Tuesday, 7/9, Market WrapUp (This is not your ordinary market)

Financial Sense Online ^ | 7/9/2002 | James J. Puplava

[rohry]

"Did you see the press report on Morgan Stanley where they said the lowest rating the analysts were allowed to give any stock was "neutral"?"

I did not see that but 95% of the recommendations over the two years from 1999 to 2001 carried a positive bias, so I am not surprised...

[d4now]

Given our (the U.S') position in a sink hole of debt wouldn't it be a smart thing to do (deflate the dollar and inflate us out of the sink hole) and forgive my ignorance but doesn't that debt put Bush in a different position that Hoover?

[razorback-bert]

Shell off and E-bay on the S&P, I am going to only invested in cigars and whiskey from now on.

[d4now]

Also have you seen the latest concerning the S&P?

From Aaron Task at thestreet.com:

...news from S&P that it is removing Royal Dutch, Unilever, Nortel, Alcan, Barrick Gold, Placer Dome and Inco from the S&P 500.

Replacing those (eek) foreign-based firms are UPS, Goldman Sachs, Prudential, eBay, Principal Finanical Group, Electronic Arts and SunGuard Data.

Notably, companies that are domiciled abroad but with U.S-headquarters -- like TYC and Carnival Cruise Lines -- aren't being removed in what S&P is calling an attempt "to make the S&P 500 a better reflection of the large-cap segment of the U.S. equities market."

That's fine and dandy but given that some of those foreign companies have been in the SPX for as long as 60 years, the timing of this moves is going to get the conspriacy theorists in a lather.

[disclaimer]

For people nearing retirement, the money they will absolutely need is best off in bank-insured CDs.

I have a few comments about your proposition:

1.) Interest rates most likely will rise as the credit crunch tightens. Money locked in long-term CDs will have a poor rate when compared to these high future rates. If your CD were treated as a bond, it would be losing principle in this situation.

2.) Some banks may fail - if you invest through a bank make sure the account is FDIC insured. Avoid banks offering consumer credit cards. Distribute your money across several banks.

3.) Consider short-term Federal bonds. Roll mature bonds into new issues. Almost zero risk of capital loss. Since the bonds are short-term, you will have new issues with competitive interest rates every new purchase, so you won’t be exposed to currency inflation losses as you would with a longer term fixed interest instrument.

You won't get rich investing in either CDs or Fed short term bonds, but the idea is to retain your principle during the next couple of rough years ahead.

I’m tired of seeing the Wall Street money machine steal retirement money from trusting fellow Americans. I believe in free markets and buyer beware, but when you have an ongoing conflict of interest between brokers, analysts, and the media misrepresenting the facts the average investor doesn’t have a chance.

[rohry]

"Shell off and E-bay on the S&P, I am going to only invested in cigars and whiskey from now on."

What are you saying Bert? I don't understand.

If you are invested in something you can't be consuming it! No more whiskey and cigars for you tonight!

[rohry]

"Consider short-term Federal bonds."

You receive the "post of the night award." I've been in long term bonds for over two years and recently moved to short-term bonds.

Thanks for alerting the rest of the people...

[Wyatt's Torch]

Did you see the press report on Morgan Stanley where they said the lowest rating the analysts were allowed to give any stock was "neutral"?

Holy class action lawsuit Batman! Unreal...yet unsurprising.

[razorback-bert]

Ah, but when you want a drink and a smoke, you will have to give the password, when you knock on my door.

This is a good snapshot of what the oil industry is like today.

Patterson-UTI Energy, Inc. is the largest provider of domestic land-based drilling services to major independent oil and natural gas companies in North America, and is also engaged in pressure pumping, exploration and drilling. For the three months ended 3/31/02, total revenues fell 46% to $128.2 million. Net income fell 89% to $3.9 million. Results reflect a decline in drilling activity, a reduced rig count and increased depreciation and depletion.

When the price of oil is up as it is now, drilling usually picks up, but at present it is very slow.

[disclaimer]

Market WrapUp is delivered...

Thanks for your nightly Market Wrap-up postings. Makes for a good read.

[razorback-bert]

Another choice:

The Liberty Dollar  
Returning America to Value - One Dollar at a Time!

[rohry]

Please explain, before I go to bed...

[noloveforlibs]

The real problem we have here is that most of the idiot public,(you know, the majority who voted for gore), have no idea what a dividend is! I try to smarten up the people I work with but they are too lazy to care. People seem to be more interested in what Madonna is doing than what their own retirement money is doing. I had a conversation with one guy I work with the other day. He rode 100 shares of Qualcomm stock from $150 all the way down to $28. I asked him why he didn't sell once his losses exceeded 10%. Of course, he gave me the standard answer, "It'll come back some day." The ill educated public will make multiple, idiotic decisions then blame it on Bush when it blows up.

[razorback-bert]

See http://www.norfed.com/

I know nothing about them just found them, while wandering around the net.

This from e-mail;

The downgrade of Bristol Myers Squibb to Aaa by Moody s leaves only 8 AAA-rated companies left. They are GE, UPS, AIG, ExxonMobil, Johnson & Johnson Berkshire Hathaway, and Pfizer & Merck. In 1990 there were 27 AAA companies and in 1979 there were 58.

[grania]

You won't get rich investing in either CDs

The trick is to have enough principal in CDs by the time of retirement so that the interest can balance one's budget. In the meantime, try to not use that interest (especially if it is earning one of those high interest rates from a few years ago)

Meanwhile, do something to earn some income. If a person over 50 earns $3500 a year, they can transfer that much of savings into a Roth IRA...one might as well pay the taxes, which are pretty close to nothing on a small salary. Once that money is in an IRA, it is tax free interest, forever.

I agree with you that it's important to look for FDIC protection...those money market funds and some of those CDs sold through brokerages aren't directly from the bank, so their is no insurance protection.

And then, for heaven's sake, people have to take charge. Granted, some of this sale stuff and the attitude conveyed that you can trust the mutual fund is pretty sleazy and convincing. But, people who are just going to trust others with their money really don't do themselves any favors by accepting any risk at all.

[rohry]

Too late, I've gone to bed...

[Tauzero]

A note about Smart Money. This year's Smart Money portfolio is health care. That does not bode well for the health care industry.

I wonder what congress is going to do to mess it up (further)?

[Tauzero]

Downgrades always come too late to help anyone who relies on them, but the trend is highly intelesting.

[RightWhale]

No one in the media would dare to recommend selling short. [Why?] They don't recommend buying on margin either. A few might recommend reducing the equity portion of the portfolio before it happens automatically anyway. They don't have much to say about options or commodities, either.

[sarcasm]

Canary?

Denver's real estate plunge

Markets with the greatest deterioration comparing the first quarter and fourth quarter of 2001, based on supply and demand.

Denver multifamily -36%

Sacramento office -35%

Denver industrial -27%

Indianapolis industrial -25%

Dallas office -22%

Dallas industrial -20%

New York office -19%

Charlotte office -18%

St. Louis office -18%

Tucson industrial -17%

Denver office -16%

Ft. Lauderdale industrial -15%