Daily Investment Interpretations

November 2, 2009


2009-11-2:  It's been another bipolar day on Wall Street. The S&P 500 was up 16 points at 10:40, down 7 points at 2:10, and closed up 6.69 points for the day. Stocks seem to be moving up when the dollars moves down, and down when the dollar moves up. Unfortunately, to the best of my knowledge, predicting the value of the dollar is no easier than predicting the levels of the market indices. 
    T
he NASDAQ Composite annexeded  4.09 points, (0.2%%) to end at
2,049.20, the Dow added 76.71 points (0.79%) to finish at 9,789.44, and the S&P 500 leaped 6.69 points (0.65%) to 1,042.88. Oil jumped $2.41 to $80 a barrel, while gold soared to $1,047. The VIX climbed 3.15 to 24.76. Oil increased $1.13 to $78.13 a barrel, while gold rose to $1,054. The VIX climbed 0.91 to 29.78.  
    One market commentator remarked today that where investors had been buying the dips, they're now selling the rallies.
    There's a bevy of articles tonight.
'Dark pools' comprise 4% of European equity trades also mentions that imstitutional private market exchanges now handle about 11.5% of all daily U. S. volume.
Turnaround Letter not for faint of heart 
    Peter Brimelow comments on the "Turnaround Letter" investment advisory service. It's been highly volatile, but it has slightly outperformed the Wilshire 5000 over the last 22 years.
Born to run 
    Michael Ashbaugh observes that with the S&P 500 already up 65%, it's not a sure thing that the general market can continue to rise. However, he advises that the energy sector is poised to outperform.
Profits made in China 
    This expands upon what the title implies: China is a good place to invest.

Mind the volatility
 
    This author argues that the current mini-bull market has one-to-four months left, but then a grinding several-year bear market will follow.

No irrational exuberance
 
    Mark Hulbert discovers that the best performers over the last year and over the last ten years are bond and international stock funds.

Trade like a fund manager
 
    This article discusses the incentives that guide mutual fund managers as they approach the end of the year. Since their year-end bonuses are tied to their performance relative to the S&P 500, they tend to sell riskier stocks and load up on S&P 500 wheel horses (since their bonuses will depend upon how well they do relative to the S&P 500). He lists AT&T, Johnson & Johnson, Walmart, IBM, ADP, Abbott Labs, and GE as running at the head of this pack. Then once the new year arrives, these managers will unload their blue chips and stock up on promising, riskier stocks. He recommends buying an S&P 500 exchange-traded fund (like SPY), holding it until late in December, and then switching to a small-cap ETF in anticipation of the January small-stock run-up.

Roubini Says Carry Trades Fueling 'Huge' Asset Bubble (Update3 ... 
    Nouriel Roubini (Dr. Doom) explains that investors borrow money from countries that have low interest rates and invest the money in hard assets in countries that are booming (China?). This creates huge asset bubbles that may burst in a year or two. (The article notes that Dr. Roubini warned in March that the rebound was a "dead cat bounce", said in May that it may "fizzle", and warned in July that "the economy is not out of the woods".) 

On the downswing
    This article warns that "the economy is not out of the woods" (Dr. Doom is right.) It recommends some commodity stocks and some hedging strategies.