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Greg Marciniak: >how bad can stock market correction be? 1 Sep 93 22:01 In article <1993Aug31.053930.21557@adobe.com>, pngai@mv.us.adobe.com (Phil Ngai) writes: |> I wanted to get opinions on how bad the stock market correction will |> be. Is there a worst case scenario or is it basically impossible to |> tell? Would anyone care to advance some likely scenarios? What's |> the lowest the market can go and why? Elliot Wave suggests a MINIMUM of 1750 on the Dow. That is their best case senario. Their worst case senario is something like 400 on the Dow. The lower number could occur sometime later in the decade. Basically the buy of a lifetime would be around 1997-1999 according to them. Why those numbers? It has to do with going lower than the last lows at various times depending on which wave pattern etc. Greg Marciniak Larry Rogers: >>>how bad can stock market correction be? 2 Sep 93 17:04 I tell you what. If the market falls to zero, I will take all they've got. Shoot, if I get in early, say at .01, maybe I can run IBM, Motorola, Ford, and numerous companies for free. What a moronistic statement. The market may go to zero. If the world gets hit by an asteroid or nuclear war erupts, maybe. Of course, we would have significantly more to worry about. A recent article I read shows that historically the market corrects around 30% on major corrections, of which there are very few. A more likely question would be what is the most probable market adjustment given today's market conditions. I would say, about 20% on the DOW and maybe ad high as 35-40% on the NASDAQ, taking out alot of speculative high fliers such as Snapple. These stocks tend to crash much harder than the market, plunging 70-90%. Could a bear market ensue that would continue for some period of time dragging the market down further? Another good question. It has happened in the past during very high inflationary periods and deflationary periods, but there is no historic precedent for such a bear market in a slow growth, low interest rate, low inflationary environment. Right now, profits are increasing, GDP is up, interest rates are low, inflation is low, new taxes will probably cap growth, our export market nations are in recession (markets there are indicating they are about to emerge). This does not point to a long term bear market. Wait until you see Fed rates rising significantly and inflation numbers of sincere consequence. You will have plenty of time to react. The crash in 1987 followed a sigificant hike in interest rates both short and long term. The bear market of the seventies was accompanied by numerous interest rate hikes and double digit inflation. Many bad markets have also ensued from inverted yield curves. Again unlikely, unless the long term rates ends up dropping below the short term rate. The only real pressure is from the national debt. Well, the deficit is 35 billion less than predicted this year alone and will get better. Things are looking better now than in decades. Jobs are lagging, but businesses go through cost cutting cycles. Will NAFTA hurt or hinder, will the loss of blue-collar jobs permanently hurt our nation, or will education become a prime objective? If everything else is moving so slowly, it amazes me that people are so worried about the stock market moving quickly. Larry Matt Kennel: >how bad can stock market correction be? 2 Sep 93 21:26 Steven D. Litvintchouk (sdl@linus.mitre.org) wrote: : How's this for a worst-case scenario: : The Dividend/Price Ratio of the S & P 500 fluctuates inversely as the : market fluctuates between undervalued and overvalued (like now) : positions. Currently it is dropped to around 2.8%, which is : comparable to what it was in 1973 and 1987. : During the depths of the Great Depression, this value went as high as : around 8% (I don't have the exact number), the highest it ever was in : the 20th century. : Well, 2.8 / 8 = 0.35. Meaning that if dividends stay about the same, : a depression-sized crash could cause the stock market to drop to only : 35% of its current value. For a DJIA currently at around 3650, this : would take the Dow down to 1280 or so. Note, there's one extra ingredient needed here: a depression. Dark Hacker: >>>>how bad can stock market correction be? 3 Sep 93 02:20 Wow Larry that was a good post! You almost had ME believing that the economy is going to be just fine. ALMOST but no cigar! The very instantiation of object-oriented evil says the market is going to wring itself out first! Jim Waugh: how bad can stock market correction be? 3 Sep 93 13:36 My $.02 regarding when the market(s) will top/correct: A recent chart published by the St. Louis Federal Reserve shows the "Adjusted Monetary Base" expanding between 7/92 and 7/93 at a 12.3% rate. Reports I have read indicate this new money is not finding its way into commerce and fueling price escalation there, but instead it is the catalyst behind the price inflation in equities markets. This monetary expansion is occurring while earlier this year the GDP growth was forecast at 3%, and within the past week was revised downward to 2% by the Clinton administration. I propose that there will be no real market top or significant correction until (a) the FRB slows its monetary growth, or (b) the monetary stimulus starts finding it way into commerce kindling price increases and validating people's fears of renewed inflation, or (c) market participants recognize the precariousness of the situation and leave. Pu Shi : >>T-bills vs. CDs 3 Sep 93 18:21 >pshsuan@scifac.indstate.edu (Pu Shi ) writes: > NOT! Buying into cash when it was burning white-hot (like the >Nifty Fifty ten years earlier) would have caused you to miss a bumper crop >of screaming bargains that took off in the 1980's bull market. So are you saying that one should stay liquid when rates are low and buy stocks when rates are high? It sounds right theoretically, but the reality is people usually do just the opposite. Since late 1992 we've seen floods of cash into stock funds from CDs and money market instruments. I personally think it's quite dangerous, but the DJ and S&P continue to surge despite warnings of an end-of-June correction. Larry Rogers: >>>Stock Market correction this fall 2 Sep 93 15:20 louis.m.leciejewski> The dollar can't just keep on sinking. If the louis.m.leciejewski> dollar sinks too low, the Federal Reserve louis.m.leciejewski> will be heavily pressured into RAISING louis.m.leciejewski> interest rates to strengthen the dollar. If louis.m.leciejewski> this happens...dollar goes UP and the value louis.m.leciejewski> of foreign mutual funds will DROP. This louis.m.leciejewski> warning has been stated by James Stack of louis.m.leciejewski> INVESTECH for the past 2 months. If the dollar strengthens alot against foreign currencies, it is possible that it would offset gains in those markets. Of course, many mutual funds use hedging tactics to address this. The hedges often have better yields than the underlying investments when currency gets volatile. If you believe that currency changes are going to pose a problem soon, you may want to consider a fund that hedges. If not, you have time to swap funds when, and if, the problem arises. Larry Larry Rogers: >>>>Stock Market correction this fall 2 Sep 93 16:44 Greg> The rise in gold must have bothered the Fed quite a bit Greg> because they sold 70,000 ounces into the rally as the Greg> momentum subsided. This caused a drop in the the price and Greg> set off stop loss orders setting off a small panic. Gold Greg> has held nicely above $365 and should make another run to Greg> $450-$500. With or without the Fed on board. The drop in Gold was affected by many factors. The Fed selling gold was a wise decision. They made pretty good money on that rally. China thought so too, and were part of the drop when they sold a bunch. Gold won't hit $500. anytime soon. If you argue that interest rates are due to go up, which Greg is prone to do, you have a contradictory prediction. Interest rate hikes stem bull gold markets. Larry Weimin Ma: >>>>Stock Market correction this fall 2 Sep 93 20:35 > Sure sure. But lets assume you found buyers and you are OUT. You >are sitting on one million in cold hard cash. And you do not want >real-estate(too easy). What are you going to do with this cash? That's the >question I was really speculating about. When the market is falling, anything else is a better alternative. Lib: Which stocks hurt in corrections? 2 Sep 93 14:53 In article <262tjr$91j@spitfire.navo.navy.mil> u4775@luke.navo.navy.mil writes: >In article <25fpeb$bj6@agate.berkeley.edu>, wft@soda.berkeley.edu (William F. T ell) writes: >|> >|> Why worry about the "correction"? If you are a solid long term investor, >|> you really can't do much better than be in stocks or equity mutual funds. >|> Staying out of the market until the "crash" comes is not sound financial >|> planning. The smart money stayed in the market after the '87 crash. >|> The Dow Jones has doubled since then. What other investments have done >|> that? > > This is exactly the attitude that will cost you lost opportunity and >liquidity. To buy at these ridiculous prices in the hope they will go higher >is not solid long term investing. Solid long term investing is buying at the >right price... not at ANY price! True, but being young he doesn't know that. He's only been following the market post '82 and doesn't know that the DJIA first hit 1000 in 1966 and 16 years later (a reasonably long term) was at 770. Larry Rogers: >>>>Which stocks hurt in corrections? 2 Sep 93 16:37 Greg> This is exactly the attitude that will cost you lost Greg> opportunity and liquidity. To buy at these ridiculous prices Greg> in the hope they will go higher is not solid long term Greg> investing. Solid long term investing is buying at the right Greg> price... not at ANY price! That is exactly the market-timing bull____ that is completely worthless. If none of the professionals have been able to do it consistently, what makes you worth listening to? Who are you to say that prices are ridiculous? The prices are based on so many factors that cannot be compared to previous times. The low interest rates and low inflation that are persisting today are unlike any time in our past. These add value to the market. The market could meander along at current P's until the E's catch up. Nobody says that P has to crash to bring E into line. Market timing is bull____. Mr. Hacker says he is waiting for a crash to buy Motorola, AT&T and Disney. Well, he would have been doing quite well with such an investment portfolio even started in January of this year. This portfolio would be up 30%, even with Disney's poor performance. A market crash, may take the 30% away temporarily, but if the environment does not turn out generating such a crash, you just threw away 30% for your attempt to time the market. The bottom line for the average individual is how to invest, not when. If into the market, diversification in both time and industries has delivered secure returns. Portfolios of good stocks purchased before the 1987 crash, still showed solid returns over the next five years. Don't fool yourself people. You cannot time the market. It has just as much a probability of being up 25% next year as down. Slow growth, low interest rates, low inflation and deficit reduction are not the things crashes are made of. The valuation of the market based on P/E's may be valid, but we are still growing slowly following our last recession. The normal growth out of a recession is double what we are currently experiencing, so it seems to follow that it would take twice as long for the normally excessive P/E's existing during recessions to adjust (by E increasing, not P declining). The dividend argument appears to be bunk, because there have been many, many times in market history that the dividend rate has been low and it has not resulted in any calamity. In fact, the dividend yield is higher than periods during 1990 and 1991, both of which were dandy times to have invested. Further, with incredibly low interest rates and higher taxes on regular income (dividends), dividends will be significantly less important than growth in the coming years. These guys like Greg are predicting complete armageddon, as so many have done in the past. Books are available at your local library right along side the current Bankruptcy 1995, that were printed decades ago that contain exactly the same tripe. Greg recently posted saying that the time frame for his prediction was not important. Another indefinite "forecaster". I have said it before, and I will say it again, a forecast without a timeframe is USELESS!!!! If this debacle does occur six years from now, and in the meantime, the market heads up to 6000, what good was the forecast? I will tell you, not worth the time it took Greg to type it. In fact it has negative value for anyone that took the time to read it, especially if they act on it. Well, Greg, seems like you finally wised up and took some of my advice. If at first you don't succeed, forecast again. See ya next year at 4500. Larry Rogers: >Value Line 2 Sep 93 15:33 Value Line is very good at summarizing a company's current position. They show price movement, a cash flow line (basically similar to earnings line), volume, profits, debt, cash flow. Saves alot of research time. They also make projections that are noted for being somewhat conservative. They have a mutual fund that follows the Value Line recommendations staying only in stocks rated 1 and 2 for timeliness. At last check the fund was not doing too well this year. They have some good and some bad recommendations, like Dell was a 1 for timeliness in the high forties, whoops, but it is all averages. It is hard to say whether they are any better than any other service at recommending stocks and I have never seen such a comparison. It seems that sometimes the review text disagrees with the timeliness rating though. That was the case with Dell. They pointed out that Dell faced stiff competition and many others were providing quality service that had formerly made Dell a standout. On ThreeCom, which they recently rated as a 3 for timeliness, they say that because of their price being below the average market premium there was substantial probability of capital gains, but they had just dropped the stock from a 2 to a 3. Note, however, that Value Line is readily available at many local libraries, and if you have the time to go there, it is free. George Crissman: >Value Line 2 Sep 93 18:46 In article <262d0j$lb4@lsi.lsil.com> carbo@elst3.40 writes: >I just recived some propaganda from Value Line in the mail. Does >anyone have any experience with them and are they as good as they >claim to be? > I tried their ten-week trial for $55.00 and was *very* impressed by the amount of information provided on a per-company and on a per-week basis. The value received was far in excess of the $55.00 I paid. Unfortunately, the annual subscription was a vastly higher amount, and I was not able to continue with the service. Their "special situations" service wasn't as appealing, so I wouldn't consider it (personal opinion). Mad Vlad: Investors' Business Daily-Sept 2 2 Sep 93 15:47 Hi netters, Just thought I'd pass along some tidbits from this morning's IBD. FYI, in yesterday's IBD, the White House released info regarding the budet deficit. According to Leo Panetta, the 'official' budget deficit for 1993 was supposed to come in at 285bill. A downward revision of between 30-35bill was announced yesterday. Thus, the target for the 1993 budget deficit is expected to come in around 250-255bill. Thanks to the low interest rate environment. 18 companies reported higher earnings yesterday compared with only ten reporting lower earnings. No big names. The plan for downsizing the military looks somewhat better than previously described. The US will maintain 12 active aircraft carriers(one will be a trainer) and build an additional supercarrier. I believe that will be given to Tenneco's Newport News Shipbuilding and Drydock. Originally, Clinton had proposed 10 active carriers. These numbers will bring the active duty carriers down to 12 from currently 14(maybe one was recently retired-13). The B1 and B2 are planned to play larger than previously thought roles. Northrup lives! The Navy's advanced medium- range bomber to replace the aging A-6 is canned as is continuation of F16 procurement. The new ATF stealth fighter was given the green light. Patriot-type missile systems are enhanced in the plan while schemes such as 'brilliant pebbles' or star wars-type schemes are greatly curtailed. In addition, the Navy will get a new SeaWolf atomic sub to join the two already in service. I believe the Gen Dynamics Electric Boat Div gets that contract. looks like the Navy is the big winner as far as new toys go(ie., big ticket items). The rate on the 30yr T-bond held steady at a record-low yield of 6.09%. Bond market fundamentals remain good. According to John G. Lonski, senior economist at Moody's Investor Services, the long bond's yield will not reach bottom until much faster economic growth increases risk of inflation and fuels demand for credit market funds by the private sector. NASDAQ/OTC hit another record high yesterday on volume of 281mill shares. The index closed at 746.15 with advancers exceeding gainers by a 1.1:1 ratio. YTD, NASDAQ/OTC is up 10.2%. SOme indicators commonly followed: Mutual fund cash position(July): 9.3%; up from June's 9.1% Investment advisor sentiment remains neutral Specialist short sale ratio remains low(actually high according to IBD as they use an inverted ratio)-.81-bullish Short interest ratio-4.77 (compare to 5yr high of 5.81 & low of 2.74) ratio of puts/calls-.84(.22-1.74 is low-to-high 5yr range) Speculation Indices: 1) Volume of Amex/NYSE-6.99% (1.00-15.00% 5yr range) 2) stock splits in IBD 6000 last 30 days-71 (20-127 5yr range) 3) New issues in last 12months as %age of all NYSE stocks- 28.3% (9.20-28.4% 5yr range) #3 is suggestive of excessive speculation. #1 and #2 are essentially neutral. DJIA price/book-3.37 DJIA PE-22.7 DJIA div yield-2.81% new highs vs new lows 314-26 breakdown: NYSE 135-5 AMEX 33-7 OTC 146-14 Some index performances: DJTA +13.9% ytd DJUA +15.5% ytd Value Line +13.5%ytd NYSE Composite +6.9% ytd S&P 500 +6.3% ytd DJIA +10.4% ytd AMEX +14.9% ytd Morgan Stanley EAFE +26.0%ytd gold-down 3.10 to 370.80 in NY, silver also lower, crude oil fell below 18.00/barrel where it has spent much of the last several months, dollar gained on yen but lower against the mark, the CRB Futures Index lost 1.52 to close at 215.67. In the Making Money in Mutuals, the focus is on internat'l investing. Apparently, much money has been flowing into foreign stock funds over the last several months. Deemed as a diversification push as sales in June jumped 75%. Purchasing Managers Index slipped to 49.3% from 49.5% in July. Consumer spending rose .4% as incomes fell .2%. The Govt restated 1993 GDP estimates for 1993 at closer to 2.0%. Help Wanted Index climbed to 100 from 97. Still very weak. Mad Vlad Mad Vlad: Investor's Business Daily-Sept 2 2 Sep 93 15:58 Hello again, Just correcting a small error. For the NASDAQ, advancers edged out DECLINERS 1.1:1.!!!! Mad vlad Inflating: INVST909.CAP <to console> Mad Vlad: Investors' Business Daily-Sept 3 3 Sep 93 19:28 From IBD, Sept 3 The yield on the longbond fell to another alltime low at 6.04%. (Today, the bond market closed at 1:00pm ET.) In addition, the yield on the 3-month Tbill fell below 3.00 to close at 2.99%. Weak retail sales for August. Durable goods sales rose. Sears reported an 11% increase in sales over this period last year as did several others. The NASDAQ/OTC index hit its fourth consecutive record high at 748.65. The Dow fell 19.00 to close at 3626.10. AMEX rose to a record close, up 2.31 to 461.28 Company earnings reports: 16 reported better earnings than the year-ago period while 18 reported lower earnings than in the year-ago period. Bundesbank hints at possible future rate cuts as inflation appears to be on the wane in germany and much of Europe. Jobless claims hit 4-yr low; factory orders remain weak, contracting 2.1% from the previous reading. Dollar rallied against the yen: 105.50yen/dollar dollar falls against Dmark : 1.6445marks/dollar gold was hit relatively hard, down 6.30 to close at (NY) 363.30. silver was also off M2 fell 1.6bill in the week of Aug 23 to 3.528trill. M3 fell 3.1bill to 4.17trill. M1 rose 1.1bill to 1.098trill. M1-narrow money supply M2-broad money supply M2 consists of M1 + several other items(mney market funds either institutional or noninstitutional I've forgotten which as well as repurchase agreements) M3 consists of M2 + several other items(money market funds not contained in M2 as well as Eurodollar instruments) Conclusion: Liquidity remains high DrPepper/sevenUp Companies enacted a poisonpill takeover defense mechanism following the acquistion by CadburySchweppes of 25.9% of the company's stock. The defense industry will always be with us and viable. A senior Pentagon official stated that the Clinton defense plan which was released earlier this week(which was aimed at protecting contractors of sophisticated defense systems in the shaky economy and in the shift from the cold war state) will protect manufacturers of submarines, ships, missile systems and also armor and tank systems. Is it McDonnell Douglas that states that the world is still a dangerous place and they will always be there when the US military is pressed into action? Guess what? They are right! Future IBD info: I think I'll summarize corporate earnings on a weekly basis and present an aggregate weekly report. Most of the 'big boys' have released their earnings for this quarter and the new releases are down to a trickle. It should begin to pick up again in about 30 days as the 3rd Q ends. Indicators will be presented on a monthly basis as will the performance of the indices. Any suggestions of info that you'd like to see posted from IBD(at no more than a weekly basis please) may be emailed to me. I guess I'll post on Fridays. So, if you want something from that particular week that you are unable to obtain elsewhere in a timely fashion, email me at the above address and I'll do my best to air your request. I'll begin posting Oct 1. Also, I'd like some feedback on the posts regarding LR's Wall St and RCY's Intelligence Report as well as Fin World. Have these been useful? Is enough info provided? I've been posting for about three months and I've received email from several individuals regarding the posts. All have been positive. However, is that the general consensus in netland? If the folks who kindly emailed me when I posted the original intention would please kindly email me with your impressions on the first three months I would be highly appreciative. Comments, questions and criticisms are all welcome. Thanks. Mad Vlad Jason Hsu: >how bad can stock market correction be? 3 Sep 93 19:37 Worst possible (but unlikely) scenario: 70% crash in the next trading session Best possible scenerio: no correction, but the market goes nowhere for at least a decade, meaning a battle between cash equivalent yields and dividends Where do these predictions come from? Today, the price/book ratio of the S&P 400 Industrials is 3.2. If the market crashed to 1.0 times book value (about the level of the 1982 bottom), the drop would be almost 70%. A more realistic prediction would be a regression to a price/book ratio of 1.7 (average for the period 1947-1989), implying a drop of about 30% (assuming book value grows at 6% a year, average for 1947-1989). The market may simply chug along as the book value gradually catches up. But it would take more than a decade (assuming book value grows at 6% a year) for the price/book ratio to drop to 1.7. Don't think this cannot happen. After the peaks in the 1960's, an index fund investor would have had to wait many, many years to recover, let alone make big profits as stocks are supposed to yield. Red Herring: how bad can stock market correction be? 3 Sep 93 20:31 >In article <1993Aug31.053930.21557@adobe.com> pngai@mv.us.adobe.com (Phil >Ngai) writes: > Worst possible (but unlikely) scenario: 70% crash in the next >trading session A recession causing corporate profits to decline. While few economists forecast one any time soon, these are the same folks who predicted a "soft landing" in the economy in 1990. A 1987-style crash in the bond market would bring the stocks down, albeit for a short period of time. > Best possible scenerio: no correction, but the market goes nowhere >for at least a decade, meaning a battle between cash equivalent yields and >dividends A Japanese style asset inflation caused by a combination of a weak economy and excess liquidity. In fact, we could have a recession in 1994, and a runaway bull market after that. Both scenarios assume that inflation (CPI) will remain subdued. S Litvintchouk: >>how bad can stock market correction be? 3 Sep 93 20:32 In article <263633$97g@spitfire.navo.navy.mil> u4775@luke.NoSubdomain.NoDomain ( Greg Marciniak) writes: > Elliot Wave suggests a MINIMUM of 1750 on the Dow. That is their best > case senario. Their worst case senario is something like 400 on the Dow. The > lower number could occur sometime later in the decade. I'm not familiar with Elliot Wave, so please forgive my naive question: Does this mean that all stocks everywhere will be dragged down that much? Gold stocks as well? International stocks as well? Greg Marciniak: >>>how bad can stock market correction be? 6 Sep 93 00:57 |> In article <263633$97g@spitfire.navo.navy.mil> u4775@luke.NoSubdomain.NoDomai n (Greg Marciniak) writes: |> |> I'm not familiar with Elliot Wave, so please forgive my naive |> question: Does this mean that all stocks everywhere will be dragged |> down that much? Gold stocks as well? International stocks as well? | That is the big question isn't it? The Dow figures mentioned are exactly that, Dow figures. The U.S. stock market is the one referenced by this comment. Can the world escape a U.S. meltdown? Probably not completely. Some markets with good internal fundamentals and little reliance on the U.S. may do well but the odds are that the world would be affected more or less. Gold will probably be going up as the stock and bond markets drop. After a time, however, the metals and everything else will suffer a 2-5 year deflation as the depression reaches bottom in 1997-1999, according to Elliot Wave. It will be riding a rising tide of anger leading to a radical presidential candidate succeeding in 1996, probably Ross Perot. Stocks with money in the bank and good, repeatable, dividends are the stocks which will succeed the best. The big will get bigger and the leveraged will go under. G. Thomas Rush: >>>how bad can stock market correction be? 7 Sep 93 12:11 In article <2637t9INN6lo@gap.caltech.edu> iotov@ccsf.caltech.edu (Mihail Iotov) writes: >In article <260i0fINNsnv@dns1.NMSU.Edu>, rascott@dante.nmsu.edu (Randy A. Scott ) writes: > >I wonder why would the market fall bellow its book value. While I can understan d >that for a single company (e.g. you think the management is crooked) thinking >so about he U.S. (or the global) economy will be panic very short of paranoia. It's possible to have such a panic, and people with committments of their funds to other things (mortgages, etc) that they would be willing to sell a stock at book or below. Especially if they thought that nnext week would see the stock priced even lower. thomas rush thomasr@cpqhou.compaq.com It's time to tell President Clinton to cut spending _first_. Write him at President@WhiteHouse.Gov. Please do it today (and tomorrow and...). G. Thomas Rush: >>>how bad can stock market correction be? 7 Sep 93 12:18 > That is the big question isn't it? The Dow figures mentioned are exactly >that, Dow figures. The U.S. stock market is the one referenced by this comment. What concerns me about the internationals is history. In 1929, when Great Britain was the world leader, their stock market dropped only 50%. The US market dropped 90%. Afterwards, GB was no longer the power it once was. In the 1990s, we see that the US may be on the verge of losing its position of power in the world -- an overwhelming debt, a declining education establishment, increasing tax burden, etc. If our DJIA drops 50%, will Japan's (and others!) drop 90%? That could get very messy. What happened to gold in the Great Depression? Greg Marciniak: >>>>how bad can stock market correction be? 7 Sep 93 21:19 |> What happened to gold in the Great Depression? Actually I believe that is exactly what "The Great Reckoning" was predicting. More of a depression in Japan than in the U.S. with the U.S. losing its power and prestige. Gold stocks rose in the depression but I don't know the strength or duration. Irving Weiss of Weiss research made a lot of money in them according to him. Garrett Lau: Broker recommendations wanted 5 Sep 93 18:18 I just had a bad experience with my stock broker last week, so I'd like recommendations for other brokers. Please forgive my long-winded description of the problem in the next paragraph. You may skip to the requirements if you wish. My broker, Baraban Securities, executes trades through a clearing firm called CSC. When I buy stock, I write the check out to CSC, but I mail it to Baraban's headquarters in Long Beach. The last time I bought stock was August 16, and I mailed the payment promptly. However, on Saturday, August 28, I received a mailgram from CSC dated the previous night informing me that they must receive payment by 1:00 PM EST on 09/01/93 or "WE WILL BE FORCED TO LIQUIDATE YOUR POSITION(S) OR A PORTION THEREOF WITHOUT FURTHER NOTICE TO YOU." That scared the heck out of me, especially since the stock was currently four points lower than the price I paid for it. After calling my bank to confirm that my check was indeed not cashed, I decided that the only way to ensure that CSC would receive payment by September 1 was for me to mail another check immediately, so that's what I did. The first thing Monday morning, I called my broker's colleague (my broker being on vacation) to tell him to tell the people at headquarters to watch for the new check. He checked my account and found that it had a positive balance. They had already received my first check. That was a relief, but I don't want anything like this to happen again. Therefore, I want to switch to a broker that satisfies the following requirements. The broker must: execute stock trades without using a separate clearing firm. provide 24-hour access to account information. have an office between San Jose and San Francisco, inclusive. charge low commissions on stock trades of 100 or 200 shares. Thanks in advance for any recommendations. I'll post a summary of my responses in a couple of weeks. Garrett Lau lau@efi.com uunet!efi!lau Electronics for Imaging, Inc. San Mateo, California Arthur S. Kamlet: >Broker recommendations wanted 5 Sep 93 19:10 In article <26dai5$h9e@outrage.efi.com> lau@gateway.efi.com (Garrett Lau) writes : >My broker, Baraban Securities, executes trades through a clearing firm >called CSC. When I buy stock, I write the check out to CSC, but I >mail it to Baraban's headquarters in Long Beach. The last time I Is this what your broker asks you to do? And does the confirmation slip also say to mail your check to the broker and not to the clearing house? If so, it is somewhat different than I've seen. While the broker will always accept your check, the agreement between the broker and the clearing house should call for the clearing house to accept and clear all checks. >bought stock was August 16, and I mailed the payment promptly. >However, on Saturday, August 28, I received a mailgram from CSC dated >the previous night informing me that they must receive payment by 1:00 >PM EST on 09/01/93 or "WE WILL BE FORCED TO LIQUIDATE YOUR POSITION(S) >OR A PORTION THEREOF WITHOUT FURTHER NOTICE TO YOU." That scared the >heck out of me, Rule: Never let stuff like this scare you. As an investor, there's too many other things, like your stock going belly-up, that can legitimately scare you. If this happened to me I would have called my broker (if not in ask to speak to the office manager) and let him know they -- not you, but they -- have messed up. If they want to maintain your account they had better find out what happened to your check. If it doesn;'t clear on the next statement, you will send in a duoplicate, but tell them to put a hold on any further actions. They might try to cite rules and stuff, but if you know you are in the right, let them know they better work for you, and you don't appreciate getting notices such as these. So I don't think it really matters if the broker uses a separate clearing house or not. You could send your check directly to the clearing house with your brokers account name and account number on it. Or you could set up a money market fund with your broker, so transactions will automatically draw from and deposit into the m-m account. -- Art Kamlet a_s_kamlet@att.com AT&T Bell Laboratories, Columbus Garrett Lau: >>Broker recommendations wanted 6 Sep 93 00:06 >In article <26dai5$h9e@outrage.efi.com> lau@gateway.efi.com (Garrett Lau) write s: >Is this what your broker asks you to do? And does the confirmation >slip also say to mail your check to the broker and not to the >clearing house? If so, it is somewhat different tha I've seen. Yes, on both counts. >If this happened to me I would have called my broker (if not in ask >to speak to the office manager) and let him know they -- not you, >but they -- have messed up. If they want to maintain your account >they had better find out what happened to your check. If it >doesn;'t clear on the next statement, you will send in a duoplicate, >but tell them to put a hold on any further actions. If I had been able to contact my broker on Saturday, I might have done exactly that. But, with time running out, I decided to mail the duplicate check. Actually (as someone e-mailed me), I could have gotten immediate credit by hand-delivered the check to Baraban's local office, but I was under the impression that the check would still have to go to Baraban's headquarters and then to CSC before the matter was cleared up. >... Or you could set up a money market fund with your broker, so >transactions will automatically draw from and deposit into the >m-m account. My broker never mentioned such an option to me. If she had, I definitely would have used it. Anyway, even if I didn't have this problem with the check, I would still be interested in finding another broker in order to reduce the commissions I'm paying. And despite everything you've said, I'd be more comfortable with a broker that didn't use a separate clearing house. John Nestoriak: Contrarian investing 6 Sep 93 02:56 There was an interesting article in last monday's Washing Post business section on contrarian investing. (ie if everyone is bearish you should be bullish). They support that this might work by the fact that so many advisors were bullish before the crash in 87. Anyway, I can see saying that advisors are often wrong and we should ignore them but the reason they give doesn't seem to wash. The idea is that if a lot of people are bearish they have a lot of money in cash. That's money that can be invested and will keep prices rising. When everyone is bullish, they might be fully invested and therefore there are no more buyers and prices go down. The one thing I found really intersting though was the number of funds (which investors pay to have professionally managed) that do worse than the S&P 500. I wonder if some of this is do to the fact that the big boys influence the market too much. If I know that some fund manager is selling a particular stock that I also own I want to sell too. Besides the fact that these guys play with millions at a time of their own. John Nestoriak Penn State class of '92 - Go Nittany Lions! ----------------------------------------------------------------------------- We are Clinton Borg! Resistance is futile. Your paycheck will be assimilated. Bill Rea: >Contrarian investing 6 Sep 93 20:48 John Nestoriak (johnn@cap.gwu.edu) wrote: : The one thing I found really intersting though was the number of funds : (which investors pay to have professionally managed) that do worse than : the S&P 500. I wonder if some of this is do to the fact that the big : boys influence the market too much. If I know that some fund manager : is selling a particular stock that I also own I want to sell too. Besides : the fact that these guys play with millions at a time of their own. There are costs involved. Consider what would happen if you invested your money by buying the stocks that are in the index. You have to pay some form of borkerage when you buy in and when there is a change in the composition of the index you get hit both ways, brokerage to sell the deleted stock and brokerage to buy the new one. For managed funds there is also the fees which go to the managers etc. I have read that 80% of funds underperform the appropriate index over the long term. But if you average it out they claim it just comes to index minus expenses. ___ Bill Rea (o o) -------------------------------------------------------------------w--U--w--- | Bill Rea, Computer Services Centre, | E-Mail b.rea@csc.canterbury.ac.nz | | University of Canterbury, | or cctr114@csc.canterbury.ac.nz | | Christchurch, New Zealand | Phone (03)-642-331 Fax (03)-642-999 | ----------------------------------------------------------------------------- BREADS@DELPHI: >>Contrarian investing 6 Sep 93 21:42 The 1980's was a very difficult decade for investing in anything other than the top 100 stocks of the S&P 500. Many managers mine other areas. I would expect that the 1990's might see a signficant improvement in those numbers as other indices outperform the S&P 500. That would be ironic given the large amount of money indexed to the SPX. Larry Rogers: >Contrarian investing 7 Sep 93 16:45 In article <Pine.3.05.9309052200.D6954-b100000@cap.gwu.edu> johnn@cap.gwu.edu (J ohn Nestoriak) writes: John> The one thing I found really intersting though was the John> number of funds (which investors pay to have professionally John> managed) that do worse than the S&P 500. I wonder if some John> of this is do to the fact that the big boys influence the John> market too much. If I know that some fund manager is John> selling a particular stock that I also own I want to sell John> too. Besides the fact that these guys play with millions at John> a time of their own. Funds, on average, have to do worse than the S&P 500 average, assuming the S&P 500 accurately defines the movement of the market as a whole. After all, if everyone did better than the average, it wouldn't be the average, and with transaction costs and the large block sales/buys these funds have to execute, they do have some pretty significant costs. 6881300@LMSC5: Contrarian investing 8 Sep 93 13:53 You really should not expect the average stock fund to beat the averages during a bull market. The reason is that the average stock fund is not fully invested in stocks. Contrary-wise, you should expect the average stock fund to beat the averages during a bear market. Same reason applies. Transaction costs are a drag on performance in both bull and bear markets. However, funds with low turnover ratios minimize this effect. More to the point is the expense ratio. Matt Kennel: >Contrarian investing 8 Sep 93 21:39 Larry Rogers (larry@boris.webo.dg.com) wrote: Also, funds generally invest in a broader market than S&P500, which during the 80s, did not do as well as the large-cap's (think LBO's). And funds also hold cash and bonds, which also reduce their returns for the benefit of reducing volatilty. And funds provide services that cost real money. Mad Vlad: Investors' Business Daily-Sept 7 7 Sep 93 15:13 From the Sept 7 issue of IBD. Norman Fosback, editor of many newsletters including the Mutual Fund Forecaster is featured on page one. He says that, based on the current div yield of the S&P 500 and his 'wonderful' econometric model, that the stock market will go nowhere over the next five years. Seems he said that in the free issue of MFF for July that I received. Fosback expects that the 6ow will fall below 3000 sometime over the next 12-18 months(who doesn't). He says only that if the Dow moves to 4000, "the S&P yield would be a record low and would set up the possibility of a stiff decline." For support of his argument, he harkens back to late 1972, when the div yield was 2.65% and the ensuing two years are history. Also, in 1987, just prior to the October meltdown, the div yield stood at 2.6%. Bonds continued their party on Fri. The yield on the Tresury's 30yr bond 'smashed' through the 6.00%(or is that collapsed) level to yield 5.94% According to Donald E. Maude, economist at ScotiaMcLeod, the behavior of the treasuries 'have thrived in all worlds' and there is little indication that this will change as autumn approaches. Also, the story cites that bond market fundamentals remain strong. The 3month T-bill fell to a yield of 2.95%. Five yr T-notes currently yield 4.62%. Fed funds hovered around 2&15/16 for much of the session. The Dow gained and the NASDAQ/OTC struck a new record high as did the AMEX. Trading in gold and silver was largely quiet. Mutual fund cash position for July stands at 9.3%, up from June's 9.1%. Due out this week: Today: oil stocks and petroleum data Wed: wholesale inventories, Fed's beige book, consumer install credit Thur: nonfarm productivity, capital spending, mortgage application index, jobless claims, mortgage rates, money supply report, Bundesbank Central Council meeting, money-market mutual fund assets weekly Fri: PPI, comercial & industrial lending report, business confidence Mad VLad Matt Kennel: >Investors' Business Daily-Sept 7 7 Sep 93 19:53 Mad Vlad (england@helix.nih.gov) wrote: : From the Sept 7 issue of IBD. And inflation starting to rage during a long term war of attrition and nearly a nuclear war in the mideast and an oil cartel embargo. : Also, in 1987, : just prior to the October meltdown, the div yield stood at : 2.6%. And interest rates had just been hiked (even starting from higher levels than present) (and the market had been up 40% since Jan) The yield on the S&P might go up without a market decline too. Jordan Hayes: >Broker Report - 9/2/93 7 Sep 93 15:23 Gerald R. Walls <di236@cleveland.Freenet.Edu> writes: E*TRADE does do pinks. However, it took me a hour yesterday to get a Calneva Resources (CRK:V) quote. Why do you think a stock listed on the Vancouver Stock Exchange qualifies as a "pink sheet" stock? Or do you just call anything that's not on NYSE/ASE/NASDAQ "pink" ...? Nirmal Keshava: NYT: Sep. 7 , Mutual Funds 7 Sep 93 16:23 I was interested in getting opinions on the article that appeared in today's New York Times, on the front page, titled "Investment Soars in Mutual Funds, Causing Concerns." It talks about the huge tide of money shifting from personal savings to mutual funds, and how market performance is now being affected by the concerted movements of mutual fund managers, who are shifting their money daily in large amounts, to realize net gains. Some stats cited in the article: $1 billion a day is going into mutual funds. 10% of stock ownership is accounted for by mutual funds. 30% of all transactions are accounted for by mutual funds. It also talks about the stereotypical new invester, who is looking for the quick gain fromt the bull market but may sell off his shares, via 800-number redemption. While most of the new investers of this type, myself included in this category probably, can comprehend how a correction may occur, the article goes on to talk about how a long-term bear market, such as the one in 73-74, is something that the newer invester may not be prepared to tolerate. Any opinions?? Nirmal 6881300@LMSC5: NYT: Sep. 7 , Mutual Funds 8 Sep 93 13:39 >about how a long-term bear market, such as the one in 73-74, >is something that the newer invester may not be prepared >to tolerate. >Nirmal A small quibble. 73-74 was more "steep" than "long-term." Another such market will occur, although this isn't on the immediate horizon. When it does, one thing is guaranteed. The newbie investor will panic and sell at the bottom... just as the smart money rushes in to buy. L2: >NYT: Sep. 7 , Mutual Funds 8 Sep 93 21:54 Economies live and die based on cycles of recession and inflation. Bill Clinton is trying to fuel the US economy with lowered interest rates that will in turn cause "inflation" in the stock and bond markets - these are the two economic *sectors* where inflation is greeted with cheers. The banks themselves are afraid to lend money to kickstart the economy (through housing starts etc.) so Bill is trying to create an environment where *rich* investors (honk if Bill Clinton thinks you are rich) effectively lend money to the poorer investors because of the new tax policy which effectively makes the capital gains tax rate much lower than their tax rate on income and *forces* them to invest in the stock market - driving up prices. Additionally, the average guy, that has seen returns on savings accounts go to the dumps and is now in mutual funds, is being told "federal experts think that you should keep your holdings and not panic if the market corrects". I believe that the feds are trying to stabilize their new-found source of inflation (NASDAQ up 8% in the last 8 months - the DJIA up etc - and look at the muni bond market) until the rest of the economy can begin to "turn-on" again. Additionally, many of the major mutuals (i.e. Magellan) are ~15% invested in the international market - making any movements in Asia and Europe available indirectly to large numbers of domestic investors. Anyway - I remain somewhat bullish because I believe that the federal government will do whatever it can to prop up the stock market - and I also remain somewhat bearish because I am not sure that the feds are competent enough to pull this off. L^2 Mad Vlad: Investors' Business Daily-Sept 8 8 Sep 93 13:23 Yesterday was a bad day to be an investor. Unless, of course, you are heavily invested in US bonds. The benchmark 30yr US Treasury gained more tha a half point to close yielding 5.90%. The bond market rally continues. Gold prices in NY plunged 14.60 as inflation fears were dampened by a sluggish economy and the further decline in interest rates. Oil also plunged as the Internatl Energy Agency reported that 1993 demand for oil will be below that for 1992. OPEC nations continue to produce, further disrupting the supply-demand equation. Oil closed yesterday(Texas light sweet crude) off .66/ barrel at a three-yr low of 17.07. Is 16.00/barrel oil(I mean below 17.00) at hand? Gold is currently trading for 352.20(NY). Spot gold is currently 350 as quoted late by Republic Natl Bank. The Dow was pummelled as profit-taking and the battering of tech stocks ruled The Street. The NASDAQ/OTC fell from its record high with great emphasis on FELL. It lost in excess of 10 to close near 339. Gold stocks and tech stocks were battered. The AMEX lost some 5 points off its Fri record close. The DJUA managed a fractional gain. The US govt reported that the nation's banks reported slightly- less than record earnings for the 1993 2nd q. Profits came in at 10.4bill. Up 33% from the year-ago period. Record earnings of 10.9bill were realized in 1993 1st Q. The health of the nation's banks continues to improve. Lisa Lee Freeman writes that the growth darling of the 80's, PhilMorris, may become the yield play of the 90's in IBD's Investor's Corner. In returning to the credit markets, chief economist Philip Braverman of DKB securities says that the yield on the longbond will see 5.50%. His reasoning: "the overwhelming weight of evidence affirms the weakening economy, evaporating inflation and tenacious bond market rally." Braverman states that due to the 'blantantly weak' economy, the Fed will be forced to ease. Either by a single .5% cut or two .25% cuts in the(he says) fed funds rate. Companies reporting higher earnings: 14 " " lower " : 10 244 new highs vs 34 new lows NYSE: 113-11 OTC: 96-16 AMEX: 35-7 The Fosback High/Low logic Index remains favorable. Micheal Metz of Oppenheimer Securities is quoted as being bullish on gold. This may be a good time to short gold then! I've read Metz statements before and, invariably, it seems that quite the opposite occurs! He was quoted as saying that yesterday "was a humbling day for me." On another note, according to JD Brown in 101 Years on Wall Street, the performance of the market as measured by the Dow during the Labor day week portends its performance for the remainder of the year. If the Labor day week performance is net down, then...... In 1987, the Labor day week performance was net positive and yet.... The Dow is down 26.83 points so far this week. It may take an exceptional effort to salvage the year..... I actually think that Labor day week last year was a loser. A bellwether indicator according to Fosback: Track the performance of the DJUA and compare its current performance with its performance 15 weeks ago. Another method is by using a(at least) 200day moving avg. You might want to use weekly averages in the moving avg. If the DJUA is currently higher than either of the yardsticks, it portends favorably for the market in general. These two protocols greatly reduce whipsaw. Conclusion: Summer is over except for the people in the credit markets. Their summer will end eventually. Mad Vlad As always, usual disclaimers apply. I have no vested interest in PhilMorris. I currently do not own the stock nor have I ever owned the stock. This statement does not apply to any mutual fund shares I may hold. Any interest in PhilMorris on my part will be generated by the fact that it is, come Feb 1, 1994, one of the five-lowest priced stocks comprising the top ten highest yielding stocks of the DJIA. Buyer beware. Understand the risks associated with securities investment before committing funds. This posting reflects actual commentary or factual data obtained from the IBD. My opinions are held to a minimum and used only for comic relief. Bill Kennedy: Dow Jones News Retrieval 8 Sep 93 19:16 Forgive me if I haven't been reading this group long enough to know this has been posted umpteen jillion times. My curiosity was piqued when Chris Davis posted the traceroute output to djnr.dowjones.com. I tried to send mail to the postmaster to get some more information but their mail exchanger isn't exchanging mail. I spoke with a human today (800) 522-3567 who is going to send some paper information regarding quotes and services available for Internet access. Basically you can get, via telnet, what ever you'd otherwise get with a dial up modem. There's no introductory or welcome material on the system, so you're wasting your time with telnet until you're a paying subscriber. Call the above number for more info. Apologies again if this has been gone over before, I have only been reading the newsgroup for a month or so. -- Solaris is an anagram for Isalosr | Bill Kennedy bill@WLK.COM Inflating: INVST913.CAP <to console> Darin Okuyama: >Market Crashes / Presidential Elections 10 Sep 93 16:40 YOU FORGOT ONE: blh@uiboise.idbsu.edu (Broward L. Horne) writes: > For the past few weeks I've been playing around with historical > market crashes / depressions. I'd say there's definitely a > pattern in that virtually all market crashes / depressions have > been in odd-numbered years. But, still, it seemed like there > was something more... > > Year Presidential Election Comments > > 1837 one year before - 1836 Depression begins > 1857 one year before - 1856 Market crashes > 1869 one year before - 1868 Market crashes > 1873 one year before - 1872 Market crashes / Depression > 1893 one year before - 1892 Market crashes / Depression > 1907 ---------------------- Market crashes, JP Morgan > keeps it propped up > 1929 one year before - 1928 Market crashes / Depression > 1987 ---------------------- Market crashes, govt keeps > it propped up 1993 one year before - 1992 Market crashes Oops. A little premature extrapolation. :o) Darin OKuyama NASA Ames Research Center Greg Marciniak: >Market Crashes / Presidential Elections 10 Sep 93 19:34 To cycle therorists, 1995 is a very important year, as important as 1987. Elliot wave has called for a reversal to the right in the next election with Ross Perot as the probable winner. Certainly someone very radical. Think about what would happen to the stock market if it became clear a radical candidate was heading for the whitehouse. Albert Sindlinger, longtime pollster, who called Bill Clinton's victory well in advance, says that whichever party won the election in 1992 wouldn't see the whitehouse again for a generation. They would be the ones holding the bag. Currently 69% of the heads of households report their current income and prospects will be worse six months from now. Not the same, mind you, but worse. As Elliot wave pronounces, the business cycle is intact, we are ENDING the recovery not entering it. I don't know about your part of the country but around here there is a tremendous amount of forward selling. Buy now, pay in 1994-no interest. Who do they think will be buying in 1994 while they are paying for what they bought in 1993. Sindlinger presented a case of why forward purchases caused the downturn in the ealry 70's after Nixon lifted price controls. People rushed out to buy but had no money later. All in all, not the thing bull markets are made of. I rather hope all this comes to a head sooner rather than later. The more money that is trotted out of insured accounts and set adrift in the markets, the less money there will be available to rebuild the economy later. Money in the markets does not have the same multiplier effect as money in the banking system. Greg Marciniak -- 20:49 --misc.invest-- 7 MORE+next --help:?--Bot-- Gerald R. Walls: >Market Crashes / Presidential Elections 10 Sep 93 22:08 In a previous article, blh@uiboise.idbsu.edu (Broward L. Horne) says: > > For the past few weeks I've been playing around with historical > market crashes / depressions. I'd say there's definitely a > pattern in that virtually all market crashes / depressions have > been in odd-numbered years. But, still, it seemed like there > was something more... > > > Year Presidential Election Comments > > 1837 one year before - 1836 Depression begins > 1857 one year before - 1856 Market crashes > 1869 one year before - 1868 Market crashes > 1873 one year before - 1872 Market crashes / Depression > 1893 one year before - 1892 Market crashes / Depression > 1907 ---------------------- Market crashes, JP Morgan > keeps it propped up > 1929 one year before - 1928 Market crashes / Depression > 1987 ---------------------- Market crashes, govt keeps -- 20:49 --misc.invest-- 6 MORE+next --help:?--Top 52%-- > 1929 one year before - 1928 Market crashes / Depression > 1987 ---------------------- Market crashes, govt keeps > it propped up > > Sure, it's a simplistic relationship, but still, with presidential > elections in only 25% of possible years, it seems kind of unlikely > that there's no relationship. This is a tradition. Markets tend to do poorly the first two years of a president's term and well the last two years (thought under Reagan this didn't hold very well). This has been attributed to the president applying bitter economic medicine his first two years and then stimulating the economy his last two years to get himself (or his party) re-elected. Bush screwed it up and you see what happened. The 1990 tax bill (a clone of which we have now in 1993) at the beginning of a recession was a real smart idea. Funny how the spending cuts never seem to stick and the taxes do, isn't it? -- Gerald Walls | Don't blame me. I voted Libertarian. Who is John Galt? | NRA Life Member -- 20:49 --misc.invest-- 6 MORE+next --help:?--96%-- Gerald Walls | Don't blame me. I voted Libertarian. Who is John Galt? | NRA Life Member di236@cleveland.freenet.edu / int_walls@ecc6.cfsat.honeywell.com -- 20:49 --misc.invest-- 6 MORE+next --help:?--Bot-- Broward Horne: >>Market Crashes / Presidential Elections 10 Sep 93 22:54 In a previous article, u4775@luke.NoSubdomain.NoDomain (Greg Marciniak) says: > > To cycle therorists, 1995 is a very important year, as important as >1987. Elliot wave has called for a reversal to the right in the next election >with Ross Perot as the probable winner. Certainly someone very radical. Think I checked out the historical data on change of party in the White House. It isn't anywhere near as strong a relationship. >I rather hope all this comes to a head sooner rather than later. The more money >that is trotted out of insured accounts and set adrift in the markets, the >less money there will be available to rebuild the economy later. Money in the I agree. I've got two scenarios now. In one, using an aggregate model of South American countries, the U.S. comes out with about a 15-20% unemployment rate for about 2-4 years. That's the good scenario. It was the one I was betting on, but lately I'm not so sure if we aren't looking at an all-time blowout. I can't believe Clinton is jabbering about how the 'free health care system' will magically save $90 billion. Or that not only has my country now torched 80 people in Waco, it's taken to firing on Somalian women from helicopters. I never thought it could be so deluded. So selfish. A real crunch might really make Clinton ( or whoever ) the American Fuhrer. Doug DePrenger: >>>Market Crashes / Presidential Elections 13 Sep 93 15:51 |> I checked out the historical data on change of party in the White |> House. It isn't anywhere near as strong a relationship. Agreed. Norm Fosback (Mutual Fund Forecaster, et al) published a study (I received along with a subscription) that had the same conclusion. Mad Vlad: Market Report-9/10 11 Sep 93 15:38 The DJIA and the NASDAQ snapped back sharply yesterday when the PPI was released. The PPI, excluding the volatile energy and food segments, dropped an astounding and unexpected 1.0%. With the energy/food components included, the PPI was off by .6%. The bond market rallied at the news expecting that the Fed will not have to raise interest rates or deviate from current monetary policy in any way. The yield on the Treasury's 30yr offering fell to 5.88%, down from Thursday's 5.94%. The DJIA swelled some 32 points in moving through the 3600 level (and reestablishing a mark well above the 3600 level) convincingly to close near 3622. The NASDAQ gained to close within 5 points of its record of 749.xy. On the Bigboard, advancers swamped decliners by a greater than 2:1 margin. Up volume dwarfed down volume by nearly 3:1. On the NASDAQ, risers exceeded decliners by roughly 16:11. Volume fell some 10mill shares from the previous session. Gold was off approx 4.00 in NY to close at 352.xy. Silver was also a loser as was oil. Any inflationary pressures on wholesale food prices due to the Midwest flooding were muted by the decline in energy prices in Aug as well as by the decline in prices in components comprising the core rate of the PPI. The midwest flood's effects on inflation appear fated to be a non- event as other aspects of the economy have shown a tendency to fall relative to prices at the producer level. As opposed to Tuesday, yesterday was a good day to be an investor, unless, you were holding gold, silver or oil futures. The breadth of yesterday's market rally was strong and many industries participated. The Dow moved back through 3600 in a strong manner and the NASDAQ is off less than 1% from its all-time high set on Sept 3. Perhaps this Labor Day week is not a harbinger of a terrible remainder of the year. On the other hand, I wouldn't plan on 4000 on the Dow by Christmas. Corporate earnings will begin to(for the 3rdQ) filter out the first week of October. Some of the big boys should start reporting their third Q results(GM, GE, DuPont, Kodak, etc) probably about the third week of Oct. That will probably be the next focal point of this market. In harkening back to a previous post from IBD regarding a comment about the sell-off earlier this week from Mr Newman: The gravity and extent of any further decline in the nearterm will be dependent upon the nature and breadth of the attempted rally. Well, I think we've seen the market put its best foot forward. Mad Vlad Thanks to those who sent email regarding the usefulness of these posts. I received nearly two dozen responses and all were favorable. As I see I am not wasting my(or others) time, I will continue to post. I owe you the Sept 14 issue of Fin World. Look for that mid next week. I think I'll post corp earnings on Fridays in an aggregate manner as well as indicators. The daily posts will be limited to front page stories and bits from Making Money in Mutuals and the Credit markets column. Mad Vlad: Investors' Business Daily-Sept 13 13 Sep 93 15:00 I'll dispense with the usual stuff since I posted under Market Report, Sept 10. One thing from the Sept 10 issue of IBD, Heiko Thieme, the manager of American Heritage Fund thinks there will be a 10% corection back to 3000 before June 1994. He says that this will be the last time 'we see 3000.' earnings reports: 12 up, 6 down Due out this week: Monday: manufacturers profits for 2Q Tuesday: CPI, retail sales for Aug, current acct balances for 2Q, auto sales to Sept 10, oil stocks and petroleum data, Wednesday: Business inventories for July Thursday: industrial production, merchandis trade report for July, mortgage application index, jobless claims, mortagage survey, money supply report, money market mutual fund assets Friday: commercial and industrial lending activity Sysco Corp board authorized a share buyback program of 10mill shares. Abbott Labs has been authorized to buyback 5.5% of its 363mill shares outstanding. Crude oil at 16.76/barrel. Analysts say the slide may continue due to the inability of OPEC to reach agreement on production levels. Mad Vlad This is not a recommendation for the purchase of Sysco Corp or Abbot Labs stocks. Buyer beware. A profit from the purchase of these securities is neither guaranteed nor implied. I have no interest, past, present or near-future in the above-mentioned securities. Understand all risks associated with a particular investment before committing funds. Bill Kennedy: Internet Dow Jones Market Monitor 13 Sep 93 18:43 Last week I followed up on an article that Chris Davis posted about the djnr.dowjones.com machine (and their MX that doesn't accept SMTP) on the Internet. I got the material today and signed up. It's painless. The fee is $29.95/mo for unlimited access after 2001 and before 0600 weekdays, 24hrs weekends and major holidays. In addition to Internet access via telnet you can dial them up on Tymnet or SprintNet, they sell various software packages for IBM and Mac for modem access. Fees are ~$1.50/min prime time and more per 1,000 characters during prime time. The person you need to contact to sign up is Doris Runyon (800) 815-5100 (press 1 when the robot answers). The only credit card they accept is American Express. You can call the number I posted last week if you want the sales propaganda. The service is not available outside the contiguous 48 states and it says the password can not be shared. Presumably that means that the material has a compilation copyright and may not propagate beyond the paying subscriber. There are a number of data bases to query, the one that started this thread is //CQE, Current Quotes Enhanced. Might want to explore //SYMBOL first to make sure you're using the same symbol they are. I haven't tried it yet but will prowl it after 2001 this evening and will post again if there's anything worthy of the bandwidth. The times say "local time" but I'll bet that's Eastern because subscriber services are on a (609) number. That's all I know at this point. Inflating: INVST916.CAP <to console> Mad Vlad: Financial World-Sept 14 16 Sep 93 15:35 COMPANY WATCH Plum Creek Timber-currently at 60 following a 200% runup since Jan, 1991, PE=10, barring sharp rise in interest rates, this timber limited partnership could be headed higher; one of the largest holders of private timberland in Pac NW; owns its own timber and doesn't have to buy timber on the open market; Evadna Lynn, Dean Witter forest products analyst, says that this stock is the purest play on rising timber prices in the Pac NW, she currently has a buy rating on the stock; current yield 6.6%; 2Q earnings came in well above expectations at 1.73/share, 93% above last year's result; gross margin has jumped more than 25% to 38.9%; Larry Katz, analyst with Pacific Crest Securities in Portland, OR, estimates that the company will earn 6.10/sh for 1993 and 6.94 in '94. Daniel McKenzie of Ragen-Mckenzie speaks well of the management: "They have looked out for the limited partners. They have improved mills and they have focused on niche markets." (original story by John Kimelman) NYSE-PCL THE DOOMSDAY SCENARIO by Jennifer Reingold The story centers around Stanley Salvigsen, chairman and CEO of the private Comstock Partners. He also manages Dryfus Capital Value fund and a Comstock Partners fund. Mr. Salvigsen has been a bear for 18 months. He is predicting a 25% drop to this market. As to when , he claims that he's "the wrong guy to ask." His reasoning unfolds as follows: A deflationary trend now exists with a "tug of war between deflation and inflation, producing what the bulls would say is ideal low growth." Debt-financed growth will result in the ability of companies to pay dividends large enough to support their current valuations. Furthermore, a collapsing market will look towards the Fed for help; however, the Fed strapped with 25% of the 16trill nat'l debt will not be able to 'come to the rescue'. As interest rates continue to hover around the inflation level,, policy options available to stimulate a slow-growing, debt-ridden economy are few and inflationary. Mr. Salvigsen's advice following a correction: "The thing is to buy something. Even if you make poor guesses at the bottom you're going to better than if you held them at the top." SELECTED ISSUES by Susan Jones Aggressive growth stocks(as recced by the management of Invesco Dynamic Fund) rec price 92EPS 93EPS PE 5yr growth Advanta B 47.50 2.08 2.70 18 23% Applied Mats 68.25 1.09 2.20 31 30 Cisco Systems 57 .68 1.30 44 40 Cott Corp 30 .26 .55 55 50 Linear Tech 33.25 .69 1.00 33 25 Newbrdg Netwrks 59 .16 .78 76 40 Equity-Income(as recced by managment of American Natl Income fund) Current yld Abbott Labs 23.625 1.42 1.69 14 2.9% Ball Corp 30.625 2.21 1.93 16 4.0% ConAgra 23.125 1.61 1.77 13 2.7% Lee Enterprs 30.375 1.75 2.00 15 2.6 UGI Corp 24.50 1.20 1.33 18 5.5 Whirlpool 65 2.90 3.70 18 1.9% USX conv preferred A 48.625 not appl not appl not 6.7% Mutual Funds(as recced by The Mutual Fund Letter) performance 7/31/92-7/30/93 7/31/90-7/30/93 Clipper Fund 11.5% 15.2% Invesco European (.6) (1.7) Lexington Goldfnd 48.3 6.2 Price Interntl Stock 14.1 2.6 Vanguard Small Cap 21.6 15.7 "Large-cap growth funds, the darlings of the 1980s, will most likely lag during the 1990s. To get the best returns, look for funds in out-of-favor sectors. These days those sectors incluse international equities, samll caps and precious metals." Global Stocks(as recced by management of TRowe Price Internatl Stock fund) rec price 1992EPS 1993EPS PE Aoyama Trading(Jap) 71.13 1.97 2.39 30 HutchisonWhampoa(HK) 2.80 .12 .21 13 Kingfisher(UK) 9.30 .48 .53 18 Reed/Elsevier(Holland) 69.50 3.00 3.54 20 United Overseas Bnk(Singa) 7.50 .33 .39 19 YPF(Argentina) 20.60 .74 1.65 12 NO LONGER RISING SUN? by Stephen Kindel Jeffrey Funk, an asst prof as Penn State, published a work entitled The Teamwork Advantage: An Inside Look at Japanese Prroduct and Technology Development. It noted that while the Japanese are system works well with products "that are logistically complex, such as automobiles, consumer electronics and memory chips, when- ever such products demad the addition of creativity, the Japanese have difficulties in execution." The story measures two components of competitiveness. One, inventory turns(cost of goods sold/ inventory) is clearly headed by US concerns. US turns moved up decisively in a 5yr improvement of 11.2%, from 4.65 to 5.17. The Europeans also registered a 5yr gain. The Japanese have been lagging. The second indicator, gross margins, also shows the US clearly ahead of the Japanese. Gross margins(in the last 5yrs) peaked for both the US and Japan in 1990; however, the 1992 differential increased sharply. Micheal McGrath, managing director and a founder of the consulting firm PittiglioRabinTodd& McGrath, says that US firms have developed a competitive edge that goes beyond the strong yen. According to McGrath: "The Japanese are just beginning to learn about global supply-line integration. But while they are doing it, the US is already rewriting the rules on distribution with interlocking computer systems, and that will help keep us ahead." McGrath's data takes into acct the current high yen. A dissenting view is presented by P. Ranganath Nayak, a senior VP with Arthur D. Little. He explains the US 'edge' in terms of macroeconomic theory. "The Japanese economy has slowed down precisely because it has become less price competitive, so, of course, inventory turns are going to slow. Of course gross margins are going to erode." A survey by Nayak indicates that 73% of US CEO's polled believe they hold an edge over the competition. According to Mr. Nayak, these figures do not correlate "with what we've been observing in our work with clients. The sense of complacency that this survey shows is very dangerous." Mad Vlad Usual disclaimers apply. Buyer beware. Do not buy any securities until all risks are understood. This post is not a recommendation to buy these securities. A profit from the purchase of the above- mentioned securities is neither guaranteed nor implied. I receive no compensation, financial or otherwise, for posting this info. I have no association with the publisher except as a paying subscriber. Although the figures are believed to be correct, an error in data transfer is possible. Further investigate any invesment found to be interesting before purchase.