« back
to News section
"Few men of action
have been able to make a graceful exit at the appropriate
time." -Malcolm Muggeridge
The Markets
Like viewing an optical illusion, many
investors were left wondering exactly what they were seeing
last week.
The Dow Jones Industrial Average broke
through the 13,000 level for the first time and did so in
a convincing
way that
leads investors to believe that we'll have smooth sailing
through Dow 14K. However, the last few weeks have also shown
us a series of negative economic data, including:
- First
quarter Gross Domestic Product increased by
1.3% which was the weakest
pace in 4 years. (analyst forecast was 1.8%).
- The University of
Michigan Consumer Confidence Survey showed that sentiment
slipped.
- Housing market reports showed weakness
in March when sales of existing homes dropped.
And yet the Dow
Jones Industrial Average hit record highs throughout the
end
of last week.
What gives? Was it just good old American optimism? Such
optimism is rarely seen on Wall Street. In fact, this is
only the third time the Dow has closed with gains for 19
of the last 21 trading days. The last two times this occurred
was back in the roaring 20s in the summers of 1927 and
1929. Wow!
Should we all throw on our Dow 13,000 Party Hats? Well,
maybe, if you bought at the bottom
in 2002 or 2003. But for the buy and hold investor that
held their stock investments from 2000…it hasn't
been a very profitable ride. Take
a look at the
chart
below. We ask: Is this
anything to cheer about? If you factor in the effects of
inflation most investors should be crying not cheering.
How long the markets can rise in face of
a weakening economy is anyone's guess but I believe we've
entered a new paradigm that offers more risk than reward.
You can't possibly predict when investors will suddenly change
their view.
| Returns through 04/27/07 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Dow Jones Industrials |
1.2 |
5.3 |
15.4 |
7.8 |
6.0 |
6.8 |
| Nasdaq Composite |
1.2 |
5.9 |
10.1 |
6.4 |
8.1 |
7.2 |
| Standard & Poor's 500 |
0.7 |
5.3 |
14.0 |
9.5 |
7.0 |
6.8 |
Source: Yahoo! Finance, Barrons
Past performance is no guarantee of future results. Indices
are unmanaged and cannot be invested into directly. Three-,
5-, and 10-year returns are annualized. Assumes dividends
are not reinvested.
As the stock market moves to new record levels, and more
companies are announcing multi-billion dollar buy backs we are observing no
such eagerness of corporate
insiders to buy their company stock – that is, company executives
buying their own stock with their own money.
Insider sales are still exceeding their buying by record
amounts and there was recently a new surge in their rush to the exits. According
to Investors
Intelligence insider sales last week doubled from the prior week and at
present, there are over nine sales for each purchase.
So one has to ask why the rush to sell by corporate insiders?
What do they know that the rest of investors don't? Well we can't
answer those questions but it looks to us that they are among the few that
have been taking
advantage of the higher prices by selling.
 If you're a fan of adventure movies, you've undoubtedly
heard of bullion. It's the treasure everyone is after—but it's
not jewels or land. Bullion (not to be mistaken for bouillion, which is soup)
is a term that applies to precious metals. Bullion could be gold, silver, platinum,
or palladium stored in bars, plates or ingots. In a bullion economy—like
that of the Vikings—the weight and purity of precious metals was far
more important than their shape.
Bullion can be a bit unwieldy, but countries still rely
on it today. The United States Bullion Depository—also known as Fort Knox—contains about
4,570 tons of gold bullion. In the world there are currently somewhere between 120,000
and 140,000 tonnes of gold 'above ground'. To visualise this imagine
a single solid gold cube with edges of about 19 metres (about three metres
short of the length of a tennis court). That's all that has ever been produced.
Divided amongst the population of the world there are about
23 grams per person, about 1.2 cubic centimetres each. This equates to about
$250 - $350 worth per
person on Earth, depending on the current price.
A man wanted to encrypt his password but
he needed to do it in a way so that he could remember it.
His password is 7 characters long. The password consists
of letters and numbers only (no symbols like ! or <).
In order to remember it he wrote down "You force
heaven to be empty". Can you guess what his password is?
Click here for the answer.
Best Regards,
P.S. Please feel free to forward
this newsletter to family, friends, or colleagues.
|
