Sunday, January 30, 2005

all hands on deck

January 26,2005
Ok, Ok it the worst start for the market since 1982, but what happened in August of 1982? The start of the major bull market that went from 1982 till 2000 producing outsized returns close to 15% a year and pushing the DOW from just under 1000 to over
12000. It gets particularly ugly for the short term investor just prior to the start of the next secular Bull market. Post bubble time periods share many of the same trading phenomenon; first and for most Index Funds tend to underperform the market as the Indexes themselves seem to tread water showing little or no direction. 2nd Momentum investing fails to produce consistent returns and stock pickers out perform. We may have period of lower highs and lower lows punctuated by big short term rallies and longer sell offs. Investors should be using these sell offs to accumulate positions in equities. Once many of the optimists throw in the towel on the market, overwhelming pessimism will signal the beginning of a new super bull market. Look for a big bump up in volume to signal the turn.

The other big issues that has begun to trouble me more and more is the attempt some politicians to tell you how to invest and know what right for you based on after the fact information. As a financial professional I consider it part of my job to protect you and your money from the media, the firms, the industry and yourself, but I am going to add one more group Uncle Sam and his minions of regulators namely at the moment Elliot Spitzer (NY Attorney General). Though Mr .Spitzer has positioned himself as the white night for the small investor and on many issues like getting directors of companies like ENRON to pay up he can not be impugned, but he is going a bit to far when he starts to interfere with the investment process deciding which type of mutual fund pricing structure is right for you. Only you know your particular situation and can weigh the funds pricing structure which best meets your plan and goals and your needs. Mr. Spitzer would be better to spend his time protecting the public from over inflated asset valuations based on false premises ie…political corruption and bad accounting.

And finally despite efforts by terrorist and their allies in the media and in the US Senate to stop the move toward freedom and democracy, Iraq will hold historic elections. People have the right to determine there own destiny. The secret weapon of all democracies is women. Women of Iraq will prevail and vote in great numbers .No mother wants their son or daughter to grow up to be a suicide bomber. The vote of women has done much to destroy the Taliban as a political force and other tyrannies. Women set free to express their voice also brought Japan from an absolute tyranny to the more open global competitor and the ally that it is today. Liberty is calling and the people of Iraq will answer in great numbers. Democracy is a process not an end result. It is not lost on those who defend our freedom that the forces of tyranny and nihilism emanate primarily from the part of the world that has seen the smallest growth in freedom and democracy. While the amount of Democracies in the world has almost doubled in the last 30 years the mid east stands alone in the lack of participation. At the moment Israel is the only representative democracy. What does this all have to do with the stock market? Freedom and Democracy lead to stability, prosperity and peace and in case you missed the last 20 years, that’s good for the stock market!


Wednesday, January 19, 2005

fortune favors the bold..........


Year 2004

12/31/03 12/31/04 2004
Close Close Performance

DJIA 10,453.90 10,783.01 Up 3.15%

S&P 500 1,111.92 1,211.92 Up 8.99%

NASDAQ 2,003.37 2,175.44 Up 8.59%

Russell 2000 556.91 651.57 Up 16.99%

January 7, 2004

Dan, Dan duck an cover, where are you Dan….when the going got tuff Dan is no where to be found…courage Dan, Courage…So far the January effect has been noticeable absent . Buyers seem disgruntled, while sellers greet each day with glee. Each passing day has given the sellers a new reason to sell. Many of the reasons to sell are met with “myopic zeal”, and most of the reasons seem fallacious and recycled; like there is no political bias at CBS, or smoking gives you cancer, or consumer spending will slow down or most likely it is Roger Ailes fault or Bush or the bloggers or the FED or the budget, trade or some other deficit. Yes folks it is glum and the end is near. The trade deficit continues to grow because our economy is still growing faster than our trading partners. Because consumers are forced to save so much money shopping at wall mart, they continue to spend on new cars and new homes. Things simple could not get any worse. In fact the real “axis of evil” tax cuts, Karl Rove and Halliburton have managed one more awful result, the budget deficit is actually declining. Be very, very quite don’t tell anyone but the tax cuts caused and increase in revenues of 10.5 % while government spending during a war only increased 6.1% .Yes I know the old folks only get free medicine not free booze and mid night basketball was cancelled, but hey we all gotta make sacrifices.

If you’re “tired of the freak show of political pornography”, and are pondering why so often good news gets met with grunts and groans, I have a few ideas as to why the market has clearly lost it’s mojo. First the Iraqi election has the terrorist and their backers (Iran, Syria and others) scrambling to do as much destruction as possible because they know this election will signal the end of the legitimacy of the tyrannies that govern the mid east. Obviously oil facilities are in direct threat and there for so is the fuel that propels the worlds engine. 2nd It is becoming more and more obvious that the “insurgency” in Iraqi is being financed and fueled and fought by outside forces ,except for the remnants of the old Bathest Regime. They have no popular or religious backing what so ever. This implies that these forces will have to be dealt with. Rumors are circulating that Syria may be next and the offensive will come as early as February right after the Iraqi election. 3rd some of our “friends” in the mid east like Saudi Arabia may also oppose a free and independent Iraq. A friendly Iraq will lessen our dependence on their oil and put pressure on others in the mid east to form more open and representative societies.

And finally it seems the cost of the Presidential Inauguration has gotten some peoples skirts up .If the New York Yankees can have a $201 million dollar payroll on a baseball team and the UN can skin at lest 1.4 billion from the oil for food program or better put from the starving mouths of Iraqi children, I hardly think $40 million dollars in private donations is a big deal one way or the other. And what about those gift bags at the Golden Globes, some say they were worth $40 thousand a bag no scaling back there. I need to get out more.

Remember you can “bork” but you can only “bork” so often


10:17 ET 2005 Will Be A Good Year : 2005 is bound to a good year for the stock market. Why? Because all years that end in a "5" have been good years. There is no rational explanation for it, but the years ending in "5" have all been years of positive returns for the stock market. The following table illustrates the total returns of the market, measured by the S&P500 since 1905. (The S&P500 did not exist prior to 1950, the earlier historical returns are reconstructed returns.) (BRIEFING.COM)
Total Return %
1905 7.0
1915 14.0
1925 13.0
1935 46.0
1945 35.7
1955 31.0
1965 12.3
1975 36.9
1985 31.1
1995 34.0
No Guarantee The above trend is more than 100 years old with a 100% accuracy.

Wednesday, January 05, 2005


December 27, 2004


*First a quick note on the Tsunami: I find it very disgusting that any one would use a tragedy of this magnitude to make cheap political points. Spending and giving someone else’s money is not charity, it is mooching! Since the UN has proven time and time again that they do not have the ability to act decisively in a crisis there is no reason to think that they can contribute anything positive to this crisis. The UN has once again demonstrated their failure of leadership and their failure to act. President Bush has wisely circumvented the UN bureaucracy and skimming machine, delivering aid directly with our allies in Japan, India, Australia and Great Brittan to the areas affected.

Folks this is my year end market letter, so like everyone else I’ll try to pick the winners and the losers, separate the wheat from the chaff and separate the boys from the men. It is a tall order given the markets propensity to make pundits consistently look like fools. Recent moves in the market since the November election only reconfirm my earlier prognostications. Succinctly speaking; the economy will boom and the stock market will zoom. While the nay-sayers in the mainstream media will continue to harp that the end is near, and it is all George Bush’s fault, the reality is far different. Inflations continues to remain under control, interest rates despite raises remain low, consumer spending and housing continue at a brisk pace, energy prices will continue in their fall ,productivity will grow like a weed, payroll employment will continue to increase and new business formation will flourish. Yes, I am very bullish.

So instead of reminiscing about 2004’s have’s and have not’s, winners and losers, the two Americas ,where are the WMD’s, where they aren’t, whose axis of evil anyway, super bowl half times shows, not my president, Grey Davis, Howard Stern, Gay Marriage , the death of a president ,1000 causalities ,too prolif or not, global warming ,global cooling ,graying of snow, the yellowing of snow, the ice caps are melting, Halliburton, FOX/CNN, too Google, old media ,new media, you’re fired, red sox, red states ,blue states or pink states, Jesus land ,massive right wing conspiracy, it’s a quagmire ,to vote or not ,presidential libraries or trailer parks, the Swifties, Mekong delta, war hero for who, and recounts and recounts and recounts oh my……
So if all this leaves you confused , empty and blue (or red) the most important thing to remember are those years ending in 5 always seem to be up! In 1995, the S&P 500 Index was up 34.1 percent. In 1985, the S&P 500 was up 26.3 percent. In 1975, the Index was up 31.5 percent. In 1965, the S&P 500 was up 9.1 percent. In 1955, the S&P 500 was up 26.4 percent and in 1945; the index was up 30.7 percent. I make no promises I am just telling the numbers just the facts mam, just the facts.

Happy New Year and thank you again for all the referrals!


I want to say Happy Birthday to our beloved web designer Kristine D Paige (January 2 ….)

Sunday, January 02, 2005

you go with the army you have not the army you want

December 16, 2004


Today is the 60th anniversary of the battle of the bulge and that brings to mind a few lessons about war. The war in Europe was considered over then out of nowhere in one of the worst winters, with no air cover the Germans attacked with troops they weren’t supposed to have, with equipment they were not supposed to have, to win a war that was considered lost. Our troops were unprepared, our Generals were considered incompetent, our supplies were wrong, our equipment was poor, and our infantry was in short supply. Seems the problem with wars is that the enemy gets in the way of our best laid plans.

By the way the congress approves all military spending, allocates all the money and overseas how the money was spent, and reviews all the intelligence. Criticizing the secretary of defense or anyone else for that matter for congressional failings is a bit offensive. Congress needs to contribute more than ,telling the public to go about your business after 9/11,while they take time off and run home to hide ,but only after giving themselves an other pay raise.

It is office party season, who got invited to what? Did you get invited? Seems the party these days on Wall Street is the erge to merge, Johnson and Johnson eyes Guidant, Nextel courts Sprint, but wait now maybe it is Verizon ,Symantec goes after Veritas and Oracle finally gets with People soft and so it goes. What does all this tell us about the market, seems the big money sees a lot of bargains out there and so should you.

Bernard Kerik recently stepped aside as the Presidents nomination for Home Land Security Czar it seems he is being accused of being involved in a bum Real-estate deal, two extra marital affairs, polygamy, ties to the mob and an undocumented alien nanny, sounds like a good candidate for the next Governor of New Jersey.

Happy Holidays!