investors really are sheep – except I think sheep have better memories… We're still right on plan of dropping 10% and then bouncing 4% (strong bounces) by Wednesday (today) that was initiated on October 6th by our friends at the Fed (see yesterday's post for the summary). For those of you keeping score, our strong bounce predictions for today were:
- Dow 16,466 (weak) and 16,632 (strong).
- S&P 1,878 (weak) and 1,903 (strong).
- Nasdaq 4,280 (weak) and 4,360 (strong).
- NYSE 10,360 (weak) and 10,540 (strong).
- Russell 1,104 (weak) and 1,128 (strong).
The Dow is just 17 points away from our goal and we'll just need the NYSE and the Russell to confirm their bounce lines and THEN we can get bullish again. Meanwhile, we actually got a bit more bearish in our Short-Term Portfolio (also in yesterday's post) as our Long-Term Portfolio popped right back to up 18.1% for the year so we wanted to lock those gains in with the STP, which finished the day up 81.8%, down from 92% in the morning as the markets rocketed.
If the rally is real, the Dow should have no problem at all popping our 16,632 line – after all, it jumped 234 points yesterday but stopped dead right at our strong bounce line. The…
Will We Hold It Wednesday – Global Correction Edition
by phil - September 24th, 2014 7:50 am
You call this a correction?
The Nasdaq is down 4%, Russell is down 5%, the Hang Seng is down 6% and the FTSE is down 3.6% but barely a pause from the rest of our Global Indexes. The problem is, it's been so long since we had a proper pullback that people think a tiny little correction is the end of the World. Even in the good old days, before high-frequency trading made a joke out of the market – investors didn't get too upset about a 5% pullback.
That may be the problem as well. The reason the market has marched off to record highs is BECAUSE investors have been led to believe that it's better than bonds, better than cash, even – to have your money in the stock market. We certainly seem to have convinced a lot of Boards of Directors that the best thing to do with their company's money is to buy back their own stock or the stock of their competitors – no matter how ridiculous the price.
$533Bn of hard-earned Corporate Profits were spent buying just the S&P 500, by the S&P 500, in the past 12 months alone. That's 20% more than all of 2013 ($420Bn) and 30% over the 5-year average and that DOESN'T include M&A activity – also at a record pace. While this has been going on, insiders have been SELLING their company stock at a record pace – Interesting…
So the company uses it's profits, not to invest in it's own future but to prop up it's own stock price – making earnings seem better because you are dividing the profits by a lower number of shares than there were last year. This inflates the stock price and the insiders get out and that's when you buy – is that about right?
What a friggin' scam - I can't believe you fell for that! Seriously, that is such an obvious fraud that you would think people would run screaming away from equities. The problem is, there's nowhere to run to, is there. Your cash is being devalued, bonds don't keep up with inflation, real estate is still very…