Continue reading Are U.S. Stocks Cheap?

Are U.S. Stocks Cheap? originally appeared on BloggingStocks on Mon, 26 Apr 2010 17:40:00 EST. Please see our terms for use of feeds.

It started with Dubai. Then it spread to Greece, Now its moving to Spain and Portugal. What is it? It's fear that some European countries will default on their sovereign debt.

The Europe Markit Sovx index, which measures the cost of insuring against default, jumped 100 basis points for the first time, along with heavy buying of credit default swaps (CDS). CDS spreads on Portugal hit record highs, up 17 basis points to 212. Greek swaps rose 7 basis points to 398.

Continue reading Fear over Sovereign Debt Rattles European Markets

Fear over Sovereign Debt Rattles European Markets originally appeared on BloggingStocks on Thu, 04 Feb 2010 12:00:00 EST. Please see our terms for use of feeds.

Spurred on by strong earnings from JP Morgan Chase & Company and Intel, the Dow punched through the 10,000 mark today.

The Dow 10,000 is a psychological level. Very often traders pay attention to round numbers like 10,000. Breaking through often kicks off buy stops and that is an added push to the move. Traders also see strong earnings by two giant companies as a positive for the market and often follow along with the momentum.

Recapping, the market was last at 10,000 back in October when it broke that mark on the downside. The index is down 29.4% from its 2007 peak of 14,164.53.

Do you believe that the market will continue to move higher?

It's official: Dow hits 10,000 mark originally appeared on BloggingStocks on Wed, 14 Oct 2009 16:15:00 EST. Please see our terms for use of feeds.

Stocks rally, Dow up 200 points originally appeared on BloggingStocks on Tue, 29 Jul 2008 14:25:00 EST. Please see our terms for use of feeds.

After my rant yesterday, The Dow throws a 280 point hissy fit!, resulting from my unhappiness about the behavior of the market response to the rumor mill, I was sort of happy today to find investors coming back to their senses ... maybe.

So I followed with I guess the Dow hissy fit was short lived, and now am troubled even though the market has responded positively to what I thought was bargain hunting, but turns out might also be more rumors and speculation about a cut in the interest rate that was fed by the fed, by Bernanke himself ... make up your mind already. Bernanke Wants Help for Homeowners, or so the story goes. It does not say how exactly help will come.

The harshest comment I received to my second post, which is not far from my own thinking, was from Cullen:

• The Fed should keep rates where they are!
  
  Let the greedy speculators and the reckless mortgage lenders and the foolish or careless borrowers take their lumps! The free markets NEED to adjust. Those in the lending business NEED to return to SOUND lending practices. We consumers NEED to learn a lesson from this. Live within your means!

Continue reading Bernanke's Fed: Maybe they will and maybe they won't

Bernanke's Fed: Maybe they will and maybe they won't originally appeared on BloggingStocks on Wed, 29 Aug 2007 21:00:00 EST. Please see our terms for use of feeds.

A recent Wall Street Journal article blared Fast-Money Crowd Embraces ETFs, Adding Risk for Individual Investors. The article focused on the imperfection of exchange-traded funds as tracking devices for the indices whose performances they seek to mimic. The problem is that, because ETFs are traded like stocks, they go up and down based on supply and demand for the shares themselves. Traditional index mutual funds are simply adjusted at the end of each day to reflect the net asset value of the underlying stocks. As the article says:

The funds also are heavily used by the fast-money crowd such as hedge funds and big Wall Street traders. Combined with the effects of a 24-hour market and the unusual inner workings of ETFs, that trading can distort prices on days such as Feb. 27 and March 13 when the market swooned. Some investors who sold amid the turmoil got significantly less for their ETF shares than the underlying assets were worth.

It's quite true that this is a disadvantage of the funds -- if you decide to, like a lemming, dump your shares when everyone else is trying to as well. But history has demonstrated that panic-selling can only lead to disaster for investors. Where some might see disadvantages in the volatility of ETFs, savvier investors can profit from them. One strategy for avoiding being bitten by panic-selling in ETFs is to never buy when the price is at a substantial premium to the net asset value (the net value of the underlying securities held by the fund), nor sell at a large, one-time only discount. In funds that normally trade in a tight range around their NAV, these situations are signs of extremes in investor sentiment. When investors are dumping shares well below their NAV, that is a sign of panic.

As Benjamin Graham used to say "The secret of making money on Wall Street is to be greedy when others are fearful and fearful when others are greedy."

Panic-selling a problem for ETFs? Not necessarily! originally appeared on BloggingStocks on Sun, 08 Apr 2007 08:10:00 EST. Please see our terms for use of feeds.

DOW closes at a new high originally appeared on BloggingStocks on Thu, 14 Dec 2006 17:48:00 EST. Please see our terms for use of feeds.

Engadget Index up $19.20 on first day 'trading' originally appeared on BloggingStocks on Thu, 26 Oct 2006 18:02:00 EST. Please see our terms for use of feeds.

New high: are you this optimistic? originally appeared on BloggingStocks on Mon, 23 Oct 2006 18:37:00 EST. Please see our terms for use of feeds.

• 3M Company (NYSE:MMM), $79.20 up 3.66% today; 52-week high $88.35; 52-week low $67.05. P/E 17.47. Latest quarter results show it is up 6% on LCD growth. I think that P/E is nice and low for a company which, despite its industrial roots, is really an innovative company that actually makes things that people want. A good 10% below the 52-week high sounds like lots of room to me.

Continue reading Dow 12,000: Where to go from here? Five stocks with room to zoom

Dow 12,000: Where to go from here? Five stocks with room to zoom originally appeared on BloggingStocks on Fri, 20 Oct 2006 16:46:00 EST. Please see our terms for use of feeds.

I'm looking at my screen and I rub my eyes. Could it be? On the left-hand column I read a headline, "Slowing Economy Spurs Bond Rally." Over there in the side bar is the cute box that shows the Dow Jones Industrial Average and the S&P 500. The chart spikes peppily. "11610.55" is the bright number next to DJIA. "1330.60" reads the S&P 500 -- its five-year high. [Update: at market close, the S&P 500 had hit a brand-new five-year high of 1336.34, with the DJIA at its 2006 high and second-highest close ever, 16669.39.] The world is full of bright, happy green that seems to belie the sad economic data, the slow in advertising, the doom for American autos.

Could it be true?

It seems as if it is. One one side we have the DJIA and the S&P 500. The Dow's all-time high is 11,750 (140 90-ish points away), while the all-time closing high is only 11,722 (that's 111.45 52.61 points away from right now, if you're counting along with me). The S&P is raring to go, as well, creeping ever so slowly up towards its all-time high of 1,552 (although it's still 222 215 points away, 16.6% 16.1%). Strikingly, the current level is higher than the index has been for five-and-a-half years.

And yet, still, economy slumps, slows, dips, weakens. Why are consumers so confident, why are investors eagerly buying up stocks, while the rest of the indicators seem to warn them away? I've searched my brain for a creative answer, and can't discover one. What do you think?

Dow, S&P near all-time highs while economy slumps. Why? originally appeared on BloggingStocks on Tue, 26 Sep 2006 17:37:00 EST. Please see our terms for use of feeds.