SUMMARY - "PIG":
The Contrarian's View is published 11 times per year on a mostly-irregular schedule, and the views expressed are those of the author and editor, Nick Chase. Because nobody can predict the future, results of past suggestions or recommendations are no guarantee of future results. Material in this publication may be freely quoted provided proper attribution is given to its source. Subscription rate: Free on the Internet through the World-Wide Web service at Assumption College. Using your favorite Web-browsing program, Open URL http://nick.assumption.edu. Mailed paper subscriptions, one year for $39 to The Contrarian's View, 132 Moreland Street, Worcester, Massachusetts 01609. There is a limit of 50 paid subscribers at one time; please check for availability before sending any money. Sorry, Visa and Mastercard are not available. Overseas subscription rate, U.S. $54. Unsolicited material sent to us by UPS or by courier other than the postal service is refused and returned to sender! Phone: (508) 757-2881
Hah, I had you going there for a moment, didn't I?
At the current rate of progress, we are unlikely to see a meaningful bottom in the stock markets before next summer, more likely later in the year. (Of course, I keep hoping for that bottom to arrive sooner, because I'd much rather be in the stock market when it is relatively safe to invest, and when profits are more likely to occur, than deciding whether or not.... more specifically, just not.... to ride a mania. I'm not a permabear, you know.)
But bull markets can and do occur in other areas, even while stocks are letting out hot air, and such appears to be the case now in the bond market. Leading long-term bond models which I follow (not mine; I have no "Timer's Trend" for bonds, I observe other people's models) have turned bullish, or are on the verge of turning bullish.
This matches common sense. The economy is clearly tipping into recession; the Federal Reserve has signalled that it's done raising short-term interest rates, and that its next move is likely to be toward lowering them; and yields on high-grade bonds (particularly Treasuries) have been slowly declining for several months now.
I had the good fortune to capture virtually all of this rise in my TIAA CREF pension funds, where (for safety, not trying for yield) I had put about half in the inflation-indexed bond fund, which is more than 90% invested in Treasuries. Now the good news is, the bull market in bonds is not over yet, it's likely just beginning. For those of you who think only stocks offer a satisfactory (protection against inflation) long-term return, you should know that riding long-term bond trends (and avoiding the bond bears) has provided almost as good a return as stocks.... up to 1995, before the mania began, anyway.... and with much greater safety. Dot-coms grab the headlines; bonds just make money, when the trend is your friend.
What is interesting is that we may be on the verge of a major (read: high profits) bull market in bonds, of the kind that occurred here during the Great Depression, or in Japan in the 1990s. Now that does not indicate a bright future for the stock market.... four years of bear followed by a decade of economic stagnation.... but clearly we are on a deflationary track. The Federal Reserve has (until recently) been expanding the money supply at a 10%-plus rate, with little effect on the Consumer Price Index (even after adjusting for the government's fudging of the numbers); leading inflation indicators are turning down after having risen earlier in 2000; utilities are clearly in a bull market; junk bonds are sinking in value, even defaulting at historically high rates. In other words, the rate of asset deflation (exhibit A: the NASDAQ) greatly exceeds that of money creation, whether by the Federal Reserve (monetary base) or as multiplied by the banks or by Wall Street (derivatives, government-enterprise real estate loans). Because we have had such a long period of uncorrected excesses.... certainly since 1995, and one could make an argument for years (1989, 1987) extending back to 1982.... now that the bust is upon us, I would expect it to be of much greater magnitude than the last, fairly mild, recession in 1990. My likely scenarios, and odds:
Mild recession, similar to 1990, followed by a bigger boom - 15% .(Not that this can't happen, mind you.... I gave only 15% odds in 1995 for a stock-market bubble bigger than Japan's in the 1980s to occur. I just did not foresee that the Federal Reserve would be stupid enough to do what it actually did. I thought they knew better.) Bond bull market is short-lived; real interest rates begin rising again as inflation heats up. Stocks bottom out by year's end.
Severe recession, like 1980/82 or 1974-75, with severely depressed stock markets and major busts in real estate and consumer credit - 20%. Fed prints money like crazy to get us out of the bust; it works, consumer prices soar, bond market collapses, inflation-indexed bonds work well.
A decade of "price destruction", similar to what happened in Japan in the 1990s - 50%. A two- to four-year bear market in stocks is followed by another eight to twelve years of stocks going nowhere. Real estate experiences a major bear market. Investment-grade bonds perform exceedingly well in a market which sees yields on Treasuries decline from 5.5% to 0.7%. Widespread defaults in junk bonds. Because consumer prices are flat, inflation-indexed bonds perform OK, but not as well as conventional bonds.
A new Great Depression, though different in form from that of the 1930s - 12%. Different, in that the Federal government has implicitly guaranteed virtually every major consumer lending enterprise in the country.... bank deposits, "securitized" consumer loans, mortgages, college loans, farm loans, banks' derivatives positions. Get ready for trillion-dollar budget deficits as the debt pyramid crumbles away.
Something worse than the Great Depression - 3%. A favorite of "Grand Supercycle" Elliott-wave-type followers. Human nature does shift from optimism to pessimism in decades-long (though not necessarily predictable) cycles, so this is not beyond the realm of things possible, but it is unpleasant to contemplate. Global debt structure collapses. U.S. becomes a world-class banana republic. Nuclear war in the third or fourth decade of the century. Ugh.
I'm still debating when to make my further move to bonds in my TIAA
CREF retirement funds. I'd like to first observe the behavior of the
decisive break below Dow 10,000, when it comes.... if it's with a rapid
deterioration of credit conditions and consumer confidence, putting
pressure on corporate bonds (which make up most of the CREF bond
fund's portfolio), then I'll want to wait until there are clear signs of
easing (or intent to ease) from the Federal Reserve, a move which will
"rescue" corporate bond values, before committing funds for what is
likely to be a generous bull move. After all, I'm making 7-1/2% virtually
risk-free in my SRA, and I'd like a reasonable prospect of a greater
overall return from the bond fund before abandoning that certain return.
In my RA, I am already tracking bonds with the inflation-indexed bond
fund; that position will be kept for the time being. I'll probably be shifting funds sometime within the next three months.
The packet of info the company provided was interesting (at least to me) of the choices of mutual funds (mostly Fidelity funds) it offered. No money-market fund. No government-securities-only fund, either short- or long-term. Only one bond fund (U.S. corporates). Only one fund emphasizing dividends. No index fund, surprisingly (gotta collect those fees!) One fund offering CD-type safety and returns (similar to the TIAA part of TIAA-CREF). The rest of the dozen choices were all funds ranging from "growth" to "aggressive growth".
The literature explaining the plan described the risk profiles of various types of funds, without actually tying them to the specific funds offered. It was left to the reader to try to match up the profiles with the funds using only a fund's title. No prospecti. No performance records or current yields.
Financial advisors typically recommend a mix of 60% stocks, 40% bonds (or thereabouts) for retirement plans (which advice also appeared nowhere in the company's literature). My friend is not much younger than I am, and I know her risk tolerance level is fairly low, so I suggested a more conservative mix of 60% bonds/money, 40% stocks. I also suggested she stay away from the so-called "growth" ("shrink"?) funds as, despite their names, they really weren't much diversified from each other. The money managers tend to run with the herd and they all bought too much technology at high prices, and they all still own too much of the big-cap stuff, a la "nifty fifty" of 1972-73.
I also knew that once she made her choices, she'd have no interest in changing them.... "set it and forget it". So I suggested a mix of: 15% in the CD-type fund; 45% in the investment-grade (single-A or better) bond fund; 30% in the dividend-growth equity fund; and 10% in the global equities fund. That, I felt, would even out the performance bumps in each, and would show overall growth in her monthly or quarterly statements. I further suggested she keep her fund choices to five or less, because each generates its own paperwork (quarterly reports, proxy statements, revised prospecti, etc.). That's OK, she said, all of that stuff just goes into the circular file, anyway.
I am amused that equities are now so widely perceived as a reliable and
equally riskless alternative to bank savings, that a 401(k) plan could
invite employees to sign up (and make important decisions affecting
one's later life) as carelessly as if one were putting money into a CD.
You know when the ultimate stock market bottom will arrive? When
your 401(k) offers three kinds of money-market funds, six types of bond
funds, a REIT fund, a precious-metals fund, five equity-income funds,
one "growth" fund, no "aggressive growth" funds, and no technology
or specialty funds. Then they will be ringing the bells to buy stocks.
Japan's protracted financial and economic difficulties are primarily the unavoidable consequences of wild boom-time financial excess. Still, through it all, the Japanese economy has run large trade surpluses while enjoying significant household savings. These two factors have been critical in allowing Japan the "luxury" of dropping interest rates to near zero with little concern for the yen. This is one heck of an advantage when an economy suffers from a collapsing bubble, one that has proved elusive to other countries forced to raise interest rates dramatically to stem capital outflows. A question for 2001: Will the dollar's status as the "world's reserve currency" provide the "luxury" of Japanese-style interest-rate flexibility, as Wall Street and Greenspan assume? If not, there is one big problem brewing. - Doug Noland
Credit, which was very cheap and very abundant only a few months ago has suddenly become expensive. The average junk bond has fallen 10.85%. A bond buyer, using borrowed funds, would have a real cost of funds exceeding 18%. An investor who mortgaged his home in March of 2000 in order to buy tech stocks paid an effective interest rate - over the last 9 months - of greater than 50%. His stocks probably fell at least 50% ...and he probably pays an additional 8% or so on his mortgage.... real rates have gone from minus 8 percent to plus...what...plus 20%...30%...50%?! And there are 900 basis points between Treasuries and Merrill Lynch's high yield index. Mr. Greenspan will be outgunned. - Bill Bonner
I want to make it very clear that presently both the U.S. financial system and economy are grossly maladjusted and acutely unstable. Unfortunately, these are the unavoidable consequences of years of runaway credit and speculative excess, and the Fed repeatedly "Putting Coins in The Fuse Box." We saw similar credit bubble dynamics in the late 1920s that led to depression. Perhaps some of you can relate to this, but I remember first reading about the Roaring '20s, particularly the wild euphoric period of 1928 and much of 1929. I just couldn't comprehend how everyone was so fooled. How could even the brilliant economist Irving Fisher see permanent prosperity, when the nation was heading right into the Great Depression? I would today argue that he and virtually everyone else failed to see how acutely fragile the financial system had become and how imbalanced and distorted the economy was beneath the surface of strong nominal growth and rising asset values. Importantly, Irving Fisher failed to recognize that the U.S. was in the midst of an enormous financial and economic bubble - that the U.S. had become one momentous bubble economy within an increasingly fragile global backdrop. However, one needn't go back 70 years to witness credit bubble dynamics. Much more recently, a rather stunning proclivity of unrelenting global credit and speculative excess has fostered numerous booms and busts, including those in Japan, Mexico, SE Asia, Russia, and emerging markets generally. I strongly argue that contemporary uncontrolled credit systems are dysfunctional, both domestically and globally. - Doug Noland
The Fed cut rates massively and immediately during the Long Term Capital Management debacle, thus saving the day ... What is happening in the stock market now could have immeasurably greater consequences. But Greenspan does nothing but issue more enigmatic statements. It is as if Greenspan's vision is limited to trees such as Long Term Capital and the banks that backed it, but he's unable to take in what is happening to the forest known as Nasdaq in which most of us have a very significant stake. - Paul Erdman
The Nasdaq has now surrendered all of its gains since March 1999.... the total loss of capital thus far in the bear market is up to $4 trillion. For reference, or amusement, that's about $40,000 [paper loss] per family. Can the average family afford to lose that much in stocks? - Bill Bonner
As the great stock market bubble on Wall Street kept inflating, legions of gurus and soothsayers assured us the economy could only go up, up, up. We were in a 'new paradigm shift' created by the Internet and trendy young .com crewcut men in chartreuse 1950s retro-outfits. Boring stuff like sales, cash flow, and profits were for old fuddy-duddies. Chipheads would rule the world. You didn't have to make or sell anything. You just had to communicate. Well, the great techno-hot air bubble, like all bubbles, finally burst. Savvy North American investors, who had sneered at rustic Albanians for losing their shirts in sleazy financial pyramid swindles, suddenly found themselves cleaned out by an even bigger swindle: the Great Dot.Com Ponzi Flimflam. The hyper-inflated market collapsed, paradigm-shifting all the 22-year-old former geniuses into scruffy unemployed college dropouts, and proving that there is some measure of justice in this cruel universe. - Eric Margolis
Remember all those articles about those guys who could be you or me going off and starting something that had the sales of the average 7-Eleven but suddenly they were worth $200 million? There's a certain amount of delight in seeing the downfall of these people. - Patrick Byrne
According to the Treasury, federal tax receipts in fiscal 1999 totaled
$1.8 trillion, or 20 percent of the Gross Domestic Product.Since the
end of World War II, taxes have seldom exceeded 18 percent of GDP.
In fact, the only other time in the nation's history that they were as
high as they are now was during World War II. Worse yet, fewer
individuals are bearing an increasing share of the tax burden. One
fourth of all those who filed tax returns in 1998 paid no income taxes
at all. Meanwhile, the top 10 percent of taxpayers paid 63 percent of
individual income taxes, up from 49 percent in 1980. We're all familiar
with the fact that individuals work on average from January through
May just to pay the government.... Less known, however, is the fact
that "tax freedom day" for businesses actually comes much later than
May. A survey of business taxation in 1999 by Carl Olson of the Fund
for Stockowners Rights shows that the average business serves the state
until Sept. 5. - Joseph Farah
I don't blame Gore for withdrawing his concession on election night. The television networks had screwed up royally, but, after the first recount and the absentees had been counted, Gore should have conceded. Instead, he sent his lawyers to bend and warp the law so that unmarked ballots could, by some divine revelation of Democrats, be construed as ballots on which people had really intended, after all, to vote for Gore. That was, from the start, absolute nonsense. Forgotten in all this mess was the clear, unmistakable responsibility of the voter to mark his or her ballot correctly. In every precinct where punch cards are used, there is a sign that states in plain language that if the ballot is not punched clean through, the vote will not count. That should be the only standard for determining a voter's intent. After all, these infamous chads are not made of titanium. - Charley Reese
The reason impeachment and Lewinsky loom so large in the Clinton
era is that there was so little else. He engaged, entertained and enraged. He was full of himself and full of talk. He had an amazing
ability to outmaneuver his adversaries and gain short-term political
advantage. But all the noise and action merely highlight the larger
contradiction. He was always on the move but rarely going anywhere.
He was mostly a do-nothing president. - Robert Samuelson
How far down is down? The NASDAQ has, historically, traded at a price-to-earnings ratio between 20 and 40. It's now just under 100, down from a peak of 280 last March. Even if it touches just the high end of its historical range, we're looking at a further 60% decline, to around 1000 for the average. But given the magnitude of the mania, and the severity of the subsequent return to reality, I expect to see the NASDAQ index well into triple digits before its bear ends. This is in line with what you would expect when a bubble bursts; typically, the bear decline wipes out 89% to 98% of the paper values created in the mania.
And when? The NASDAQ is experiencing a mega-bear, of the kind the entire stock market experienced in 1973-74, so I expect similar megabear timing.... about two years, maybe a little less. Since the NASDAQ peaked in March 2000, that means we should expect the ultimate bottom around year-end 2001.
Meanwhile, back on the Fed's price-controlled S&P ranch, the NYSE has some catching-up to do. The New York exchange has benefitted from the rush of "flight to safety" funds escaping the NASDAQ debacle, from "buy-and-hold-forever" investors socking retirement money into index funds, and from the plunge protection team's implied guarantee. This is where I would expect to see a crash, but guessing when means trying to guess when the Fed will fail in its futures manipulations and, as you know, I don't do that anymore. But, crash or not, I do expect the Dow and S&P 500 to join the NASDAQ's bear party by the second half of 2001.
Several factors will take down the NYSE: Declining earnings from the recession, less "new" money pouring into stocks as consumers retrench and begin paying down debt, a weaker dollar. But the most important may be that money abhors a vacuum. After a bad year in 2000, and what looks like another bad year unfolding in 2001, those buy-and-hold for-the-long-term types will figure out that instead of losing 10% (or more) per year in stocks, they could be making 10% to 12% per year in bonds. Then, just as money escaped from the NASDAQ to what appeared to be the stability of NYSE stocks, it will shift again, from stocks to the new "safe, sure thing" game in town, bonds.
I love to see myths bite the dust. The late, lamented "new economy" died with the dot-coms and the NASDAQ. Yet to die is the myth that one will always come out ahead by buying index mutual funds. (Yes, maybe, if one doesn't need the money for 20 years, but you might have done better in cash, bonds or precious metals.) Perhaps this was true when index funds were relatively unknown; but the investment rule-of thumb is, when something becomes too popular, its rate of return plummets, and this is certainly the case with index funds today. Their immense popularity and "sure-thing" return of 15%-plus per year in the minds of the public have inflated the underlying (capitalization-weighted) stocks way above historical value. The only thing index funds guarantee you is that over the long haul you will make more money, or lose less money, than in "managed" funds, because the fees are lower.
"Fair value" for the Dow is still in the mid-3000s (but likely to rise as the bond bull market progresses). "Fair value" for the NASDAQ remains below 1000. History tells us that major bear markets return stocks to at least fair value, and usually well below.
While you're waiting, you can enjoy the nice bull market in bonds.
Original cost (adjusted): $ 4,998.21
Present value: $ 4,375.42
Increase: $ -622.79 [-12.46%]
The performance of this portfolio and its predecessors ("Hedger's Delight", "Present and Future Income", "Crapshooter's Folly") from January 1987 to the present is -0.74%, for a compound annual rate of return of -0.04%. COMMENT on "Phoenix": There is no change from the last issue. I am in the process of moving this account from Suretrade to another e-brokerage, as Suretrade's "cheap" commissions have disappeared, and the new firm gives much better service (including free check-writing, should I need money in a hurry).
B. "Professors' Investment Group (PIG)" - investment club portfolio.
SUMMARY - "PIG":
Original cost: $ 9,024.00
Present value: $15,245.99
Increase: $ 6,221.99 [+68.95%]
COMMENT on "PIG": The PIGs' Web page is at
http://www.assumption.edu/HTML/Faculty/Kantar/WPigs.html
C. Roth rollover IRA - real portfolio, includes commissions:
SUMMARY - IRA:
Original (1983-86) cost: $ 8,326.19
Present value: $11,197.37
Increase: $ 2,871.18 [+34.48%]
The performance of this portfolio (including its predecessors)
from January 1, 1987 to the present is 2.18%, for a compound
annual rate of return of 0.14%.
D. CREF Pension plan; I switch between indexed stock/bond/money funds:
Date Sold Bought
13Mar1992 stock @ 56.65 MM @ 13.41
29Apr1992 MM @ 13.48 bond @ 31.19
19Jun1992 bond @ 32.14 MM @ 13.55
29Jun1992 MM @ 13.57 stock @ 56.74
24Jul1992 stock @ 56.76 MM @ 13.61
29Oct1992 MM @ 13.72 stock @ 58.61
23Dec1992 stock @ 61.48 MM @ 13.78
16Jan1995 MM @ 14.83 equity-index @ 26.44
20Jan1995 eq-index @ 26.19 MM @ 14.84
30Oct1997 MM@ 17.24 bond@47.56 (27.17%)
30Oct1997 MM@ 17.24 i-i bond@26.12 (27.17%)
11Feb1998 bond@ 48.84 MM@17.52 (27.17%)
11Feb1998 I-I bond@ 26.23 MM@17.52(27.17%)
16Jun1998 MM@ 17.84 TIAA Traditional (45.87%)
23Sep1999 MM@18.99 I-I bond@27.56 (53.32%)
17-18May2000 rate adjustment to 7.25% in SRA
12-13Jul2000 rate adjustment to 7.5% in SRA
Values, 29Dec2000: stock, 188.73; MM, 20.48; bond, 57.84; inflation-indexed bond, 31.11; TIAA current yield in SRA, 7.5%
Gain, 1988: 18.91%; 1989: 14.48%; 1990: 8.28%; 1991: 27.93%; 1992: 10.20%; 1993: 3.08%; 1994: 4.07%; 1995: 4.80%; 1996: 5.28%; 1997: 5.38%; 1998: 5.72%; 1999: 5.12%
Gain, January 1 through September 30, 2000: 7.023% (9.51% annual rate of return)
Total gain since January 1, 1988 (12.25 years): 208.27%
Compound annual rate of return: 9.23% (My long-term target: in excess of 15%)
Gain shown excludes the impact of additional monthly cash contributions.
Buying CREF stock on January 1, 1988 and holding it gained
558.86%, for a compound annual rate of return of 16.28%.
COMMENT on NYSE "Timer's Trend":
Some whipsawing in December
has left us with a BUY signal on December 22, indicating at least a
temporary respite from the bear on the NYSE and (in my opinion)
probably a neutral to mildly bullish trend into the spring of 2001. (A
"buy" signal when stocks are still grossly overvalued? Sure, it's possible. Thank your Uncle Al for his generosity to your wallet.)
____________________________ NYSE TIMER'S TREND _______________________________
Tue 1 Aug 00 . I .# ]|10606.95 + . *
Wed 2 Aug 00 . I # |10687.53 |+. *
Thu 3 Aug 00 . & . |10706.58 |+. *
Fri 4 Aug 00 . | # }|10767.75 | + *
Mon 7 Aug 00 . | . # |10867.01 | .+ *
Tue 8 Aug 00 . | .# |10976.89 | .+ *
Wed 9 Aug 00 . | #. |10905.83 | + *
Thu 10 Aug 00 . | # |10908.76 | .+ *
Fri 11 Aug 00 . | .# |11027.80 | .+ *
Mon 14 Aug 00 . | . # |11176.14 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 15 Aug 00 . | #. |11067.00 | .+ *
Wed 16 Aug 00 . | #. |11008.39 | .+ *
Thu 17 Aug 00 . | . # |11055.64 | .+ *
Fri 18 Aug 00 . #| . |11046.48 | + *
Mon 21 Aug 00 . | #. |11079.81 | + *
Tue 22 Aug 00 . | #. |11139.15 | + *
Wed 23 Aug 00 . |# . |11144.65 |+. *
Thu 24 Aug 00 . | #. |11182.74 |+. *
Fri 25 Aug 00 . | #. |11192.63 |+. *
Mon 28 Aug 00 . | .# |11252.84 | + *
Tue 29 Aug 00 . |# . |11215.10 | + *
Wed 30 Aug 00 . | #. |11103.01 | + *
Thu 31 Aug 00 . | .# |11215.10 | + *
Fri 1 Sep 00 . | .# |11238.78 | .+ *
Tue 5 Sep 00 . | # |11260.61 | + *
Wed 6 Sep 00 . | .# |11310.64 | .+ *
Thu 7 Sep 00 . | # |11259.87 | .+ *
Fri 8 Sep 00 . | #. |11220.65 | .+ *
Mon 11 Sep 00 . | .# |11195.49 | .+ *
Tue 12 Sep 00 . | #. |11233.23 | .+ *
Wed 13 Sep 00 . | #. |11182.18 | + *
Thu 14 Sep 00 . | #. |11087.47 | + *
Fri 15 Sep 00 . & . |10927.00 | + *
Mon 18 Sep 00 # I . {|10808.52 + . *
Tue 19 Sep 00 .# I . |10789.29 |-. *
Wed 20 Sep 00 # . I . |10687.92 |~-*~~~~~~~~~~~~~~~~~~~~~~~~~
Thu 21 Sep 00 # I . |10765.52 | .- *
Fri 22 Sep 00 .# I . |10847.37 | .- *
Mon 25 Sep 00 . #I . |10808.15 | .- *
Tue 26 Sep 00 .# I . |10631.32 | .- *
Wed 27 Sep 00 . & . |10628.36 | - *
Thu 28 Sep 00 . I .# |10824.06 |-. *
Fri 29 Sep 00 . I# . |10650.92 + . *
Mon 2 Oct 00 . I# . |10700.13 + . *
Tue 3 Oct 00 . & . |10719.74 |+. *
Wed 4 Oct 00 . #I . |10784.48 |+. *
Thu 5 Oct 00 . #I . |10724.92 + . *
Fri 6 Oct 00 # . I . |10596.54 | - *
Mon 9 Oct 00 #. I . |10568.43 | .- *
Tue 10 Oct 00 #. I . |10524.40 | .- *
Wed 11 Oct 00 . & . |10413.79 | .- *
Thu 12 Oct 00 # . I . |10034.58 |~.~-~~~~~~~~~~~~~~~~~~~~~~~~
Fri 13 Oct 00 .# I . |10192.18 | . - *
Mon 16 Oct 00 .# I . |10238.80 | .- *
Tue 17 Oct 00 # . I . |10089.71 | . - *
Wed 18 Oct 00 # . I . | 9975.02 | . - *
Thu 19 Oct 00 . & . |10142.98 | . - *
Fri 20 Oct 00 . & . |10226.59 | .- *
Mon 23 Oct 00 . #I . |10271.72 | .- *
Tue 24 Oct 00 . #I . |10393.07 | - *
Wed 25 Oct 00 #. I . |10326.48 | - *
Thu 26 Oct 00 .# I . |10380.12 | - *
Fri 27 Oct 00 . I# . |10590.62 | - *
Mon 30 Oct 00 . I .# |10835.77 |-.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 31 Oct 00 . | . # |10971.14 + . *
Wed 1 Nov 00 . |# . |10899.47 |+. *
Thu 2 Nov 00 . | # |10880.51 | + *
Fri 3 Nov 00 . | #. |10817.95 | .+ *
Mon 6 Nov 00 . | # |10977.21 | + *
Tue 7 Nov 00 . |# . |10952.18 | + *
Wed 8 Nov 00 . | #. |10907.06 | + *
Thu 9 Nov 00 .# I . |10834.25 |+. *
Fri 10 Nov 00 # I . |10602.95 + . *
Mon 13 Nov 00 # I . |10517.25 |-. *
Tue 14 Nov 00 . I .# |10681.06 |-. *
Wed 15 Nov 00 . I# . |10707.60 |-. *
Thu 16 Nov 00 . #I . |10656.03 |-. *
Fri 17 Nov 00 . #I . |10629.87 + . *
Mon 20 Nov 00 #. I . |10462.65 |-. *
Tue 21 Nov 00 . #I . |10494.50 | - *
Wed 22 Nov 00 #. I . |10399.32 |~.-*~~~~~~~~~~~~~~~~~~~~~~~~
Fri 24 Nov 00 . I # |10470.23 | - *
Mon 27 Nov 00 . I #. |10546.07 |-. *
Tue 28 Nov 00 . #I . |10507.58 |-. *
Wed 29 Nov 00 . #I . |10629.11 |-. *
Thu 30 Nov 00 #. I . |10414.49 |-. *
Fri 1 Dec 00 . I #. |10373.54 |-. *
Mon 4 Dec 00 . I# . |10560.10 |-. *
Tue 5 Dec 00 . | .# |10898.72 +. *
Wed 6 Dec 00 . # . |10664.38 +. *
Thu 7 Dec 00 . # . |10617.36 |+. *
Fri 8 Dec 00 . | . # |10712.91 |+ *
Mon 11 Dec 00 . | . # }|10725.80 |.+ *
Tue 12 Dec 00 . | #. |10768.27 |+ *
Wed 13 Dec 00 . |# . |10794.44 |+ *
Thu 14 Dec 00 . #| . [|10674.99 |+ *
Fri 15 Dec 00 . #| . |10434.96 |+. *
Mon 18 Dec 00 . | # ]|10645.42 +. *
Tue 19 Dec 00 . | #. |10584.37 +. *
Wed 20 Dec 00 # I . {|10318.93 +. *
Thu 21 Dec 00 . |# . |10487.29 +. *
Fri 22 Dec 00 . | .# }|10635.56 |+. *
Tue 26 Dec 00 . | # |10692.44 |+. *
Wed 27 Dec 00 . | . # |10803.16 |+ *
Thu 28 Dec 00 . | . # |10868.76 |.+ *
Fri 29 Dec 00 .# | . |10786.85 |.+ *
========================================================================
COMMENT on NASDAQ "Timer's Trend": The trend continues down since I began tracking
this on February 28, 2000.
____________________________ NASDAQ TIMER'S TREND ____________________________ Tue 1 Aug 00 #. I . | 3685.52 | . - *> Wed 2 Aug 00 # I . | 3658.46 | . - * Thu 3 Aug 00 # I . | 3759.88 | . - * Fri 4 Aug 00 . & . | 3787.36 | .- * Mon 7 Aug 00 . I #. | 3862.99 | - * Tue 8 Aug 00 . #I . | 3848.55 |-. * Wed 9 Aug 00 . & . | 3853.50 |-. * Thu 10 Aug 00 #. I . | 3759.99 |-. * Fri 11 Aug 00 .# I . | 3789.47 |-. * Mon 14 Aug 00 . & . | 3849.69 | - * Tue 15 Aug 00 . #I . | 3851.66 | - * Wed 16 Aug 00 . #I . | 3861.20 | - * Thu 17 Aug 00 . I# . | 3940.87 |-. * Fri 18 Aug 00 . I #. | 3930.34 + . * Mon 21 Aug 00 . I# . | 3953.15 + . * Tue 22 Aug 00 . I# . | 3958.21 + . * Wed 23 Aug 00 . I# . | 4011.01 |+.~~~~~~~~~~~~~~~~~~~~~~~~~~~~* Thu 24 Aug 00 . I# . | 4053.28 |+. * Fri 25 Aug 00 . I# . | 4042.68 |+. * Mon 28 Aug 00 . I .# | 4070.59 |+. * Tue 29 Aug 00 . I #. | 4082.17 |+. * Wed 30 Aug 00 . I # | 4103.81 | + * Thu 31 Aug 00 . | . # | 4206.35 | .+ * Fri 1 Sep 00 . | # | 4234.33 | .+ * Tue 5 Sep 00 . |# . | 4143.18 | + * Wed 6 Sep 00 . #I . | 4013.34 | + * Thu 7 Sep 00 . | .# | 4098.35 | + * Fri 8 Sep 00 . #I . | 3978.41 |+. * Mon 11 Sep 00 .# I . | 3896.35 + . * Tue 12 Sep 00 . #I . | 3849.51 |-. * Wed 13 Sep 00 . I# . | 3893.89 + . * Thu 14 Sep 00 . I # | 3913.86 + . * Fri 15 Sep 00 # I . | 3835.23 |-. * Mon 18 Sep 00 # . I . | 3726.52 |-.*~~~~~~~~~~~~~~~~~~~~~~~~~ Tue 19 Sep 00 . & . | 3865.64 |-. * Wed 20 Sep 00 .# I . | 3897.44 | - * Thu 21 Sep 00 #. I . | 3828.87 | .- * Fri 22 Sep 00 #. I . | 3803.76 | .- * Mon 25 Sep 00 .# I . | 3741.22 | .- * Tue 26 Sep 00 #. I . | 3689.10 | . - * Wed 27 Sep 00 #. I . | 3656.30 | . - * Thu 28 Sep 00 . I #. | 3778.32 | .- * Fri 29 Sep 00 .# I . | 3672.82 | - * Mon 2 Oct 00 #. I . | 3568.90 |-. * Tue 3 Oct 00 # . I . | 3455.83 |*.-~~~~~~~~~~~~~~~~~~~~~~~~~ Wed 4 Oct 00 # I . | 3523.10 | .- * Thu 5 Oct 00 # . I . | 3472.10 | . - * Fri 6 Oct 00 # . I . | 3361.01 | . - * Mon 9 Oct 00 # . I . | 3355.56 | . - * Tue 10 Oct 00 # . I . | 3240.54 @|~.*~~-~~~~~~~~~~~~~~~~~~~~~~ Wed 11 Oct 00 # . I . | 3168.49 @| . - * Thu 12 Oct 00 # . I . | 3074.68 @| . *- Fri 13 Oct 00 . #I . | 3316.77 @| . - * Mon 16 Oct 00 # I . | 3290.28 | . - * Tue 17 Oct 00 # . I . | 3213.96 | . - * Wed 18 Oct 00 # . I . | 3171.56 | . - * Thu 19 Oct 00 . I# . | 3418.60 | . - * Fri 20 Oct 00 . I# . | 3483.14 | .- * Mon 23 Oct 00 . & . | 3468.69 | .- * Tue 24 Oct 00 .# I . | 3419.79 | - * Wed 25 Oct 00 # . I . | 3229.57 | - * Thu 26 Oct 00 # I . | 3272.18 | .- * Fri 27 Oct 00 .# I . | 3278.36 | .- * Mon 30 Oct 00 #. I . | 3191.40 | . - * Tue 31 Oct 00 . I #. | 3369.63 | .- * Wed 1 Nov 00 .# I . | 3333.39 | - * Thu 2 Nov 00 . I #. | 3429.02 |-. * Fri 3 Nov 00 . I# . | 3451.58 |-. * Mon 6 Nov 00 . & . | 3416.21 + . * Tue 7 Nov 00 . & . | 3415.79 + . * Wed 8 Nov 00 # . I . | 3231.70 |-. * Thu 9 Nov 00 # . I . | 3200.35 | - * Fri 10 Nov 00 # . I . | 3028.99 |~.*-~~~~~~~~~~~~~~~~~~~~~~~~ Mon 13 Nov 00 # . I . | 2966.72 | . - * Tue 14 Nov 00 . & . | 3128.27 | . - * Wed 15 Nov 00 . #I . | 3165.49 | . - * Thu 16 Nov 00 # . I . | 3031.88 | . - *< Fri 17 Nov 00 #. I . | 3027.19 | . - * Mon 20 Nov 00 # . I . | 2875.54 | . - *< Tue 21 Nov 00 # . I . | 2871.45 | . -* Wed 22 Nov 00 # . I . | 2755.34 @|*.~~~~-~~~~~~~~~~~~~~~~~~~~~ Fri 24 Nov 00 . I# . | 2904.38 | . - * Mon 27 Nov 00 #. I . | 2880.49 | . - * Tue 28 Nov 00 # . I . | 2734.98 | . - * Wed 29 Nov 00 # . I . | 2706.93 | . - * Thu 30 Nov 00 # . I . | 2597.93 | . -* Fri 1 Dec 00 .# I . | 2645.29 @|. - * Mon 4 Dec 00 # . I . | 2615.75 @|. -* Tue 5 Dec 00 . I# . | 2889.80 |. - * Wed 6 Dec 00 #. I . | 2796.50 |. - * Thu 7 Dec 00 # . I . | 2752.66 |.- * Fri 8 Dec 00 . I #. | 2917.43 |.- * Mon 11 Dec 00 . I# . | 3015.10 |-. * Tue 12 Dec 00 # I . | 2931.77 |- * Wed 13 Dec 00 # . I . | 2822.77 |- * Thu 14 Dec 00 # . I . | 2728.51 |.- * Fri 15 Dec 00 # . I . | 2653.27 |. - * Mon 18 Dec 00 # . I . | 2624.52 @|. -* Tue 19 Dec 00 # . I . | 2511.71 @|~*~~~-~~~~~~~~~~~~~~~~~~~~~~ Wed 20 Dec 00 # . I . | 2332.78 @|~.~~*~-~~~~~~~~~~~~~~~~~~~~~ Thu 21 Dec 00 # . I . | 2340.12 @|. - * Fri 22 Dec 00 . & . | 2517.02 |. - * Tue 26 Dec 00 #. I . | 2493.52 |. - * Wed 27 Dec 00 . #I . | 2539.35 |. - * Thu 28 Dec 00 . & . | 2557.76 |- * Fri 29 Dec 00 . I # | 2470.52 |-. * ---------------------------------------------------------------- ========================================================================"Timer's Trend" is based on 4% and 10% exponential moving averages of the New York Stock Exchange or NASDAQ advance/decline lines (that is, the ratio of advancing to declining stocks). There are many symbols shown above, but the ones that count are the braces:
LAST MINUTE NOTE - written January 3, as this issue is about to be printed, and just after the Federal Reserve's surprise 1/2% federal funds rate cut. This panic move returns the Fed officially to the side of the bulls, and may possibly re-ignite the mania (not the dot-coms, of course, the mania will manifest itself in some new hot spot). But history tells us that first rate cuts usually don't mean a bull market right away, only that at least an intermediate bottom in the bear, and subsequent playable rally, is probably less than six months away.
Deflationary exceptions do come to mind.... the U.S. In 1929-32, and Japan in the 1990s, where interest-rate cuts merely trended lower with stocks, too little too late, insufficient to reverse investor and consumer psychology. But, I repeat, the Fed is now on the side of the bulls; until it is evident that its reflation efforts are insufficient.... which I think will eventually prove to be the case.... assume that it has the clout to engineer at least a sizable rally in stocks, and that it may be able to mitigate the magnitude of the onrushing recession. Regardless of when/if stocks temporarily pull out of their bear swoon, you know for sure that there will be pressure on bond prices to rise. Enjoy.... for the time being, don't fight the Fed. Assume they have the clout to get what they want until, some day and for no immediately obvious reason, they suddenly lose control.
I may have to decide when to switch part of my supplemental retirement annuity funds into the CREF bond fund without the benefit of seeing what happens when the Dow trades below 10,000.... which it now may not do for many months. Watch the "computer warmline" for the switch.
Internet readers: Please be sure to read the computer warmline for the latest updates on my portfolio trades. (Ahhh.... the giant awakes from his slumber....)
NEXT ISSUE - will appear about January 30. /Nick Chase