For the first half of 2010, almost two thirds of money managers are bullish, according to Barron's. In fact, 54% are bullish, and 5% are "very bullish." Responses suggest that the Dow Jones Industrial Average is expected to gain another 5% by the end of the year.

According to Barron's, "Today's bullish investors see the major stock indexes making steady progress through next June, amid signs the U.S. economy is on the mend after a searing recession."

Continue reading Healthcare, tech and energy to outperform in next 12 months

Healthcare, tech and energy to outperform in next 12 months originally appeared on BloggingStocks on Mon, 02 Nov 2009 09:40:00 EST. Please see our terms for use of feeds.

We've watched stock market numbers bounce around for two years. Unemployment stats have served as unpleasant reminders that, for some, leading indicators haven't translated to reality. We look for so many ways to understand the brutal economic environment with which we've had to contend, and all the choices can make your head spin. So, let's make it simple. Here are eight ways to tack a label onto the financial world in which we live.

1. Lost market value
Total stock market losses from October 2007's top to March 2009's bottom: $11.2 trillion
Total gains in the stock market since the bottom: $4.6 trillion
Lost ground: $6.6 trillion

2. Bad days
Percentage of the 10 worst days in history for the Dow Jones Industrial Average that happened in 2008, by point drops: 60%
Percentage of the 10 worst days in history for the DJIA that happened in 2008, by percentage drops: 30%

3. Mutual funds
Value of mutual fund assets at the end of 2007: $6.5 trillion
... and a year later: $3.7 million
Lost value: $2.8 trillion

But, it got a little better at the end of August 2009: $4.5 trillion (value of assets)

Continue reading Eight ways to define the recession

Eight ways to define the recession originally appeared on BloggingStocks on Mon, 12 Oct 2009 14:50:00 EST. Please see our terms for use of feeds.

Continue reading Will GM finally be kicked out of the Dow?

Will GM finally be kicked out of the Dow? originally appeared on BloggingStocks on Thu, 07 May 2009 13:30:00 EST. Please see our terms for use of feeds.

Plenty of investors have been calling for General Motors Corporation (NYSE: GM) to be removed from the Dow Jones Industrial Average (DJIA) as the automaker hovers on the brink of bankruptcy. But, like it or not, GM's rock-bottom share price isn't justification enough to oust the stock. GM still represents a major chunk of our industrial economy.

However, GM's nationalization would more than justify its removal from the Dow. After all, that's why American International Group (NYSE: AIG) got the boot last fall -- once the government took a controlling stake in the insurance giant, Dow Jones wasted no time adjusting its blue-chip lineup.

Continue reading Will GM get booted from the Dow?

Will GM get booted from the Dow? originally appeared on BloggingStocks on Tue, 31 Mar 2009 11:50:00 EST. Please see our terms for use of feeds.

Continue reading The life and times of the original Dow Dozen

The life and times of the original Dow Dozen originally appeared on BloggingStocks on Thu, 05 Mar 2009 11:40:00 EST. Please see our terms for use of feeds.

Continue reading Dow Jones Industrial Average blasted for including cheap stocks

Dow Jones Industrial Average blasted for including cheap stocks originally appeared on BloggingStocks on Mon, 23 Feb 2009 08:15:00 EST. Please see our terms for use of feeds.

Yesterday, the market had a swing of over 900 points as indexes hit new lows for the year and then pushed upward to close 6% or so higher. Overnight, markets in Asia and Europe staged rallies of their own.

The stock market may march up for a while, but that can't be sustained and the odds are likely that it will crash and make new lows again before year's end.

The fiction is that the markets trade based on what they see six months into the future. Perhaps they see GDP recovering by then. Not a chance.

George Soros said yesterday that there is some chance that the world economy will enter a depression next year. That may be extreme, but a majority of business leaders and economists who want to be heard on the subject say that this is the most significant downturn of their lifetimes.

There is a view that falling housing prices are at the core of the disaster that has overwhelmed the financial structure of the country and is now hurting everything from retail sales to tech company revenue. Housing may be helped by government programs, but if unemployment hits 8% or better next year, the number of people who have to give up their homes could rise sharply. Lower interest rates do not help people out of work.

Another misconception about the future is that oil prices will continue to fall. With some OPEC nation's facing budget deficits due to crude dropping from over $140 to $55, the cartel will have to cut production to meet demand. That may mean a huge cut, but OPEC can match the drop in the global need for oil with a paltry supply.

The stock market has not stopped going down.

Douglas A. McIntyre is an editor at 247wallst.com.

Why a stock market rally can't be sustained originally appeared on BloggingStocks on Fri, 14 Nov 2008 09:15:00 EST. Please see our terms for use of feeds.

If you believe an analysis I posted of a Fortune article last November, the answer is probably yes. This is based on a theory that stock prices needed to adjust downward for something called the equity risk premium.

How did Fortune arrive at the idea that the market needs an 18% drop? (I should note that Time Warner (NYSE: TWX) owns both BloggingStocks and Fortune.) Fortune calculates the current equity risk premium by adding stocks' earnings yield -- which it gets by flipping the market's P/E on its head (calculating E/P) -- to the inflation rate and then subtracts the t-bill yield. Then it compares the current value with the long run equity risk premium to conclude that stocks have a long way to fall before their prices align with that long-run value.

Here are the numbers. The market currently trades at a PE of 16, but based on adjustments to remove short term spikes by Yale market guru Robert Schiller, Fortune uses a PE of 22 -- which is the inverse of the market's earnings yield of 4.5%. Investors expect equity returns of 7% -- calculated by adding expected inflation of 2.5% to that 4.5%. To get the equity risk premium of 3% Fortune subtracted the 10-year treasury rate of 4% from that 7% expected return. Got that?

Continue reading Does the Dow have another 2,668 points to fall?

Does the Dow have another 2,668 points to fall? originally appeared on BloggingStocks on Wed, 23 Jan 2008 11:55:00 EST. Please see our terms for use of feeds.

Continue reading Fed be nimble, Fed be quick

Fed be nimble, Fed be quick originally appeared on BloggingStocks on Thu, 29 Nov 2007 14:45:00 EST. Please see our terms for use of feeds.

Continue reading The Dow corrects: Now what?

The Dow corrects: Now what? originally appeared on BloggingStocks on Tue, 27 Nov 2007 12:03:00 EST. Please see our terms for use of feeds.

Gallery: Investing in wicked things

Cocaine is having a better year than the Dow Jones industrial average originally appeared on BloggingStocks on Wed, 17 Oct 2007 14:45:00 EST. Please see our terms for use of feeds.

JPMorgan, Coca-Cola, United Technologies, Altria beat expectations originally appeared on BloggingStocks on Wed, 17 Oct 2007 08:55:00 EST. Please see our terms for use of feeds.

Don't expect the rally that pushed the Dow Jones industrial average past 14,000 today to last.

The world isn't going to end for investors tomorrow, but it may not have the perfect storm of bullish signals that investors are reacting to today that sent the index to record levels. I've listed a few of them below.

After warning of a 60% earnings decline in the third quarter, Citigroup Inc. (NYSE: C) Chief Executive Chuck Prince said he expects the fourth quarter to be more "normal." Former Fed Chairman Alan Greenspan said the credit slump may be ending. Shares of Lennar Corp. (NYSE: LEN) and other homebuilders rose after a Citigroup analyst said the worst may be behind the companies.

Today's rally lifted a broad array of stocks including Google Inc. (NASDAQ: GOOG), General Electric Co. (NYSE: GE) and ExxonMobil Corp. (NYSE: XOM). Even beleaguered Countrywide Financial Corp. (NYSE: CFC) got a lift as investors seem to have no doubt that at least one more rate cut was coming from the Federal Reserve after the Institute for Supply Management reported that manufacturing grew at its slowest pace in six months.

Continue reading Dow rockets past 14,000: Are happy days here again?

Dow rockets past 14,000: Are happy days here again? originally appeared on BloggingStocks on Mon, 01 Oct 2007 12:35:00 EST. Please see our terms for use of feeds.

Dow rallies 336 points on interest-rate cut originally appeared on BloggingStocks on Tue, 18 Sep 2007 17:35:00 EST. Please see our terms for use of feeds.

Last night I was so disappointed in some of my fellow stock investors (and big time whiners) that I closed the BloggingStocks day with The Dow throws a 280 point hissy fit!. Now we find the hissy fit is already over and the Dow Jones industrial average is up this morning as I write, about 140 points.

Don't you just love it. This is one crazy market. I expect the Dow to close strong today as investors take advantage of plenty of buying opportunities. Unfortunately what I expect and what happens are two different things. All bets are off, if a black cat prances across the trading floor, or Ben Bernanke sneezes.

I still hope the Federal Reserve leaves rates alone for years and I wish they would actually announce that intention and let people plan their investments based on sound principals, expanding markets, company earnings and not speculation about rates, or bail outs for wealthy (and greedy) hedge fund investors. It's all about stability and predictability.

One of our beloved editors and I were discussing how Bernanke must feel like a parent in a room full of whiney children at times. I think he had a shaky start to his tenure on the job but he has proven to be an adult about the situation and he has my support. Someone has to behave like a grown up. You won't see it from James Cramer ranting and raving. So plan on no cut and move on about your business.

To find more potential opportunities and verify my track record read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

I guess the Dow hissy fit was short lived originally appeared on BloggingStocks on Wed, 29 Aug 2007 13:44:00 EST. Please see our terms for use of feeds.

Thornburg Mortgage Inc. (NYSE: TMA) Chief Executive Larry Goldstone said there is a "crisis of confidence" in the mortgage market.

No kidding.

Shares of Thornburg fell about 9% after Goldstone made that insightful comment on CNBC. They are down 45% for the year amid concerns about the subprime mortgage meltdown. Thornburg sold about $20.5 billion in mortgage-backed securities today to return to "business as usual" -- whatever that means.

Worries about subprime mortgages continued to weigh-down the market, as did the drop-off in oil prices caused by weather forecasts that indicated Hurricane Dean wouldn't hit the oil-producing areas of the Gulf of Mexico. The Dow Jones industrial average and the Nasdaq Composite Index managed to hang onto positive territory for now as investors continued to hope -- make that pray -- that Fed Chairman Ben Bernanke will eventually cut interest rates.

Continue reading Thornburg (TMA) CEO sees 'crisis of confidence'

Thornburg (TMA) CEO sees 'crisis of confidence' originally appeared on BloggingStocks on Mon, 20 Aug 2007 11:54:00 EST. Please see our terms for use of feeds.

The markets saw broad selling pushing the Dow Jones Industrial Average down another 207 points to the bottom of the correction range. From a technical standpoint the DJIA the down broke through support at 13,041; but is still above the numerically significant 13,000 level.

The NYSE had volume of 3.8 billion shares with 440 shares advancing while 2,924 declined for a loss of 174.59 points to close at 9,254.27. On the NASDAQ, 2 billion shares traded, 797 advanced and 2,234 declined for a loss of 43.12 to 2,499.12.

With all the market volatility, options continued to be very active. In options there were 7.6 million puts and 6.2 million calls traded for a put/call open interest ratio of 1.21. Coca-Cola Co. (NYSE: KO) saw heavy volume on the January 45 calls (KOAI) with over 44,000 options trading. General Motors (NYSE: GM) tallied volume on the August 30 calls (GMHF) with over 31,000 options trading. American Express (NYSE: AXP) saw heavy volume on the January 60 calls (AXPAL) with over 28,000 options trading. Home Depot (NYSE: HD) moved heavy volume on the August 45 puts (HDTI) with over 90,000 options trading.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.

Tuesday Market Rap: KO, GM, HD & AXP originally appeared on BloggingStocks on Tue, 14 Aug 2007 18:30:00 EST. Please see our terms for use of feeds.

The market had a correction last week and we saw steep declines. People suddenly ask what is going on? Regardless of whether there is a "reason" for the decline, market commentators will disclose a number of factors with the utmost certainty that they are the cause for the fall.

Markets go up and down and all this analysis is over blown. Ultimately, there is a herd mentality in the market and at times very few people think for themselves. People in the market are like mindless cows at times, blindly following others right off the edge of the cliff.

I am sure there are psychologists and sociologists that have all sorts of explanations for this, but let's talk about animals instead. While I have never been in an honest stampede, I have been in front of a cow that had its mind intently set on going a certain direction. Knowing my weight and the milk cows weight, I have to recommend against ever being in that position. If you are smart you don't get in front of a stampeding cow.

Continue reading Are you smarter than a cow? Herd mentality and the falling market

Are you smarter than a cow? Herd mentality and the falling market originally appeared on BloggingStocks on Tue, 31 Jul 2007 12:30:00 EST. Please see our terms for use of feeds.

One of my avid readers posed an interesting question after last week's two day 500 point drop; "When will we have our first 4 digit one day move on the Dow - and will it be up or down?"

Usually I would leave the prediction business to Wall Street and Venice Beach palm readers, but I try to respond to direct questions from serious readers as best I can. A four-digit move from a DJIA level of 13,500 would be a 7.4% move. Addressing the timing first, I do not think such a move is imminent. Actually, I think it is not possible at current levels without some extreme unforeseen event, outside of the market. I think it would not only have to be unexpected, but it would have to be of a scale that would rattle the markets down to the core. To me this could only involve two or three things: significant disruption to oil deliveries, a failure of the western banking system, or a biological or nuclear war. Outside of these catastrophic events I do not think it will happen from our current level.

A 5% to 6% move could happen on any given day triggered by a far less drastic event, but to reach the four digits we would have to see the Dow at a much higher level, perhaps 17,000 or more. If we reached this level (which will happen sooner rather than later) we could see a four digit move and if that happened it is far more likely to be a downward move. The reason it would be downward in my mind is that this type of market movement requires large amounts of group think and sheepishness. Also negative events create a need for short term capital and stocks would be sold off. On the other hand I cannot think of a unifying group event that would make investors act together to the degree required to create an equally large upward move.

So enough hypotheticals for now. All of this matters not -- just diversify your investment holdings and rest easy.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Disclosure: I do not own any crystal balls and have no current plans of acquiring one.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

When will the Dow make a 1,000 point one-day move? originally appeared on BloggingStocks on Mon, 30 Jul 2007 19:00:00 EST. Please see our terms for use of feeds.

DuPont

DuPont earnings: Stock drops on earnings miss originally appeared on BloggingStocks on Tue, 24 Jul 2007 13:26:00 EST. Please see our terms for use of feeds.