So, where are you guys doing with the long green? Here are some items and questions.
NEXT DOWN LEG. Somehow, I feel another airpocket out there from Iraq, oil$, and no-jobs. It's like an airpocket, in a vacuum surrounded, in a sh*t storm. Negativity and a bad solids-loading. But, how much further down in the market indexes? March and April are going to be interesting.
I've been using Bob Brinker's Marketimer. He is on hold, saying we are in a longterm bear, with pullout in the 2015 area. Along the way, he says there'll be short-term +30% rallies. So, subscribers all stay tuned. Any of your thoughts? Did any of you take his Jan 2000 call to sell?
As a chemist, I could not resist the urge to draw a baseline in the S&P 500 graphed out over the past 10-15 years, just like an HPLC chart. (Don't ask why. I'm nuts.) Anyway, from this, the S&P500 pulls back to 600-700 in 2004 to 2005, (depending upon what solvent ... just kidding.) Altogether, it looked like Dow=6000, S&P500=700, and NASDAQ=1200 were targets, from this perspective. (OK, go ahead and scream now.)
And DOW STOCK, that lovely Dow stock. I used to think that buy it at $24-25, and sell it at anything north of $29. Now, I'm not so sure. Could be I am waiting for the $oil and jobs dealy to get more favorable. Maybe I'm waiting for prices in the teens. Maybe both. What are your thoughts?
And INTEREST RATES ... Yikes!!! Have you seen the deficit? Even when the economy does turn, the demand for money is going to send rates to the moon. I hate exiting the GNMA fund Brinker recommends; nice returns. And refinancing my variable loan (now less than 4% on a jumbo), to lock in 5-6% seems to be called for, but unappetizing. Yet when the economy turns, the lending and paying on any notes could bleed the piggy bank if you're long the wrong way. What are you all doin?
Have a good week,
I'm not sure he'd like being lumped in with those affiliations: lawyers, politicians, insurance adjusters, and financial types out for grandma's buck. His weekend show has not been friendly to them on the radio.
Dow stock did nicely today.
Brinker doesn't give specific stock recommendations, beyond Microsoft and Vodaphone. But one can extrapolate.
So, for what it is worth, applying his March 11th projection of >25% gain in a short-term cyclical bull, one gets 1.25 x Closing_Price (March 11, 2003) = 1.25 x $25/share, or $31/share.
So at 11:15 PM today, $27.55 / $25 => 10%.
I know a lot of people that followed his call to buy QQQ's at 60. BAD CALL!
He also has been calling for a hugh rally within the next 12 months for almost two years now. BAD CALL!
He got lucky in January 2000 but lost his luck with every succeeding call.
His mutual fund recommendations aren't much better. Remember his favoring an investment in Firsthand e-commerce fund? Down over 60%.
Your assesment is pretty harsh. Here's where I agree/disagree with your comments.
Yeh, that QQQ @ 60 recommendation was a bust, but that is 1-for-2 on QQQ buy/sells. Still not bad. (And technically, the second sell is not officially in yet.)
"He also has been calling for a hugh rally within the next 12 months for almost two years now. BAD CALL!" There is not "buy" signal in yet for a short-term rally, as you can tell from the portfolio recommendation. Yes, his model has not turned positive, as he anticipated it would. But aren't you happy that it did not. So basically, he has not made a call yet to be "bad."
AGREE & DISAGREE
Yes, the "recommended list" First Hand Fund fell, but so did all the recommended and the portfolio equity funds. A key point is that First Hand is not in any of the portfolios; to me it was just "recommended" if you wanted to get into B-to-B. Look at the fixed income funds, which are in the portfolios and have been awesome. Vanguard GNMA up over 32% total return since call in Jan 2000. I think that's pretty good.
On the radio, Bob's a bit tedious for me. Mainly, the show's for long auto trip drives on weekends, or for the radio in the garage. Still, he's made the good calls so far, at least for me.
How do you look at the current and future situation, viz-a-viz, interest rates, market level, and the political scene?
I smell a storm a brewing too.
Not sure I follow your analysis though. Did you fit time vs. index value and extrapolate? Where did you get the indices data that span that wide date range? I've looked briefly and didn't find it in an easily useable format.
I would be interested in seeing a regression of Dow stock price vs. price of crude, price of LPG, Dow Jones Index, prime interest rate and a few other key economic indices (MLR).
If anyone knows where to get such historical data online please share this. I've been wanting (yeah, I'm a geek) to do this analysis but haven't spent the time looking for the data.
I guess you could do something similar with Dow Jones Index and see if a good correlation exists.
I also had about the same targets for Dow stock that you mention. I think if you buy at $24 and hold you could make some good money. The teens seems a little low. I heard something about $24 being a "magic" number. That the stock "cant" (shouldn't?) go much below that. Something to do with valuation and other things.
If anyone knows why Dow stock shouldn't go below $24 please share this.
Great to have people sharing this type of information/analysis here.
[More proof that I have too much to do and a low threshold to jump onto something else to avoid doing what I am supposed to.]
ANYWAY, I plotted up the price of Dow stock and the price of oil from 1977 to 2002. The resources are the historical quotes on yahoo (monthly) and the doe.gov site.
In the seven periods below, I found the:
In two, oil rose in price, and Dow went up or was unchanged.
In three, oil fell in price, and Dow went up twice and remained unchanged.
In one, oil was unchanged, and Dow went up and went down.
The underlying Bull Market from 1983 to early 2000 seemed to be the greatest factor in the rise of Dow stock. And this is not good news for Dow stock.
OK. Now back to ...
From 1977 to 1979, oil was around $14-15/bbl. Dow stock fell 35% from $2.69 to $2.00, or so.
From Jan 1979 to Jan 1981, oil ran up from $15 to $39/bbl, and the stock price actually rose from $2.00 to $3.28.
From Jan 1981 to Jan 1986, oil at $40/bbl eventually fell to $25/bbl. Dow rose from around $3.20 to $4.85. Note that the Bull Market started in 1983, giving Dow most of its wind from then on.
From Jan 1986 to Jan 1996, oil stayed in teh $15-$20/bbl range, except the short spike during the Gulf War. All that time, Dow rode the Bull from $5 to $22/sh, except for the downdrafts in Oct 1987 and in 1991.
From Jan 1996 to Jan 1999, oil eventually fell by half from over $22/bbl to $10/bbl. Interestingly, Dow rose about +$5 from around $20 to $25/sh.
From Jan 1999 to Nov 2000, oil triples in price from $10 to $30/bbl. Dow goes up and down in price, from $25 to around $38 and back to the $25-$30 range.
From Nov 2000 to Dec 2001, oil drops from $30 to $15 and jumps back to $25/bbl. Dow stock meanders in the $32 range.
"If anyone knows why Dow stock shouldn't go below $24 please share this."
Don't know why this would be a magic number except for the dividend rate at this stock price.
At Dow stock price of $29 div rate = 4.6%
At Dow stock price of $24 div rate = 5.6%
At Dow stock price of $19 div rate = 7.1%
Unless there was good reason to think that Dow would be cutting their dividend I don't think the market would let the stock get much below 24 at that div rate.
Not much of a reason, just an opinion.
(1) The S&P500 regression. Well that was just drawing lines with an "eye-pen." You can plot out the Yahoo financial chart for ^GPSC below; view with the plot on "linear."
Then, draw two lines. The first is a linear fit through the 1983 to 1995 data, and extend it past the present. The second is a line through the recent correction. The lines cross about 700. And true to all standard methods, I really can't recall how I got the Dow and NASDAQ numbers. I think it may have been the ratio of the S&P500 fall predicted in the plot that applied to these other indicies.
(2) Hey, I got the oil price data for you. Go to http://www.eia.doe.gov/cabs/chron.html and download an Excel spread sheet of the price of crude from 1970's to 2002. There could be better ones. Anytime petroleum numbers come up, the governments doe site is a good start.