Friday, 7/19, Market WrapUp (Capitulation, or precious metals, water, oil & gas, and defense?)

Have a good trip. Take some gold with you, it may be necessary to come back.

DOW 7000

NAS 1100

SP 750

GOLD 350+

SILVER 5.25

Interesting stats; where did you find that info? Is it available just for a few key cities or can I look at other areas as well?

PS:I found the prices in California rather steep there. :^)

DJIA - 7,600

NASD - 1,175

S&P - 780

Gold - $330

Silver - $5.15

One has nothing to do with the other. Of the two, I'd choose the market every time.

Which market?

Dow: 7,000

I say DOW 6000-7000.

NASDAQ: 1,050

I say NASDAQ three digits.

S&P: 750

I like your S&P.

Gold: $330

I say Gold $335.

Well, here's my guess:

DOW - 7500

NASDAQ - 1220

S&P - 780

Gold - $350

Silver - $5.40

Capitulation is not yet here. There's still some hope left in these bear market rallies so the breakdown will just continue to decline the markets until they are 1/2 of what they are today.

The big question is silver and gold. These markets are highly subject to manipulation. However, their sharp spikes today retraced some but then showed strength, so I think the precious metal markets are due for a breakout. The usual control was not solid on a day when the options expired. If they hit these above forecast levels, they may well go much higher, especially if the breakdown of the equities continues apace.

It's the perfect sales pitch for these uncertain times: How about a chance to make money in the market, but be guaranteed you won't lose a dime?

Mutual-fund companies are racing to offer funds that promise just that. "Have you ever heard of a mutual fund that offers you the unique opportunity to participate in the market's upside potential while enjoying the added benefit of a guarantee of principal -- for five years?" reads the marketing material for ING Principal Protection Funds.

A handful of investments like the ING funds, widely known as guaranteed funds, have been around for years without garnering much attention. But the stock market's collapse is focusing attention on these offerings and bringing new versions of them out of the woodwork.

From a performance standpoint, the funds come out somewhere between stock and bond funds. Since it was launched in October 1999, the ING Classic Principal Protection Fund, for example, is down 0.2%. Meanwhile, the Standard & Poor's 500 index is down 28.8%, the average domestic diversified stock fund is down 14.2%, and the average bond fund is up 16% during the same period, according to Lipper Inc.

WSJ's Friday homes section, the cities will vary week to week, I posted this week's cities.

Mutual-fund companies are racing to offer funds that promise just that. "Have you ever heard of a mutual fund that offers you the unique opportunity to participate in the market's upside potential while enjoying the added benefit of a guarantee of principal -- for five years?" reads the marketing material for ING Principal Protection Funds.

Now that's an interesting promise. I wonder who's underwriting this? Who can afford to, realistically? And finally, I wonder what the load on such a fund would be.

WSJ's Friday homes section, the cities will vary week to week, I posted this week's cities.

Dang. That's the part of the Journal I rarely read. I guess I'll have to do better. :^)

I was really hoping that there was a web site that one could dig this stuff up on (and perhaps there is, but I haven't found it with a quick 'google' search).

Dow 7200

S&P 500 720

Nasdaq 999

Gold 400

Silver 7

Oil 35

The markets between now and September, ah yes.... That's a tough one to predict between now and September, as there are still "imponderable" events looming in the background. If hostilities break out with Iraq, say, or if there is another major terror attack on American soil, all bets are off. Hell, there may not even be a Wall Street come September.

(I laughed when I heard Dan Rather on the SeeBS evening news tonight make a quip about today's market action: "The closing bell didn't ring today, it tolled...")

... there are many shares of companies that are in the business of providing essential services or making "things" that have become grossly oversold because of short selling. Several of the key power producers are now selling at 3-4 times earnings. If you believe we will still need to turn on the lights, some of these companies are now screaming bargains. Several of the best oil companies are selling at the same multiples ...

anyone have any idea what power producers or oil companies he might be referring to?

or, better still, where one can go to easily research such claims?

Then there's the expense hurdle. The "A" class shares of the Smith Barney Fund costs shareholders 1.95% of their assets every year, and the expenses on the other two classes of shares reduce an investor's earnings by 2.7 percentage points. In contrast, the average fund that is a blend of bonds and stocks carries an expense ratio of 1.28%, according to Morningstar. The difference on these guaranteed funds is that in addition to covering the normal costs of running a fund, 0.75% of a shareholder's investment goes to pay for the insurance policy.

Gee rohry, even Rukeyser's vacations are only for a couple of weeks at a stretch. This six week stuff is more like the later years of Johnny Carson on the Tonight Show.

OK here are my calls:

Dow 7355
Naz 1125
S&P 775
Gold 344
Silver 5.70

Your return will be close to the 1st anniversary of the attacks which might be tempting for al qaida to make another move. I figure a 25% drop on the stocks and a similar % gain on the metals in that case.

anyone have any idea what power producers or oil companies he might be referring to?

I can't answer that, but I can say that a good bet would be a company that has some good, reliable (coal as a staple) power generation capability. The key is owning "hard" assets, not manipulators of contracts and such as Enron had become. Find the smokestacks (preferably, smokestacks built in the 1980's or newer) and you may find value. Don't underestimate Nukes, but only as a moderately small proportion of assets (say, 20% or less). Don't ignore wires, pipelines, wells, and that kind of stuff either.

Think physical, act financial.

Hey Wyatt !

I see "Brown" is today at a high for the year. I hope they match your 401K in company stock. What do you think of Barton Biggs comment predicting $500 - $1000 gold in the next 12 months?

"The closing bell didn't ring today, it tolled

From Letterman last night:

"I bumped into my stockbroker today -- well, I didn't actually bump into him . . . I broke his fall."

Anyone else have market humor? It is a good stress reliever.

Richard W.

Good one! Yes, from now on, let's post market humor here as an adjunct to the discussion of the carnage going on in the markets daily.

That reminds me of a Letterman quip I heard a few weeks back when the Martha Stewart insider trading scandal was still fresh:

Letterman: "I just got a call from Martha Stewart today. She wanted me to pass along to all of you that you can now take her stock certificates.... and make adorable little placemats out of them."