On Friday, hedge fund manager Daniel Loeb, manager of the $3.3 billion Third Point Partners, sent his second quarter letter to his partners. The letter, which criticizes heavy handed government policy for stifling economic recovery, is causing a stir and has been circulating widely among the moneyed elite, according to Andrew Ross Sorkin (“Why Wall St. Is Deserting Obama”, Andrew Ross Sorkin, The New York Times, August 31, B1).
On the tipping point for the correction in financial markets since April:
It is apparent to us that the turning point in both investor and consumer confidence came on April 16th, with the filing of the government’s suit against Goldman Sachs overs its mortgage CDO activities.
On the recent Credit Card law:
A well-intentioned government program gone awry is the new CARD Act that restricts banks from repricing interest rates on borrowers who fail to meet their revolving credit obligations. The effect of this legal prohibition has been to force the banks to raise the interest rate paid by all borrowers, to compensate for losses they are now being forced to take on delinquent borrowers.
On how government policy is effecting the management of his fund:
We have given a great deal of thought about the impact that public policy has on individual companies, industries, and the economy generally. It was this decision framework that led us to shed our investments in large cap US banks in January due to concerns over increasing regulatory headwinds (in advance of the announcement of the Volcker Rule). We have also sold other regulated industries and eliminated our position in Wellpoint, an HMO that is a statistically cheap stock owned by several hedge funds, but which we saw as being overly exposed to unpredictable government regulation.
On the other hand, our perspective on the government’s increased willingness to use regulatory muscle enhanced our short positions in the for-profit education space.
NOTE: Every week I write a Client Note for my clients. For a limited time, I am allowing non-clients to sign up and receive the Client Note. You can sign up at the top right hand corner of the website. I will also be posting the notes on my blog with a 24-48 hour delay from time to time. Here is this week’s.
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I’m as befuddled as anyone. This is a blow-away August. Yet I can’t call it a trend.
- Mark Shafir, Global Head of Mergers & Acquisitions at Citigroup
I’m an avid golfer, and I have yet to play in August.
- Robert Profusek, Head of Mergers & Acquisitions at law firm Jones Day
Two Monday’s ago (August 16) computer maker Dell (DELL) reached a deal with cloud storage company 3Par (PAR) to acquire all its outstanding stock for $18 a share in cash ($1.15 billion total) - more than an 80% premium to its Friday close.
That Thursday, Intel (INTC) surprised the investment world when it announced a $48 per share, all-cash, deal ($7.65 billion total) to acquire security software maker McAfee (MFE) - a 60% premium to its close the day before.
On Monday, Hewlett Packard (HPQ) jumped into the game, trumping Dell by offering $24 a share in cash or $1.6 billion for 3Par.
Shareholders of McAfee and 3Par are obviously thrilled and investors have been busy buying up the shares of other potential acquisitions.
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This sort of deal making usually gets the market excited but, paradoxically, the S&P has lost about 2.5% since Dell announced its acquisition of 3Par. In fact, the S&P is close to testing its lows for the year and more than 5% of NYSE traded stocks closed at 52-week lows on Tuesday. Jim Cramer captured the mood of the market when he wrote “It’s really, really ugly out there.”
Individual investors, especially, don’t seem to have much of an appetite for stocks. After piling into domestic stock mutual funds from 1991 through 2006, investors have pulled almost $300 billion from them since the beginning of 2007, including $33 billion through the first seven months of this year.
Instead, they have been plowing money into bond funds, almost $800 billion since the beginning of 2007, including $185 billion in the first seven months of this year (“In Striking Shift, Small Investors Flee Stock Market”, Graham Bowley, The New York Times , Sunday August 22, A1).
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My strategy is to try to pick up nickels and dimes in front of a bulldozer, as I heard one financial advisor characterize it on CNBC.
One strategy I have been employing is buying high dividend paying stocks and then selling out-of-the-money covered calls on them to bring in a little more income. When most people hear “options”, they think risk. However, this strategy is extremely conservative as we are the ones selling the options to a buyer who wants to speculate. We get the option premium up front in exchange for capping our gains on the upside. I’m happy to make this deal as I don’t see a lot of upside in the near future. I described this strategy in a Client Note from February: “Top Gun FP Client Note: Two Stocks For A Range Bound Market”, Top Gun FP, February 19, 2010.
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Another strategy that I just last week put into effect is known as merger arbitrage. When a company signs a deal to be acquired, the shares generally rise towards the acquisition price. However, there is always a risk that the deal won’t get done. Therefore, the shares usually don’t rise all the way to the deal price. Sometimes they do, or even higher, if investors think another, higher bid is likely.
That’s where merger arbitragers come into play. They will buy up the shares, hoping to profit from the difference between the market price and the deal price. For instance, let’s say a stock is trading at $25 when it is announced that the company is to be acquired for $30. The stock will rise towards the deal price, say $29. At that point, most shareholders will be happy to sell and move on. Merger arbitragers will buy the shares from them and take the extra $1 when the deal closes.
It might not seem like a lot but it can be a safe and profitable strategy. $1 on a $29 investment is only 3.5%. However, in most cases it does not take a full year for a deal to close. If it takes only 6 months, this means a 7% annualized return. If it takes only 4 months, the annualized return increases to almost 11%. Add in leverage and the returns can be amplified. Finally, there is always the possibility of a higher bid coming in, further boosting returns.
Of course, there is the risk that the deal falls apart. In this case, the stock generally collapses back down to the pre-acquisition trading price and the arbitrager can take quite a hit.
With a number of mergers being announced in the last couple of weeks, there are some opportunities here. For example, Intel signed a deal to acquire McAfee for $48 a share last Thursday. McAfee’s shares closed that day at $47 and continue to trade around that level. That reflects the risk the deal might not get done.
In this case, however, the odds are extremely high that the deal will go through. Intel has more than $12 billion in cash, cash equivalents and short term securities on its balance sheet - more than enough to pay the $7.65 billion to acquire McAfee. They may very well get some financing because of the low rates currently available, but they don’t need it.
The price represents a 60% premium to McAfee’s closing price the day before and is higher than McAfee shares have traded at any point in time since early 1999. McAfee shareholders are likely to approve the deal.
I also think the deal is likely to get done by the end of the year. The Bush tax cuts expire at the end of the year and the capital gains tax rate will increase from 15% to 20%. That means extra capital gains taxes for McAfee shareholders. They are likely to push to close the deal before year end to avoid higher capital gains taxes.
Finally, there is the possibility - though remote - of a higher bid. Cisco, Microsoft, Hewlett Packard, Google and Apple all have plenty cash on their balance sheet to do a deal. Perhaps they will come in with a higher offer.
A $1 return on a $47 investment equals 2.13%. If I’m right that the deal gets done by the end of the year, that means a 4-month holding period and a 6.5% annualized return. I have been holding a lot of cash in client accounts due to market conditions and this represents a significantly better return than we have been getting on that cash.
There are risks but there is also the possibility of more upside. It strikes me as a good way to try to pick up some nickels and dimes in front of a bulldozer.
SPECIAL OFFER - FREE INVESTMENT REVIEW: For a limited time I am offering a free investment review. Pick any stock, bond, ETF or mutual fund. I will do a comprehensive fundamental/macro/technical analysis, write a concise analyst report, and consult with you for 30 minutes by phone or in person for free.
NOTE: Every week I write a Client Note for my clients. For a limited time, I am allowing non-clients to sign up and receive the Client Note. You can sign up at the top right hand corner of the website. I will also be posting the notes on my blog with a 24-48 hour delay from time to time. Here is this week’s.
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The pace of recovery in output and employment has slowed in recent months.
Those words from the Federal Reserve on Tuesday have reverberated across worldwide financial markets over the last two days. Emphasizing their outlook, the Fed made the decision to reinvest the proceeds from maturing agency bond and mortgage backed securities in treasuries in order to hold their balance sheet steady.
The downgrade of the economy marks an important shift in the Fed’s outlook which had been improving over the last year and a half. On June 24, 2009, they said “the pace of economic contraction is slowing.” On August 12, 2009, they said “economic activity is levelling out.” On September 23, 2009, we got “economic activity has picked up following its severe downturn.” Note the substitution of “picked up” for “levelling out” as their adjective of choice to describe the economy.
The Fed used the phrase “continued to pick up” to characterize the economy in November and December 2009. In their January, March and April statements from this year, they wrote “economic activity has continued to strengthen”. Bernanke gave a speech on exit strategies in February. In June, the economic recovery was “proceeding”.
Now, however, the recovery has “slowed”. “Levelling out”, “picked up”, “strengthened”, “proceeding”, “slowed”. The Fed chooses its words very carefully. Businessmen and investors everywhere pay attention to the outlook of the most powerful economic institution in the world. Hence, we got a shift in sentiment and a reversal of the risk trade.
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We are seeing a large number of mixed signals in both the market and from our customer’s expectations, and we think the words unusual and uncertainty are an accurate description of what is occurring.
Following on the Fed, on Wednesday afternoon’s conference call Cisco (CSCO) CEO John Chambers said a number of things that corroborate the Fed. His customers are worried about the economy and uncertain about the future. As a result, Cisco is to some extent as well.
Chambers comments carry a lot of weight because he has been ahead of the curve in the current cycle. He was early in recognizing the slowdown when he forecasted “lumpy” US sales going forward in November 2007. And he was early in recognizing the recovery when he suggested a “tipping point” in August 2009.
Cisco shares were off 10% on heavy volume on Thursday dragging the broader market down.
YTD Performance (through 8/6)
S&P: +0.59%
DJ Total: +1.59%
Top Gun: +2.02%
SPECIAL OFFER - FREE INVESTMENT REVIEW: For a limited time I am offering a free investment review. Pick any stock, bond, ETF or mutual fund. I will do a comprehensive fundamental/macro/technical analysis, write a concise analyst report, and consult with you for 30 minutes by phone or in person for free.
The primary driver of today’s selloff is concerns about Cisco’s (CSCO) forecast. Cisco reported a good quarter after the close yesterday, even though revenues of $10.84 billion fell $40 million short of analyst estimates. But CEO John Chambers was a little more cautious on the conference call than he was last quarter when he said “It doesn’t get any better than this”.
Chambers has been excellent in forecasting the economy in the last couple of years so when he speaks, people listen. He was one of the first to see the recession coming when he said US sales going forward would be “lumpy” in November 2007. And he was one of the first to note the emerging recovery when he cited a “tipping point” in August 2009.
Cisco’s shares are getting whacked today, down almost 10% knocking off more than $13 billion in market cap from the company. That’s definitely an overreaction based on the earnings report, but investors rightly place a lot of stock in Chambers views.
Chambers was on CNBC this morning pointing out the strength of the quarter and doing damage control. But it’s not having an impact today.
Disclosure: Top Gun has no position in Cisco (CSCO) shares.
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.
There was endless speculation about what the Fed would do at this meeting leading up to it. The Wall Street Journal ran a front page story last Tuesday suggesting that they were “mulling” something like this:
The issue: Whether to use cash the Fed receives when its mortgage-bond holdings mature to buy new mortgage or Treasury bonds, instead of allowing its portfolio to shrink gradually, as it is expected to do in the months ahead. Any change—only four months after the Fed ended its massive bond-buying program—would signal deepening concern about the economic outlook. If the Fed’s forecast deteriorates significantly, it could also be a precursor to bigger efforts to pump money into the economy (“Fed Mulls Symbolic Shift: Officials Consider Putting More Money Into Bond Market As Recovery Wavers”, Jon Hilsenrath, The Wall Street Journal, August 3, A1).
This not a huge new Quantitative Easing 2.0 program. It is real money - about $200 billion this year according to the WSJ article - but it is more symbolic of the Fed’s willingness to do whatever necessary to support the economy.
Two weeks ago, Fed Chairman Ben Bernanke gave his semiannual testimony before Congress on monetary policy. The phrase everybody latched onto was “unusually uncertain”. The S&P tanked 20 points in the aftermath of this comment.
Nevertheless, financial markets worldwide put in a notable rally in July. The S&P tacked on 71 points or 6.9%. Volume was quite light with NYSE composite average volume of only 4.6 billion shares a day - 13% below the daily average for the first half of the year. Copper also put in a solid move from the high-$2 to the mid-$3 range.
One big catalyst for the rally was the recovery of financial markets in Europe. European stock markets in general outperformed the S&P. The Euro rallied from the low $1.20s to the low $1.30s. Spreads on European sovereign debt such as Greece, Portugal and Spain all narrowed compared to Germany. Credit default swap prices also eased for these countries (see “Rays Of Optimism Shine On Europe”, The Wall Street Journal, July 28, C1).
Also supporting financial markets, 2nd quarter earnings have met or even exceeded high expectations.
Even so, we remain in the middle of a wide trading range established by the April high around 1220 and the July low around 1020.
Yesterday’s (Monday) surge pushed us up toward the June highs on the S&P around 1130. If we could break those to the upside that would be something. Alternatively, failure here could establish a double top around 1130 creating a subsumed trading range between 1020 and 1130.
Feeding into the malaise is speculation about deflation. Last Thursday, St. Louis Fed President James Bullard raised the possibility of a Japanese style deflation and recommended more quantitative easing as the cure. The Wall Street Journal wrote an article yesterday about a few big investors who are forecasting deflation, most prominently Bill Gross of PIMCO (“Big Investors Fear Deflation: Bill Gross Among Those Bracing For Possible Decline In Prices: ‘It’s Happening’”, Gregory Zuckerman, The Wall Street Journal, August 2, C1).
Providing support for their contention, consumer goods giant Procter & Gamble (PG), maker of such famous brands as Tide, Crest and Gillette, reported a 1% drop in prices for the quarter ended June 30 compared to the year ago period. They also reported a 1% drop in prices for the quarter ended March 31.
Corresponding to the financial and economic stagnation are increasing signs of political division and conflict:
The Obama Administration filed a lawsuit to stop the implementation of Arizona’s law to control illegal immigration.
The Los Angeles Times reported that the City Manager of Bell, CA was receiving an annual salary of almost $800,000 a year creating a firestorm (“Is A City Manager Worth $800,000?”, The Los Angeles Times, July 15).
John Kerry came under fire for buying and docking his new $7 million yacht, Isabel, in Rhode Island, avoiding Massachusetts 6.25% sales tax and 1% annual excise tax on yachts, while supporting the expiration of the Bush tax cuts for the wealthy. Rhode Island repealed its Boat Sales And Use Tax in 1993 making it a haven for yacht owners (“Sen. John Kerry Skips Town On Sails Tax”, The Boston Herald, July 23).
In an Op-Ed in today’s New York Times titled “Welcome To The Recovery”, Treasury Secretary Tim Geithner claimed that we are on our way to recovery and credited the Obama Administration’s policies:
The economic rescue package that President Obama put in place was essential to turning the economy around. The combined effect of government actions taken over the past two years — the stimulus package, the stress tests and recapitalization of the banks, the restructuring of the American car industry and the many steps taken by the Federal Reserve — were extremely effective in stopping the freefall and restarting the economy.
Does anybody believe him? Consider me a cynic. All in all, it feels like neither a bull market or a bear market but a blah market.
A few weeks ago, Mark Hulbert started a debate over the value of Death Crosses - which I mentioned in my Client Note from two weeks ago - in a column for MarketWatch (“The Kiss Of The Death Cross”, Mark Hulbert, MarketWatch, July 9). Hulbert claimed that the Death Cross was a good indicator of bearish stock market performance going forward for most of the 20th century but that it has failed over the last 20 years:
It turns out that the death cross has had a mediocre track record at best over the last two decades. To be sure, it’s had some great recent successes — such as the one that occurred in December 2007, very early in the 2007-2009 bear market. But there have been a number of other failures — such as one that occurred in October 2005, in the middle of the 2002-2007 bull market.
Overall, in fact, there has been no statistically significant difference since 1990 between the average performance following death crosses and all other market sessions.
Both Mebane Faber and MarketSci have disputed Hulbert’s claim. In fact, they argue, the Death Cross has especially shined in the last decade as it guided investors to dodge most of two nasty bear markets.
Two charts illustrate their case. The first is from Mebane Faber and shows the performance of a buy and hold strategy versus one selling and moving to a bond fund after a Death Cross since 1990.
The second chart is from MarketSci and shows market performance during Golden Crosses versus Death Crosses since 1930.
One potential source for the dispute is that Hulbert uses the Dow Jones Average while Faber and MarketSci use the S&P 500.
At any rate, the evidence suggests to me that the Death Cross is a valuable indicator though there is no Holy Grail. Use it as a part of your overall market analysis in conjunction with many other technical, fundamental and macro pieces.
The financial-overhaul bill that will be signed into law by President Barack Obama on Wednesday won’t address one of the most far-reaching consequences of the recent crisis: Market power is concentrating in the hands of the nation’s largest banks.
Fortified by infusions of taxpayer capital and takeovers of other large institutions killed or wounded in the crisis, a handful of hulking banks is emerging from the mess to dominate everything from mortgages to checking accounts to small-business loans. The financial-regulation law will bring new shackles and oversight, likely to cost the big banks billions in revenue. But their growing supremacy will help them absorb the blow.
Bank of America, J.P. Morgan and Wells Fargo now have 33% of all U.S. deposits, up from 21% in mid-2007—the fastest shift of such a large chunk of deposits in U.S. history. Much of the gain came from their acquisitions of Countrywide Financial Corp., Washington Mutual Inc. and Wachovia Corp., respectively.
The three huge banks made 57% of all home mortgages in the first quarter, up from 28% in 2008, according to Inside Mortgage Finance, an industry newsletter. In 2008 and 2009, they got $95 billion in capital from the U.S. government, all of which they have repaid.
Measured in loans and other assets, Citigroup Inc. and the three other giants had $7.7 trillion as of March 31, up 56% since the end of 2007. Their combined assets are nearly twice as big as the assets of the next 46 biggest banks, according to SNL Financial, a research firm in Charlottesville, Va.
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“Concentration on the national level is something that ought to be of concern to policy makers” because it means “fewer choices and less-competitive pricing” for small businesses and consumers, says William Isaac, the chairman of the Federal Deposit Insurance Corp. from 1981 to 1985.
Possibly even worse, the consolidation puts more risk “in fewer and fewer hands, so when mistakes are made, they are doozies.”
In finance, as in other realms of business life, social polish doesn’t always go with capitalist success. Often it is the most narrow, intense, awkward people who start the best companies, employ the most people and create the most value.
Sadly, this recovery has been great for princes and horrible for grinds. The people who work at the big corporations are critical of the Obama administration, but the fact is they are doing very well. The big companies are posting excellent earnings. They’re sitting on mountains of cash.
The aspiring grinds, meanwhile, are dead in the water. Small businesses are not growing. They are not hiring. They are struggling to stay alive.
Princes can thrive in a period of slow, steady growth, but grinds need a certain sort of psychological atmosphere. They need a wide-open economy with plenty of creative destruction. They need an atmosphere of general confidence, so bankers will feel secure enough to lend them money, so big companies will feel brave enough to acquire their start-ups, so they themselves will feel the time is ripe to take on their world and show their brilliance to all of humanity.
The princes can thrive while the government intervenes in the private sector. They’ve got the lobbyists and the connections. The grinds, needless to say, don’t.
Over the past decade, professionals — lawyers, regulators and legislators — have inserted themselves into more and more economic realms. The princes are perfectly at home amid these tax breaks, low-interest loans and public-private partnerships. They went to the same schools as the professionals and speak the same language. The grinds try to stay far away and regard the interlocking network of corporate-government schmoozing with undisguised contempt.
NOTE: Every week I write a Client Note for my clients. For a limited time, I am allowing non-clients to sign up and receive the Client Note. You can sign up at the top right hand corner of the website. I will also be posting the notes on my blog with a 24-48 hour delay from time to time. Here is this week’s.
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Is the correction in stocks from the April highs almost over? Or is it more than a correction - is it the beginning of a new bear market?
The answer depends critically on what you think the economy will do. The idea that we’re going to have a “V-shaped”‘ recovery, so widespread near the top for stocks in April, seems off the table. Now everyone is expecting a “double dip” recession. If that happens, then stocks are headed a lot lower.
We never actually had much of a “V-shaped” economic recovery to begin with. So if the economy is headed south from here, it will be ugly. But I really don’t think that’s going to happen.
There is a huge debate now raging in the market between the bulls and bears.
For the most part, those who subscribe to fundamental analysis are bullish. And for good reason.
Tuesday afternoon, Intel (INTC) reported “the best quarter in the company’s 42 year history” according to CEO Paul Otellini. Revenues were up 34% from the year ago period and were the highest of any quarter in the company’s history - slightly topping the previous record from the 4th quarter of 2007. Net income of $2.9 billion was up 175% from the year ago period and just below the all-time record from the 4th quarter of 2009.
Further, Intel’s stock appears to be a bargain on the basis of fundamentals. Shares closed at $21.36 today (Wednesday). Intel has about $3 in net cash and short term investments on its balance sheet so you get the business for a little over $18. Over the last four quarters, Intel earned $1.82. Do the math and you get a trailing P/E of 10. That for a leading blue chip company with the dominant market share in its industry.
Monday’s report from railroad operator CSX (CSX) was similarly impressive. Revenues up 22% on a 13% increase in volume and an 8% increase in revenue per unit resulting in a 47% increase in net income from the year ago period.
No wonder the fundamentalists see the recent selloff as a buying opportunity.
Tuesday on his Mad Money show, Jim Cramer went off on the “eggheads” calling for a double dip recession who have probably never even looked at a balance sheet. According to Cramer, these academic economists have no clue and are missing what’s going on on the ground as evidenced by recent company reports. Hedge fund manager Doug Kass went at things from the same angle Monday night on Kudlow & Company. Both were compelling and worth watching.
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On the other side are those who are alarmed by the recent market action. Explicitly or implicitly they are technicians. The market action since late April has been dreadful. Even after the recent rally, the S&P at its close Wednesday was off 122 points (10%) from its April 23 closing high. It has broken below both its 50 and 200 day moving averages. Volume is notably higher on down days as compared to up days.
More recently, the S&P’s 50 DMA broke below its 200 DMA in what is known as a “Death Cross”. The last death cross occurred in December 2007 and we all know what ensued after that. Ed Yardeni of Yardeni Research said that every bear market since 1972 has been marked by a death cross (“Dark Omen Threatens Stock-Market Bulls”, Kelly Evans, Ahead of the Tape, The Wall Street Journal, July 1, C1).
That said, the death cross is not a surefire indicator of a coming bear market. In addition to December 2007, it was an accurate indicator in October 2000. But it prematurely signalled the end to the previous two bull markets in July 2006, August 2004, September 1998 and April 1994. To put it in logical terms, a death cross seems to be a necessary but not sufficient condition for a bear market.
Who should we believe?
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One of the reasons you haven’t heard from me lately is that I made a cross country trip to Alexandria, VA where I delivered a talk and sat on a panel on the subject of “Ayn Rand and Investing”.
In my talk, I reviewed the two main schools of investing - fundamental and technical - and how each side tends to have disdain for the other. The fundamentalists dismiss technical analysis as voodoo and superstition. The technicians laugh at the fundamentalists for wasting their time on detailed company research they believe has little bearing on stock performance. As usual in most intellectual debates, each side has some part of the truth while mistakenly believing they have the whole.
The fundamentalists appear to be right that companies are showing solid revenue and earnings growth and are attractively valued. (We will find out more about the fundamentals as 2nd quarter earnings come out over the next few weeks). On the other hand, the market action is decidedly bearish.
My own investment philosophy synthesizes the two while adding in Austrian Economics. The core of Austrian Economics is an account of the boom and bust cycle. By understanding where we are in the boom and bust cycle that dominates economic and stock market performance over long periods of time, we are in a position to make better use of the information provided to us by fundamental and technical analysis.
Looking at the macroeconomy, we can see that many large imbalances still exist. Fundamentals based on the previous twelve months are compelling. However, the market is acting the way it is because it is sensing that the policy tailwinds that have propelled the stock market and company fundamentals over that time period are waning. The headwinds from the structural imbalances are beginning to reassert themselves and will condition corporate results going forward (see “Top Gun FP Client Note: Cyclical Tailwinds Versus Secular Headwinds”, Top Gun Financial, June 3). (The current situation has many parallels with the recession of 1937-38 which occurred after four years of economic growth during The Great Depression (for a recent analogy see “Governments Move To Cut Spending, In 1930s Echo”, David Leonhardt, The New York Times, June 30, A1)).
Long secular bull and bear markets have characterized the US stock market and economy at least since the beginning of the 20th century. I have argued many times before that we are in a secular bear market that began in 2000 (see “Top Gun FP Client Note: A Secular Bear Market”, Top Gun FP, July 7, 2009). It will end when the imbalances such as the budget and current account deficits as well as the distortions caused by the Fed’s actions over the last couple of years work themselves out. That won’t happen until policy becomes more responsible or more likely another crisis flushes the system in dramatic fashion creating a stable base on which the economy can build. Until then, the upside is limited.
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The 2nd quarter ended two weeks ago and here are the performance numbers:
S&P: -11.86%
DJ Total: -11.60%
Top Gun: -2.61%
SPECIAL OFFER - FREE INVESTMENT REVIEW: For a limited time I am offering a free investment review. Pick any stock, bond, ETF or mutual fund. I will do a comprehensive fundamental/macro/technical analysis, write a concise analyst report, and consult with you for 30 minutes by phone or in person for free.
