And there’s joy at Fenway as  Boston Puts It To the Yankees.

If….you love the Yankees, I understand.

Every morning after a Red Sox game, Lisa’s grandmother tells me about the game. I already know what she tells me, but she gets quite excited at age 95.

She says, “Big Poppie (David Ortiz) clocked his third home run, and things are looking up for him” and “the stock market”, I add.

OK; not so fast, Randall. We have a lot of ground to travel before returning to solid ground. No banners hanging over Wall Street yet.

Just the same, the news is better.

Market analysts support viewpoints with statistics. Most of us find the data dreary. We scan the dull parts faster than a furtive glance.

Baseball stats dull the sound of the bat, the “wave”, and a Fenway Frank. Just the same, statistics and probabilities matter.

This summer, I went to my second Red Sox game. We sat perpendicular to third base. What seats! To my right and to my left, two middle-aged men kept track of every hit and every pitch for every inning.

I asked, “How come you do that?” They both said, “I just enjoy the game more when I do.”

So, for those who enjoy stock statistics, the attached SEI Investments commentary gives you plenty to ponder.

Quiz:  Can you guess the stat before reading the right coloumn? They all seem esoteric to me.

Here’s the article, “Small-Cap Stocks: Too Far Too Fast or Just the Beginning?” by James Solloway, CFA, Senior Portfolio Manager, Global Portfolio Strategies, SEI Investments, Inc.

Last week’s chart illustrated the current plunge of S&P 500 earnings. Today’s chart illustrates how this plunge in earnings has impacted the current valuation of the stock market as measured by the price to earnings ratio (PE ratio). Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s). As a result of the current plunge in earnings and the recent 2.5 month stock market rally, the PE ratio has spiked to the low 120s – a record high.

Notes:
- Where’s the market headed? The answer may surprise you. Find out right now with the exclusive & Barron’s recommended charts of Chart of the Day Plus.

Source: Chart of the Day

On December 19th, 2008, Robert Brokam of the Motley Fool, asked John Bogle (born 1929), founder of The Vanguard Group, if we are heading for a depression (Bogle grew up during the Depression).

“Today, we hear a lot of people invoking the possibility of another Depression. So what is your take on today’s crisis? Are we looking at another Depression?”

Bogle answered,

“…This is my tenth bear market, defined as one that goes down at least 20%. And this is in a lot of ways the most difficult one that we have had because the gross excesses — the unacceptable excesses in our financial sector — are carrying over to the economy at large…I think the excesses of Wall Street and Wall Street’s greed have carried over and done substantial harm to Main Street and the people that make America go….”

In the Berkshire Hathaway 2008 Annual Report, Warren Buffet refers to the performance table (see page 4) tracking the 44-year performance of Berkshire’s book value and the S&P 500 index.

“…2008 was the worst year for each. The period was devastating as well for corporate and municipal bonds, real estate and commodities. By year-end, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game.”

There was no place to hide, and asset allocation didn’t matter.

An “Investment News” survey concluded that “70% of 329 advisers said that the economic downturn and its effect on clients have negatively affected their physical and/or emotional health.”

Jed Horowitz, author of the article, writes,

“Mental-health professionals say that stress can trigger depression, which can lead some advisers to feel unjustified guilt over unpredictable client losses.”

“As many as 80 percent of Americans are stressed about their personal finances and the economy, according to the annual survey conducted by the American Psychological Association,”

according to CNNHealth.com.

Dr. Katherine Nordal, the association’s executive director for professional practice said,

“This year…the No. 1 concern is both money and the economy. In my 30 years of experience…this was not the thing that would be high in complaint lists…what we’re seeing today is that the economy and finances are viewed as significantly more stressful, by more than 8 out of 10 Americans”

(7,000 Americans replied to the survey from April to September 2008).

During his March 24th press conference, President Obama reminded Americans that

“We will recover from this recession, but it will take time, it will take patience, and it will take an understanding that when we all work together; when each of us looks beyond our own short-term interests to the wider set of obligations we have to each other — that’s when we succeed.”

.

Recent news suggests, but may not be conclusive, that this recession has found its bottom and finds it attractive.

My Grandmother (“Nannie”) would say, “Raymond, pick up your feet.” At the table, she would remind me to “sit up straight,” and when eating she’d say, “chew your food quietly”. She expressed herself lovingly because the way I behave matters. Probably sounds quaint but I must say, she cared.

Folks working the Wall Street trading floors care too. They’re not different. Even their motivation equates with most investors. They seek profits and wealth. They abhor losses. Their proclivity for gain makes them “push their luck”. No different from any 401(k), pension plan, mutual fund, or individual stock investor.

Excessive desire for gain blows bubbles into markets because no one wants to miss the game. Everyone wants ” in”. If you’re not in the game, you’re not a player, and you’ll feel ashamed. Nobody wants to “fold”. Investing differs from poker, but the methods and outcomes seem dissimilar as the “pot” grows because avarice instigates excessive risk-taking.

At a point of time, unknown to most players, realism cascades into the game. Emotional and economic tremors awaken “the players”  and the game ends. Players drag themselves (or get dragged) away from the table, or languish waiting for the next game to start, and the evolution toward the next game begins on the heals of the one just ended. 

What keeps this paradigm running? Human nature does. Many investors claim an understanding of risk-taking, but most want only consistent gains. These players come to the table late and leave too late.  

Investing is not a game, yet has specific rules. Maybe investors should follow the rules while adhering to ethics and managing emotion. Investing is about modernizing, making life better, healing, serving, and improving the world.

Investment dollars empower entrepreneurs and corporations to test and implement proven theories and methods to achieve a common good. With keen wit and a sharpened ethical edge, investors,  entrepreneurs, technology innovators, and business managers could apply new energy to their work and profit incentive.

Respecting resources, people, and the earth may validate adherence to wisdom and purpose when investing. Many corporations and investors have abandoned legitimate purposes and intentions for their product and service by losing a grip on the what is “good and right”.

Noah Robinson writes, ” We live in a world that’s resource-constrained but ingenuity-rich.” Taking care of the earth, the world around us, having fun, and sleeping well does not contradict the power of new ideas and the ethic that governs those concepts.

Noah Robinson elaborates in his article, “What is Ethonomics?”

My Grandmother knew this in her quiet, reserved, and short-of-stature demeanor. She collected her dividends, invested in quality companies, and held her stocks for the long-term. She saved. She was an investor.

October 29th, 2008

Nothing about the stock market is too predictable…what you expect usually does not happen.

Some will disagree. For them, the direction of the market is clear. At least clear when claiming prescience. They’ll never admit when wrong; they will boldy exclaim and humiliate when right.

Stock trading intra-day has relevance, but what seems to matter most is what the market indexes say at 4PM (or after the final trades settle around 4:10 or later).

Here are three observations:
• Volatility prevails
• The better hedge funds seem to be standing on the sideline
• Nobody is really certain about what happens next; Those who are certain see “gloom and doom”
• Many wait for the next economic “shoe-to-drop”

Finally, whatever happened to dollar-cost-averaging?

Two intriguing observations from this data (Compiled by Dustin Woodard)

Stock market crashes can last more more than a year.

September or November are the critical months (remember October 1987).

10th Worst Stock Market Crash:
Date Started: 1/15/2000
Date Ended: 10/9/2002

Total Days: 999
Starting DJIA: 11,792.98
Ending DJIA: 7,286.27
Total Loss: -37.8%

9th Worst Stock Market Crash:
Date Started: 11/21/1916
Date Ended: 12/19/1917

Total Days: 393
Starting DJIA: 110.15
Ending DJIA: 65.95
Total Loss: -40.1%

8th Worst Stock Market Crash:
Date Started: 9/12/1939
Date Ended: 4/28/1942

Total Days: 959
Starting DJIA: 155.92
Ending DJIA: 92.92
Total Loss: -40.4%

7th Worst Stock Market Crash:
Date Started: 1/11/1973
Date Ended: 12/06/1974

Total Days: 694
Starting DJIA: 1051.70
Ending DJIA: 577.60
Total Loss: -45.1%

6th Worst Stock Market Crash:
Date Started: 6/17/1901
Date Ended: 11/9/1903

Total Days: 875
Starting DJIA: 57.33
Ending DJIA: 30.88
Total Loss: -46.1%

The 5th worst stock market crash:
Date Started: 11/3/1919
Date Ended: 8/24/1921

Total Days: 660
Starting DJIA: 119.62
Ending DJIA: 63.9
Total Loss: -46.6%

4th Worst Stock Market Crash:
Date Started: 9/3/1929
Date Ended: 11/13/1929

Total Days: 71
Starting DJIA: 381.17
Ending DJIA: 198.69
Total Loss: -47.9%

3rd Worst Stock Market Crash:
Date Started: 1/19/1906
Date Ended: 11/15/1907

Total Days: 665
Starting DJIA: 75.45
Ending DJIA: 38.83
Total Loss: -48.5%

2nd Worst Stock Market Crash:
Date Started: 3/10/1937
Date Ended: 3/31/1938

Total Days: 386
Starting DJIA: 194.40
Ending DJIA: 98.95
Total Loss: -49.1%

Worst Stock Market Crash Ever:
Date Started: 4/17/1930
Date Ended: 7/8/1932

Total Days: 813
Starting DJIA: 294.07
Ending DJIA: 41.22
Total Loss: -86.0%

NOTE: This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts. For more information, including a prospectus with charges and expenses, call the number of any brokerage firm, mutual fund company, investment advisor, or insurance company.. Please read the prospectus carefully before investing. . Mutual fund investing involves risk, including the possible loss of principal. In addition to the normal risks associated with equity investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly focused investments typically exhibit higher volatility. Products of companies in which technology funds invest may be subject to severe competition and rapid obsolescence. Index performance returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index. Past performance does not guarantee future results. Ethos provides this news page for information purposes only and it should not be construed as legal, accounting, tax, or professional advice. Ethos Advisory Services disclaims any loss or liability which is incurred as a consequence, directly or indirectly, of the use or application of this news page or any page on ethosadvisory.com or echievements.com.

Tags: stock, market, crashes,

Never have I observed such a dispirit mass of views, political dysfunction, and public confusion. Dispirit views can be expected whenever discussion ocurrs, but political dysfunction is not what a democracy needs. Public confusion erupts because there is a lack of government leadership and public knowledge. When a crisis arrives, no one can decide on what works, and no one leads. All parties appear to play the zero-sum game: give me all I want and I’ll give you nothing of what you want, or I’ll give up something as long as you know there’s hell-to-pay.

Most people get their stock market updates from the evening news. The excitement on the way up with the gloom and doom during a market correction. Very few get much of an education. Duncan Niederauer, CEO of the New York Stock Exchange recognized this by statiing that many voters fail to understand the inextricable link between “Main Street and Wall Street”.

American voters think this is a “bailout of Wall Street”. What we face is a “credit-crisis”. Small businesses faces payroll challenges, the U.S. auto industry has no wheels, and the housing industry has no foundation. As Secretary Paulson said, “…this is much too important to let this fail,” Paulson said.

House Majority Leader Steny Hoyer said, “Why should taxpayers loan out their own money to solve a crisis brought on by someone else’s greed?” He answered his own question by saying, “…in our economy, none of us is an island. A meltdown would begin…on a few square miles of Manhattan, but before it was over…no city or town in America would be untouched.”

Mutual fund, 401(k), endowment fund, and pension investors can blame Wall Street “fat cats”, but we all chased the mice. We all gloated and took pride in the numbers on our statements. “No city or town in America” ran from the market upside, but everyone wants to blame someone on the downside.

The greater the excess or hubris, the greater the humiliation. The greater the cynicism, the greater the deliberative dysfunction when seeking a resolution. The greater the market avarice on both sides of a trade (long by owning stock and selling or shorting a stock)the worse the results for everyday, steady-hearted investors.

We can only hope that time and sensibility return our sanity. We can only hope that the stock market becomes a thermometer of economic growth, research and development, entrepreneural innovation, and a cooperative effort to keep this planet revolving for our kids.

Tags: stock, market, crash,, credit, crisis,, September, 29,, 2009,, Wall, Street

Just turned-off Bloomberg Television (the only reason for a TV in my office). When watching the stock market, I go from Bloomberg Television to the Fox Business Channel (some former Bloomberg talking heads must have received attractive offers from the Fox Business Channel) when watching the stock market. Turning-off the TV brings a wave of quiet and rest to my head. Too many opinions along with a depressed stock market paralyzes my work (months ago, the TV was turned-off because of too much stock market euphoria).

Sometimes I open Firefox to Google “stock market news”. I look for positive information. Something encouraging and hopeful to counterpoint my disappointment in recent Fed action (or inaction), the price of oil per-barrel, Michigan Consumer Sentiment Index – MCSI, and today’s Dow Jones Industrial Average slippage to a 20% bear stock market drop.

Have I found positive, happy, sanguine news? Not really. I have found hints of optimism based on specific indicators. Investor’s Business Daily (IBD) is a favorite stock market source of information. IBD tracks the EKG (stock trading patterns), relative strength, earnings-per-share, industry rank with a lot of other data.

At Investors.com, IBD offers a stock market video reviewing the previous day’s stock market close. Anyone may listen, but the video changes daily. Ken Shreve’s stock market commentary provides helpful insights that may soothe you while watching stock market trades.

You will find Mr. Shreve’s stock market perceptions helpful. I do. Look for the “Daily Stock Analysis” at Investors.com. Remember, this is Mr. Shreve’s comment for one day. To understand stock market trends, you’ll have to listen daily. Also, my mentioning this resource is not a recommendation. You may not find IBD’s comments helpful or suitable to your investment goals. At worst, you may find his commentary and charts entertaining.

Some times the stock market takes off like a rocket. Yesterday (March 18,2008) was one of those days. The Dow Jones Industrial Average closed with the 4th highest one day gain in the history of the index. I get excited when the market goes up like that. My tendency is to be optimistic, yesterday does not give me many reasons for a party.

You need a lot of people to make a stock market party. Yesterday everyone was invited, but only a few came. Stocks must move up on strong volume with confirmation over at least 6 to 10 days of market action (not necessarily in a row). Yesterday was not convincing because the trading volume was not there.

You can get a further sense of stock leaders by their trading volume too. If they show price gains without exceeding their average daily volume, you have an invitation, but not a party.

You can learn more about the market’s activity by listening to the daily audio report posted on the home page of the Investor’s Business Daily web site. You will learn some technical or chart pattern pointers, and get a sense of market direction, if this is important to you.

Most of us tolerate asset allocation portfolios better than individual stock portfolios. Knowing where the market is going gives you insight and confidence about your investments.

You log into your stock market account at your favorite discount broker (I like TDAmeritrade), you go to the tool bar to find “tools”. You select “screen stocks” and search for what you consider the best valued stocks. After researching Standard & Poors or Morningstar, you select the stocks that seem best suited to your portfolio as you think, “After this drop in the markets, it might just be the right time to buy these stocks. So, here I go.”

Your next step is to place your buy-orders on line. You fill in the stock symbol, select “buy”, fill in the dollar amount you are allocating or the number of shares you want to purchase. If you buy on margin (don’t), you select “margin” or “cash” (select “cash”).

Now, the next step is to “Preview Your Order”. You review each entry; it all looks correct. The next step is “Submit” You hesitate. You think about it. “Hmmm, the market is up this afternoon. There are two more hours until 4PM, but it looks OK. The market must be rebounding from the recent contraction. Time to buy.” You hit the “Submit” order and in an instant your confirmation acknowledges your order is “entered”. But, did you do it right?

At 4PM, the market closes and the Dow Jones, the NASDAQ, and the S&P 500 are all down. You check your stocks; each one is down from the price of your “buy” order. “What to do…What to do?”

Here are a few rules:

1. When the stock markets go through a severe correction in one day, wait a while.

2. If after a major market drop, the next day is a positive closing, the next one a negative, the next one, the market is up during the day, but closes down at the close of the day, you may have placed your stock buy-order at the wrong time.

3. “Waiting a while” means waiting at least 4 days after a market correction for what Investors.com (founded by William J. O’Neil) calls “a follow-through signal”. These are days when down volume falls and the market does not close below the low-close of the correction day. However you need to know that you have to observe at least 4 rally attempts after the low-close. Your buy signal, according to Investors.com, will come on the 4th rally attempt or later.

Don’t buy too soon; be patient.

Tags: stocks, stock_market, Buying_stocks,

Front page of the Wall Street Journal reads, “The Dow Industrial plunged.” Words like “plunged”, “crashed”, and “suffered losses” are inked by journalists. I can think of a swimmer taking a plunge into the water, a car crashing into a tree, or a gambler suffering losses. Each connotes surprise; something happening unexpectedly.

Jeremy Peters’ New York Times (NYT May 31, 2006) by-line reads, “Big Sell-Off Worldwide.” Trading patterns for the past month have suggested a consolidation of stock prices. Markets around the world, particularly emerging markets, have continued upward trends without retraction. Upward pricing does not continue for ever. Pricing is always in flux. Enthusiasm for any asset class is bound for a setback. After awhile the smart investors take excess profits, or rebalance their accounts to a standard weighting or dollar commitment to that asset class. The smartest take this action first, but no one gets it right every time.

Markets always warn; you never have to wonder about market surprises. When a natural disaster or war happens, everyone expects investors to sell risk while seeking a safe harbor. No one wants to be in the storm. Who wants to take risk when the odds exceed the norm? When the market takes a hit without obvious reasons, investors wonder, become worried, and confused.

This market warned as stock prices got more expensive. Trading volume decreased, and old highs were not exceeded and new highs were not reached. If some stocks reached a new high, it happened on lower trading volume. This indicates decreasing enthusiasm.

Oil prices, inflation, and interest rates will always thwart market activity. Jeremy Peters (NYT) quotes Ethan Harris, chief United States economist for Lehman Brothers. “The main thing that ails the stock market is uncertainty about the Fed and inflation. I think the stock market is beginning to figure out that inflation is becoming a danger. Where they pretty much ignored inflation for a long time, now it’s becoming an issue.” To the best of my knowledge, high oil prices have always inflated prices. Further inflation worries come from commodity pricing and demand. This may be inevitable with India and China scrambling for copper and other minerals. Oil prices will continue their climb unless demand subsides (not likely). If oil prices increase, inflation will become obvious. If inflation shows up in product pricing, the Federal Reserve Bank will ratchet rates. If the Fed keeps raising rates, the economy will fall into recession. If the economy falls into recession all asset classes will decline in value. Not a very positive outlook The markets will inform us daily.

Read some of my other articles found as Ethos Musings

Most entrepreneurs have decided at an early age that they   they were willing to make sacrifices, discipline themselves and follow strict guidelines to be successful. They knew
how important it was to investing their time and money properly. When it comes to making investments, however, most people, are unsure of their abilities to make
decisions regarding business opportunities. Or, they miss critical opportunities because they do not have any confidence when it comes to making these decisions. If you
have the ability to make the necessary decisions to make the best investments, you may be a true entrepreneur.

That’s not to say that you shouldn’t avoid risk, whenever possible. In fact, the best way to prepare yourself in the area of investing is by reading business publications that
will relate to the topic, such as The Wall Street Journal.  Research is a critical step toward investing, and should be done with thoroughness and patience. Speeding through
this process will only cause you to lose money unnecessarily. In today~s technological world, intense research can be done through various internet search engines. Speaking with other investors will give you a better picture of the types of investments that are solid, and joining stock market clubs may help, as well.

Try this experiment, if you want to test your discipline. Commit to setting aside a certain percentage of your income each week to savings. If, after a few months, you have never been tempted to withdraw money from the account, and all your funds are still intact, you probably have the stuff to start investing. If you were not able to keep your hands
off the money, you need to work on your discipline, because investing takes this kind of discipline.

Investing in a new commodity can be a very risk business, and those who are anything less than savvy should avoid this type of investment. The best approach is to look at
the histories of those items which interest you and only commit money to those which have a steady history of growth for five or more years. While no investment is guaranteed
to produce lucrative results, it~s far more likely if you’re investing in those which have a positive performance history.

In the investment world, they say “diversify risk”. It’s the same as the old proverb that tells us not to put all of our eggs in one basket. In other words, do not invest all
of your money into one type of investment or even in one sector of the economy. Spread your risk by having investments in different areas of the economy.

As with any other enterprise, patience will see you through. Often, something that~s truly worthwhile will take a good deal of time before it begins to gel. You may have to wait for a few years before an investment begins to truly become lucrative, and those who aren~t willing to play the waiting game are either going to end up making no real return on their investment, or losing their hard-earned money altogether.

Another success trick for starting out entrepreneurs is to try to find a mentor. Here is a person who already made all the mistakes in business and can help you avoid them. They
will be of great assistance in guiding you in your business and your investments until you figure it out on your own.

Lester Surtere is the webmaster and operator of Fan  Fan Investing
which is a complete resource hub for Information about investing. For more details please visit www.faninvesting.com

Read some of my other articles found as Ethos Musings

Penny stocks give you a lot of leverage; consider it a long term option on a company’s future. You could select a good company in the midst of restructuring with a low stock price.

Penny stocks have a price below $5.00 usually. Some investors like low-cost stocks, or consider a .25 cent stock worth the risk. Perhaps they are right, but most times penny stock investors lose their money.
Stock prices reach a level consistent with corporations net worth; stocks rise to their intrinsic value in most cases. However, there are times, when you may discover a company with a product or service receiving attention. Watch the news of a prospective company, track the daily stock trading volume, research institutional owners (there won’t be many if any), and buy the stock when the trading pattern shows a long support line (trading at the same price with reasonable daily volume over a long period of time).

Peter Leeds provides reasonable and prudence when investing in penny stocks. Do your homework.

Tags: penny, stocks,