Ask Rande 10,000+

Top 526. Nov 19, 2001 9:13 PM

» Erik75 - Re: Re: Re: Re: Re: Re: Ultra Bull Profund

In response to message posted by Kirk:

I prefer the one that will go up the most. Until my crystal ball is repaired, I usually opt for greater diversity with Total Market...

I just got an invitation from Vanguard to switch my Total BondMarket money over to their new Total Bondmarket Admiral shares for an expense ratio of
0.17%, down from 0.22% for investor shares. Not a big drop, but it's free money.

-- posted by Erik75

Stocks Continue to Bet On Economic Revival

Top 527. Nov 19, 2001 10:45 PM

» JenL_2 - Re: Definiton of a Bull Market ?

In response to message posted by DanG_6:

Dan - A couple articles in 11/19-20 WSJ - maybe one is the article you referred to about the New Bull?

By ROBERT O'BRIEN

Further reductions in oil prices fortified continuing hopes for an economic recovery, allowing stocks to post gains in another sprightly trading session.

Investors played several themes, betting on cyclicals and retailers as well as transportation stocks, but at the core, each played off the same sort of confidence in the reignition of economic growth that has supported stock prices for the past eight weeks.

Several cyclicals, or stocks that are exposed to growth in the economy, finished higher on the day, including Alcoa, which added $1.37, or 3.7%, to $38.49, despite some cautious comments from Credit Suisse First Boston. Whirlpool advanced 1.16, or 1.8%, to 66.75. DaimlerChrysler rose 2.19, or 5.5%, to 42.14. Gannett moved ahead 1.15, or 1.7%, to 68.35.

Meanwhile, shares of several retailers, especially those merchants that sell home furnishings and improvement products, moved higher. Williams-Sonoma gained 2.72, or 7.6%, to 38.30. Home Depot increased 1.27, or 2.8%, to 47.07. Best Buy added 2.42, or 3.7%, to 67.49.

The gains got a lift from the third-quarter profit performance of Lowe's. The nation's second-largest home-improvement retailer put up numbers for the quarter that beat analysts' forecasts, and company officials said they didn't expect the economy to sink any deeper into a recession -- presuming, in fact, that the economy officially entered a recession in this, the last quarter of the year.

There are, of course, some skeptics who don't take a resumption of economic vitality and corporate profit growth as an article of faith, or, at least, they don't believe it is as imminent as the bulls insist it is.

That argument hasn't played on Wall Street. The Dow Jones Industrial Average, which closed as low as 8235.81 as recently as Sept. 21, came in striking distance of 10000 Monday, finishing at 9976.46, after adding 109.47 points, or 1.11%. The last time the Dow industrial average finished above 10000 was Sept. 5.

"Realistically, we're not going to know whether we're in a new bull market for another six months," Thomas Galvin, chief investment officer at Credit Suisse First Boston. "People are focused on the fact that we've reversed the direction of energy prices, that interest rates have come down, and that consumers haven't gone into hibernation, adding, "Under those circumstances, the probabilities are growing that you need to be invested for an economic recovery in 2002."

The Nasdaq Composite Index also posted a sizable gain, advancing 35.84 points, or 1.89%, to 1934.42.....

<img src="http://chart.neural.com/servlet/GIFChart..." width=450 height=250>
DJIA 1 YR Chart

Military Gains Propel Blue Chips Into Bull Market

By CASSELL BRYAN-LOW

The Dow Jones Industrial Average sailed through one milestone and came within striking distance of another.

In rising 109.47 points, to 9976.46, the bellwether stock-market index pushed into the technical definition of a bull market, meaning it is now up more than 20% off its recent low of 8235.81, set Sept. 21.

Monday's rally, which traders attributed to optimism about the war in Afghanistan and better-than-expected housing numbers, also means that the Dow industrials could breach the 10000 level, a psychologically important trading milestone not seen since Sept. 5.

While Dow 10000 won't likely mean the end to the market's current jitters -- and certainly won't bring the kind of euphoria seen when the index first hit the number in March 1999 -- it will be a sign from investors that the upward trajectory of stocks could continue.

"I don't know if 10000 means a lot, but it is better than being at 8000," said Ned Collins, head of U.S. equity trading at Daiwa Securities America. But Mr. Collins is one of many who believes the market could again retest its lows. "There is a lot of work to do before we see some real signs that the economy has turned," he said.

Additional perspective: The Dow remains nearly 15% below its all-time closing high of 11722.98, hit on Jan. 14, 2000.

Rallying along with the Dow industrials' 1% advance Monday, the Nasdaq Composite Index rose 1.89%, or 35.84 points, to 1934.42, and the Standard & Poor's 500-stock index closed up 1.09%, or 12.41 points, to 1151.06.

The bond market also rose, ending a six-day losing streak. The benchmark 10-year Treasury note rebounded slightly, after plunging 4 21/32 points last week. Those declines last week sent the yield -- which moves inversely to price -- up more than half a percentage point, to 4.897%. Monday, the note's price rose 27/32, or $8.44 for each $1,000 invested, and the yield fell to 4.788%.

"At least in the short term, the market thinks what happened at the end of last week was a little overdone," says Scott Gewirtz, head of Treasury trading at Deutsche Bank in New York.

Still, the Treasury market's drastic fall last week could signal that bond investors are beginning to believe that the economy is starting to turn, bringing them in line with what stock-market investors are saying. The bond and the stock markets are "now telling a more consistent story suggesting there is hope for recovery on the horizon," said Mike Cloherty, market strategist with Credit Suisse First Boston.

The markets Monday responded to encouraging news from Afghanistan, where there are increasing signs that the Taliban's grip is continuing to weaken, as well as somewhat upbeat October housing starts.

Investors eager to buy stocks before the Thanksgiving holiday on Thursday helped to push the Dow industrials higher. Investors who "don't want to miss the bottom" or cover their short positions will do that early this week, said Art Hogan, chief market analyst at Jefferies & Co. "Wednesday and Friday tend to be a throwaway because of the holiday."

Mr. Hogan cautioned against reading too much into a possible 10000 level of Dow stocks, noting that its been there, and down, before. "It will be a terrific celebration psychologically, but I don't think it will be a great deal of technical significance," said Mr. Hogan. "We are very good at breaching it and falling back through it."

The Dow's 21.1% rise since its September low has been spurred in part by optimism that a U.S. economic turnaround is now finally in view, probably in the first half of 2002.

Evidence of that was seen in the financial sector. "When people believe the market has turned, they want to be long brokerage stocks," said Mr. Collins. On New York Stock Exchange trading, Merrill Lynch closed up $2.53 to $52.53, and Citigroup gained 80 cents to $49.60.

For the rest of this week, investors are expected to pay particularly close attention to Wednesday's initial claims for unemployment report as a taste of what December's employment report will hold, and therefore a clue to another possible Federal Reserve rate cut by the end of the year.......

Subscribe to WSJ Online @ http://www.wsj.com

.....Jen

-- posted by JenL_2

Top 528. Nov 20, 2001 7:03 AM

» DanG_6 - Re: Re: Definiton of a Bull Market ?

In response to message posted by JenL_2:

Jen, good articles, but the one I mentioned was in "Abreast of the Market" on pg C1 entitled "Bull Market Nears, but Many Won't Believe It", by Suzanne McGee. It mentioned that we only had to close above Dow 9882.97 to register a 20% gain--the most common definition of a Bull Market. We did that easily yesterday.

-- posted by DanG_6

Top 529. Nov 20, 2001 7:13 AM

» mdorsey - Re: Re: Re: Re: Re: Re: Re: Ultra Bull Profund

In response to message posted by Erik75:

For those who might have it available to them VBTIX is a better option with an expense ratio of 0.10%. If your company sponsored plan is large enough you may have it as an option. Expense ratios in Bond funds are important.

-- posted by mdorsey

Top 530. Nov 20, 2001 7:30 AM

» Rande - Re: Re: Re: Definiton of a Bull Market ?

In response to message posted by DanG_6:

Also confirmed by a nearly 22% gain in the European Index since 9/21 as well, so not just the result of a fluke in the Dow. The true test, of course, will be no return to or movement beyond the 9/21 lows. The market does not need to reach old highs for a bull to commence. The broad definition requires only that the market cease to make new lows, with the technical measurement point at 20% from previous lows for a bull to be defined (or from previous high for a bear to be defined). Clearly, the only question left is one of sustainability which no one on earth will be able to answer with absolute certainty, except in retrospect.

One more point on the "20% rule." The past four years have been misleading at best in the context of traditional metrics. In the 1998-99 period we had a "stealth" bear market where most stocks were making new lows. It was only a handful that led the popular averages higher through March of 2000, when the averages stalled and then began their decline in the late summer/early fall. But since early 2000, we've had a "stealth" bull market where the broader issues have performed quite well, particular value in general and small/mid-caps in particular. It's been large-cap growth/tech -- the area responsible for the prior narrow run-up -- that has performed horribly. Secondary issues are not supposed to do well IN a bear market, but, rather, coming out. But the parabolic rise in 1999 (over 80% for the Nasdaq from October of 1999 through March of 2000 alone) was atypical to say the least, as were the events surrounding the market's action during that time. Remember, less than one dozen stocks accounted for half of the market's rise in 1999 and the same handful has accounted for half of the decline since. If anything, we are in a much healthier situation as excesses are worked through both in the market and the real economy.

-- posted by Rande

Investors Expect Rally to Stall Before Gaining Bull Territory

Top 531. Nov 20, 2001 7:56 AM

» JenL_2 - Re: Definiton of a Bull Market ?

In response to message posted by DanG_6:

Here ya go Dan - from 11/18 WSJ:

By SUZANNE MCGEE

The Dow Jones Industrial Average, the stock market's blue-chip bellwether, is only 16 points away from a 20% gain off its recent low point, an event that would technically push the index into bull-market territory.

Too bad few people in the market are convinced the rally is going to hold.

"I can't remember seeing a market advance that people trust less than this one," says Douglas Cliggott, U.S. stock market strategist at J.P. Morgan Securities. Mr. Cliggott numbers himself among those skeptics, betting that by the time winter sets in, the market will start giving back its gains of the past two months.

The skeptics point to an assortment of lingering problems, including price-to-earnings ratios that remain too high, corporate earnings that are too low, and the possibility of more terrorist attacks or a military quagmire in Afghanistan.

Still, traders believe that despite a tiny setback Friday, when the Dow Industrials retreated 5.40 points to 9866.99, the market benchmark could still easily break above 9882.97. Once it does, it will have rallied 20% from the Sept. 21 low of 8235.81, making it, by the most-common definition, the first new bull market in more than a decade, according to calculations by market-research firm Birinyi Associates in Connecticut.

Of course, these are only technical calculations, ignoring that both the Dow Industrials -- and, more frequently, the Nasdaq Composite Index -- have seen a number of brief rallies in the past 18 months, only to have those gains evaporate. Currently, for instance, the Nasdaq composite is up more than 30% from its postattack lows -- the latest in a string of recent sharp run-ups -- though few traders expect it to last.

Since World War II, there have been 10 "true" bull-market debuts, defined as 20% gains that come on the heels of 20% declines. Only one of those has been followed by negative returns for the three months and year following the initial break into bull-market territory. In the other cases, returns ranged from 0.39% in the three months following the 1990 bull market to 16.87% in the three months following that turning point in 1976, and between 1.44% in the year following the 1968 bull market and 37.26% for the year after the 1976 jump.

But many skeptical investors and analysts say that, in this case, history is no guide. "We've seen most of the gains we're going to," says Michael Clark, head of stock trading at Credit Suisse First Boston. The chance of a break above 9882.97 being followed by an extended bull market in the Dow Industrials? "I don't see it happening," he declares.

Nor do many other market participants, who scoff at the current rally as nothing more than a bear dressed in bull's clothes. "If you believe today's market, which is doing better than it was on Sept. 10, then you have to believe that things are actually better today than before" the terrorist attacks, says George Jacobsen, chief investment officer of Trevor Stewart Burton & Jacobsen, a New York investment-management firm. "People seem to want to believe that things are getting better, but can you really make that strong an argument?"

Some investors say they don't want to get blindsided again, as happened when the springtime rally sputtered to a halt. Investors attribute that reversal to the realization that corporate earnings and the economy wouldn't show the signs of recovery that bulls had been betting on when they drove major market indexes higher. Many say the latest batch of bulls may face a similar epiphany early in the new year, igniting another selloff.

When Can a Bear Pass for a Bull?

When an index rises 20% from its most recent low, it is, by a Wall Street rule of thumb, in a bull market. But, if the Dow Jones Industrial Average hits a 20% gain (it has now gained 19.8% since its Sept. 21 low), not everyone is convinced it's a lasting bull. ....

...."People are making the same mistakes they did [earlier] this year," says Scott Schermerhorn, co-head of value investing at Liberty Funds Group, a FleetBoston unit. "This rally is unstable and precarious."

Still, some market participants, regardless of their convictions, are behaving as if the rally will turn into a long-running bull market.

Hedge funds, which have reaped rich rewards by betting on a declining market for most of 2001, are now trying to protect those gains by covering short sales. That means these sellers have now become buyers and are adding juice to the rally. Institutional money managers are fearful of being left on the sidelines in case the rally does develop into a big bull run.

In the bond market, last week's selloff suggests that fixed-income investors are beginning to embrace the view that an economic recovery may be closer than they once expected. Economic news "came in more strongly in favor of the stock market's view, and the bond market adjusted sharply in that direction," says Peter Hooper, chief U.S. economist at Deutsche Bank. "It is too early to declare the recession over, but we cannot deny there is a more optimistic feeling in the air."

But there are few optimists among the ranks of stock investors, who should be among the biggest beneficiaries of a stronger economy. They fret that the economic signals -- stronger retail sales, lower jobless claims -- are misleading, and point instead to the difficulties that bellwether technology companies and other key corporations have in predicting any kind of improvement in their operating environment. Trouncing the Taliban won't resolve the terrorist threat, they fear. Above all, they point to the stock market's still-lofty valuations as a compelling reason why any gains may be short-lived.

"Going back through history, we can't find another example of a market bottom that was reached at such high valuations as that of Sept. 21," argues Mr. Cliggott. According to his calculations, on Sept. 21, the Standard & Poor's 500-stock index components traded at 34 times net income for the most recent 12 months. In past market bottoms, that valuation hasn't topped 16.5 times trailing net income, Mr. Cliggott adds. Today, he notes, the market is valued at a whopping 40 times trailing earnings. That means that even if the rally continues, "people are going to have to really restrain their expectations and not jump into the market at these levels expecting double-digit returns."

Even those who argue that what's looming on the horizon is indeed a bull rather than a bear in disguise admit that the animal in question is a particularly runty specimen.

"If we cross the threshold, we're still going to be in dangerous territory," says Jeff Rubin, head of research at Birinyi Associates. He notes that the crash of an American Airlines jet in New York last Monday morning sent the Dow Industrials down sharply on fears that the tragedy may have been caused by terrorists.

"This is a fragile bull market," Mr. Rubin adds. "We don't recommend that anyone jump in head first. You've got to wade in and pick your investments very carefully."

-- Gregory Zuckerman and Ken Brown contributed to this article.

Subscribe to WSJ Online @ http://www.wsj.com

.....Jen

-- posted by JenL_2

Top 532. Nov 20, 2001 8:03 AM

» DanG_6 - Re: Re: Definiton of a Bull Market ?

In response to message posted by JenL_2:

Well Jen, another good article, but not the one from yesterday's (11/19) WSJ, pg C-1. Thanks for your efforts though.

-- posted by DanG_6

Top 533. Nov 20, 2001 11:19 AM

» matttheduck - bulls n bears

the 9/11 events have probably rendered any analysis of this market moot. "exogenous event"

-- posted by matttheduck

Top 534. Nov 20, 2001 12:39 PM

» DanG_6 - GNMAs worth tactical moves?

Rande, I know you aren't much on large tactical moves away from one's target asset allocation, but I know you have made small ones on occasion from the fixed to equity side and maybe vice-versa.

Now with GNMAs near their all time peak, would you consider it worth while to make small tactical asset allocation shifts strictly on the fixed side? Specifically, a small shift from GNMAs to MMF if/when the Fed stops lowering rates, or worse, if they begin to raise them?

-- posted by DanG_6