Risk/Reward Vol. 158
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"Sugar Pie, Honey Bunch
You know that I love you
I can't help myself/I love you and nobody else."---lyrics from "I Can't Help Myself"sung by the Four Tops
"Sometimes there's no hope in/In chasing opium
I'd like to love you/But I'm not sure what's in your eyes
Mm, Shanghai surprise"---lyrics from "Shanghai Surprise" by George Harrison
"Well, I'm livin' in a foreign country/But I'm bound to cross the line...
"Come in " she said "I'll give you shelter from the storm."---lyrics from "Shelter from the Storm" by Bob Dylan
Back in December, the Federal Reserve announced the continuation and expansion of quantitative easing (QE) in the form of $40 billion of mortgage purchases and $45billion of Treasury securities purchases EACH MONTH until unemployment falls below 6.5% or until inflation becomes a concern. (See Vol 148 http://www.riskrewardblog.blogspot.com/ ) The stock market rose at the time in reaction to this "Sugar Pie, Honey Bunch"--which, in effect, is a guarantee by the Fed of cheap and plentiful credit until one of those benchmarks is achieved. The upward surge from this "I love you gesture" intensified when the Fiscal Cliff threat dissipated at year end. Since then the stock market "couldn't help itself" and has continued to rise---that is, until this Wednesday. On Wednesday, the Federal Reserve released the minutes of its January meeting at which many members expressed a new concern about the current QE program, even though unemployment still hovers near 8% and inflation is in check. This new concern arises from the belief that the prolonged period of low interest rates fostered by QE has resulted in an unhealthy credit bubble. This bubble has been exacerbated by investors such as pension plans, insurance companies and yours truly in search of yields greater than those available in investment grade securities. We, collectively, have been gobbling up riskier and riskier instruments such as junk bonds and senior loans as soon as they are marketed. (See last week's post) The result is an economy flush with cheap (and risky) debt; one susceptible to a hiccup that could cause a flood of credit defaults reminiscent of 2008. That said, the possibility that the Fed would halt cheap credit (upon which the stock market has come to rely) for a reason and on a timetable other than that articulated in December caused the Dow Jones Industrial Average (DJIA) to drop 108 points that day.
On Thursday, the Chinese Central Bank, facing its own bubble, ordered the removal of $146billion worth of credit from the Chinese banking system. That "Shanghai Surprise" caused the Chinese Composite Stock Index to fall 3%, its sharpest decline in 14 months. Clearly, Chinese stocks like their American counterparts have been buoyed by the "opium" of cheap credit. In reaction to that decline, the DJIA, which tracks many companies that "like to love" China, fell another 47 points.
Friday morning, James Bullard of the Fed gave assurance that the current version of QE will continue for quite some time. Assuaged, the DJIA rose 119 points closing up 19 points for the week. Keep your eyes and ears on Congress next Tuesday when Fed Chair Bernanke is scheduled to speak. Undoubtedly, the future of QE will be discussed, and what he says will impact the market.
Switching gears, two subscribers recently returned from the 7th Annual Inside ETF Conference held in Hollywood, Fla. where they hobnobbed with such investing luminaries as Mebane Faber and James Grant. At this stage in my life, this conference is a hotter ticket than a luxury box at the Super Bowl, and is a "can't miss" for me next year. Their take away was that it's time to "cross the line"---to become more internationally oriented and to embrace the "shelter from the storm" that investing in a "foreign county" may afford. Certainly, the 8.8% rise in the FTSE 100 (London) in the past 3 months and the 12% rise in the DAX (German stock market) in the past year, both of which went virtually unnoticed by me, are reasons enough to look overseas for better returns. Although my study as to where and how to best invest in foreign markets has just begun, I am encouraged by my 10% gain in the Japanese market ETF (DXJ) which I bought on January 9th.
In closing, remember that I enjoy hearing from each of you. Investing can test one's mettle, with this week's roller coaster being just one example. Please know that if your investing "life is filled with confusion/And (investing) happiness is just an illusion","Reach out for me" and like the Four Tops, "I'll be there."
Saturday, February 23, 2013
Saturday, February 16, 2013
February 16, 2013 Floating
Risk/Reward Vol. 157
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"War, it ain't nothing but a heart breaker
War, it's got one friend/That's the undertaker."---lyrics from "War" sung by Edwin Starr
"Say what you say/We're floating away
Now I see the solemn horizons/Now I think I'll be OK"---lyrics from "Floating Away" by John Legend
"Oh, if I'd only known/What your heart cost
Oh, can we call it a loan/And a debt that I owe on a bet I lost"---lyrics from "Call It A Loan" by Jackson Browne
Finance ministers from the twenty largest economies ( the "G20") met this week in Moscow. In the corridors, a topic of great interest was the prospect of a global currency war. As discussed last week, this topic was brought to the fore by Japan's overt pledge to devalue the yen in order to address the "heartbreak" of fifteen years of deflation and to promote sagging exports. Publicly, Japan's position has not found "one friend" as virtually all of the finance ministers repeated the orthodoxy that governments should not use their currencies as economic weapons, but instead should let market forces determine exchange rates. As demonstrated by the Federal Reserve's massive increase in the supply of dollars via quantitative easing, this orthodoxy is honored in the breach. And speaking of currency wars, the diplomatic niceties in Moscow had no impact on Venezuela. That currency "undertaker" announced early in the week that it was devaluing the bolivar by 30%! In other word, a bolivar worth $0.23 in exchange last week is now worth $0.16. Companies such as P&G, Colgate Palmolive, Halliburton and Merck which have a big presence in Venezuela (and thus large sums of bolivars) anticipate huge losses as a result. Venezuela's conduct even hurt me. As I reported in Vol 152 ( www.riskrewardblog.blogspot.com ) I own ESD, a closed end fund comprised of emerging market sovereign debt including that of Venezuela. Even though ESD is hedged against just such a currency devaluation (it buys bonds that pay interest in dollars not bolivars), the move caused a sell off, thus reducing the premium that I was enjoying. Even the best hedge cannot trump market sentiment.
Those that can "see the solemn horizon" predict that interest rates will rise this year, a prediction that appears valid in light of the excellent performance of TBT, a double short on Treasuries that I own. Consequently, as reported in both the Wall Street Journal and The Financial Times this week, money is flowing out of fixed interest securities such as high yield bonds and into "floating" rate senior loans. ($1.3bn last week alone) "Say what you say", but I have said for some time (See e.g. Vol 154) that everyone should have some senior loan exposure in his/her portfolio. As the name suggests, the interest rate on these securities "float" in relation to some benchmark such as the London Interbank Offered Rate or LIBOR. (e.g. interest is reset each month at 3% above LIBOR). If LIBOR rises, so does the rate on the loan.
The vehicles that I use for floating rate senior loan exposure include two closed end funds managed by Nuveen: JFR and JQC. "If only I had known" that JFR in particular would perform so well year to date, I would have purchased a larger position. As stated previously, I like closed end funds because they use leverage. Many investors however prefer exchange traded funds (ETF's) which generally avoid the risk of leverage and the high management fees associated with closed end funds. BKLN and SNLN are ETF's in the floating rate loan space. For those that have the "heart" and are not afraid of a "bet lost", exposure to a riskier and higher yielding mix of floating rate senior loans and more junior forms of debt (such as mezzanine loans) can be accomplished via business development companies (BDC's) that specialize in this space such as Solar Senior Capital (SUNS) or Pennant Park Floating Rate Capital (PFLT).
Having constructed a portfolio that is primarily dependent on dividends for a return on investment, I do not mind the respite that the stock market is currently experiencing. The Dow Jones Industrial Average fell only 9 points for the week. We are in this game for the long haul so remember the words of Jackson Browne
"Take it easy/Take it easy
Don't let the sound of your own wheels
Drive you crazy."
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"War, it ain't nothing but a heart breaker
War, it's got one friend/That's the undertaker."---lyrics from "War" sung by Edwin Starr
"Say what you say/We're floating away
Now I see the solemn horizons/Now I think I'll be OK"---lyrics from "Floating Away" by John Legend
"Oh, if I'd only known/What your heart cost
Oh, can we call it a loan/And a debt that I owe on a bet I lost"---lyrics from "Call It A Loan" by Jackson Browne
Finance ministers from the twenty largest economies ( the "G20") met this week in Moscow. In the corridors, a topic of great interest was the prospect of a global currency war. As discussed last week, this topic was brought to the fore by Japan's overt pledge to devalue the yen in order to address the "heartbreak" of fifteen years of deflation and to promote sagging exports. Publicly, Japan's position has not found "one friend" as virtually all of the finance ministers repeated the orthodoxy that governments should not use their currencies as economic weapons, but instead should let market forces determine exchange rates. As demonstrated by the Federal Reserve's massive increase in the supply of dollars via quantitative easing, this orthodoxy is honored in the breach. And speaking of currency wars, the diplomatic niceties in Moscow had no impact on Venezuela. That currency "undertaker" announced early in the week that it was devaluing the bolivar by 30%! In other word, a bolivar worth $0.23 in exchange last week is now worth $0.16. Companies such as P&G, Colgate Palmolive, Halliburton and Merck which have a big presence in Venezuela (and thus large sums of bolivars) anticipate huge losses as a result. Venezuela's conduct even hurt me. As I reported in Vol 152 ( www.riskrewardblog.blogspot.com ) I own ESD, a closed end fund comprised of emerging market sovereign debt including that of Venezuela. Even though ESD is hedged against just such a currency devaluation (it buys bonds that pay interest in dollars not bolivars), the move caused a sell off, thus reducing the premium that I was enjoying. Even the best hedge cannot trump market sentiment.
Those that can "see the solemn horizon" predict that interest rates will rise this year, a prediction that appears valid in light of the excellent performance of TBT, a double short on Treasuries that I own. Consequently, as reported in both the Wall Street Journal and The Financial Times this week, money is flowing out of fixed interest securities such as high yield bonds and into "floating" rate senior loans. ($1.3bn last week alone) "Say what you say", but I have said for some time (See e.g. Vol 154) that everyone should have some senior loan exposure in his/her portfolio. As the name suggests, the interest rate on these securities "float" in relation to some benchmark such as the London Interbank Offered Rate or LIBOR. (e.g. interest is reset each month at 3% above LIBOR). If LIBOR rises, so does the rate on the loan.
The vehicles that I use for floating rate senior loan exposure include two closed end funds managed by Nuveen: JFR and JQC. "If only I had known" that JFR in particular would perform so well year to date, I would have purchased a larger position. As stated previously, I like closed end funds because they use leverage. Many investors however prefer exchange traded funds (ETF's) which generally avoid the risk of leverage and the high management fees associated with closed end funds. BKLN and SNLN are ETF's in the floating rate loan space. For those that have the "heart" and are not afraid of a "bet lost", exposure to a riskier and higher yielding mix of floating rate senior loans and more junior forms of debt (such as mezzanine loans) can be accomplished via business development companies (BDC's) that specialize in this space such as Solar Senior Capital (SUNS) or Pennant Park Floating Rate Capital (PFLT).
Having constructed a portfolio that is primarily dependent on dividends for a return on investment, I do not mind the respite that the stock market is currently experiencing. The Dow Jones Industrial Average fell only 9 points for the week. We are in this game for the long haul so remember the words of Jackson Browne
"Take it easy/Take it easy
Don't let the sound of your own wheels
Drive you crazy."
Saturday, February 9, 2013
February 9, 2013 Apple Bottom
Risk/Reward Vol. 156
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"When our old age pension check comes to our door
We won't have to dread the poorhouse any more."---lyrics from "Old Age Pension" by Roy Acuff
"You've got me turning up/I'm turning down
I'm turning in/I'm turning 'round
I'm turning Japanese."---lyrics from "Turning Japanese" by The Vapors
"Shawty had them Apple Bottom Jeans
Boots with fur/The whole club
Was watching her."---lyrics from "Apple Bottom Jeans" by T-Pain
This week the Dow Jones Industrial Average (DJIA) showed increased volatility which is to be expected in light of recent gains. It closed down a modest 17 points for the week, but is up 6.8% year to date and up 9% since its post election swoon.
According to the actuarial firm Towers Watson, as late as 1998, 90 of the Fortune 100 companies offered salaried employees a defined benefit pension plan. Today that number is 30. Indeed, the odds today that any employer will offer such a benefit (which guarantees a set income in retirement for life) are about the same as Roy Acuff recording a new hit---and he died in 1992. Today employees must rely upon defined contribution plans (e.g. 401k's and IRA's) for retirement. These plans place the responsiblity ON THE EMPLOYEE to invest wisely year in and year out. Thus, I was shocked to read that only 2% of individual retirement account participants and only 4% of 401k participants take advantage of self direction options. Leaving the management of one's portfolio to an employer-controlled investment adviser (who has little if any liability for bad investment advice) seems imprudent to me. So if you "dread the poorhouse" like always have, I recommend that you investigate self direction and that you take advantage of it.
As discussed in Vol. 152 (www.riskrewardblog.blogspot.com ), in an attempt to "turn 'round" its sluggish economy, Japan is overtly "turning down" the value of the yen thus making its products and services more attractive globally. It is axiomatic that a devalued currency facilitates exporting. This week, in response to his countries' falling exports, French President Hollande recommended that the European Central Bank (ECB) target a Euro exchange rate tied to the world's other major currencies and inflate (devalue) the Euro accordingly. In what can only be characterized as a disingenuous rebuff, ECB President Draghi rejected the idea, reaffirming the charade that central bankers should not "turn in" to politicians and that central banks should avoid currency wars. Come, come now Mr. Draghi. For the past four years, Ben Bernanke and you have employed bond buying and other forms of quantitative easing to debase your respective currencies to the disadvantage of a host of other countries. In this regard, we are all "turning Japanese."
On Thursday, noted hedge fund manager (Milwaukees' own) David Einhorn raised some "fur", claiming that Apple (AAPL) has breached its duty to shareholders by sitting on $140billion in cash. You will recall (see Vol. 116 ) that this has been my complaint against AAPL for a long time. Since Apple doesn't need the money to grow organically and since (apparently) no acquisition candidate meets AAPL's standards, AAPL should return capital to its shareholders in the form of increased dividends (currently 2.3%), a preferred stock dividend (as recommended by Einhorn) or an aggressive share buy back, each of which is proven means of increasing share value. To this point, compare the stock performance of AAPL (known for giving the "boot" to shareholder concerns) and Tupperware (TUP), a company wholly dedicated to shareholder value. Since September 19, 2012 when AAPL reached its all time high of $702, AAPL has done nothing but build cash. TUP on the other hand announced a 70% increase in its dividend and a very aggressive share buy back program. AAPL is down 30% since then hovering near its recent " Apple bottom", and TUP is up 35%. Shockingly, with "the whole club watching", AAPL responded to Einhorn's comments by acknowledging that it has more cash than it needs and by stating that the board is investigating ways to enhance shareholder value. Instead of "shawtin'" the stock, I bought a small position.
I reiterate. If your plan permits, take control of your retirement account through self direction. By doing so, you improve the odds that upon retirement, you can rap (like T-Pain and Yung Joc) that
"I got money in the bank
Shawty, what you think 'bout that!
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"When our old age pension check comes to our door
We won't have to dread the poorhouse any more."---lyrics from "Old Age Pension" by Roy Acuff
"You've got me turning up/I'm turning down
I'm turning in/I'm turning 'round
I'm turning Japanese."---lyrics from "Turning Japanese" by The Vapors
"Shawty had them Apple Bottom Jeans
Boots with fur/The whole club
Was watching her."---lyrics from "Apple Bottom Jeans" by T-Pain
This week the Dow Jones Industrial Average (DJIA) showed increased volatility which is to be expected in light of recent gains. It closed down a modest 17 points for the week, but is up 6.8% year to date and up 9% since its post election swoon.
According to the actuarial firm Towers Watson, as late as 1998, 90 of the Fortune 100 companies offered salaried employees a defined benefit pension plan. Today that number is 30. Indeed, the odds today that any employer will offer such a benefit (which guarantees a set income in retirement for life) are about the same as Roy Acuff recording a new hit---and he died in 1992. Today employees must rely upon defined contribution plans (e.g. 401k's and IRA's) for retirement. These plans place the responsiblity ON THE EMPLOYEE to invest wisely year in and year out. Thus, I was shocked to read that only 2% of individual retirement account participants and only 4% of 401k participants take advantage of self direction options. Leaving the management of one's portfolio to an employer-controlled investment adviser (who has little if any liability for bad investment advice) seems imprudent to me. So if you "dread the poorhouse" like always have, I recommend that you investigate self direction and that you take advantage of it.
As discussed in Vol. 152 (www.riskrewardblog.blogspot.com ), in an attempt to "turn 'round" its sluggish economy, Japan is overtly "turning down" the value of the yen thus making its products and services more attractive globally. It is axiomatic that a devalued currency facilitates exporting. This week, in response to his countries' falling exports, French President Hollande recommended that the European Central Bank (ECB) target a Euro exchange rate tied to the world's other major currencies and inflate (devalue) the Euro accordingly. In what can only be characterized as a disingenuous rebuff, ECB President Draghi rejected the idea, reaffirming the charade that central bankers should not "turn in" to politicians and that central banks should avoid currency wars. Come, come now Mr. Draghi. For the past four years, Ben Bernanke and you have employed bond buying and other forms of quantitative easing to debase your respective currencies to the disadvantage of a host of other countries. In this regard, we are all "turning Japanese."
On Thursday, noted hedge fund manager (Milwaukees' own) David Einhorn raised some "fur", claiming that Apple (AAPL) has breached its duty to shareholders by sitting on $140billion in cash. You will recall (see Vol. 116 ) that this has been my complaint against AAPL for a long time. Since Apple doesn't need the money to grow organically and since (apparently) no acquisition candidate meets AAPL's standards, AAPL should return capital to its shareholders in the form of increased dividends (currently 2.3%), a preferred stock dividend (as recommended by Einhorn) or an aggressive share buy back, each of which is proven means of increasing share value. To this point, compare the stock performance of AAPL (known for giving the "boot" to shareholder concerns) and Tupperware (TUP), a company wholly dedicated to shareholder value. Since September 19, 2012 when AAPL reached its all time high of $702, AAPL has done nothing but build cash. TUP on the other hand announced a 70% increase in its dividend and a very aggressive share buy back program. AAPL is down 30% since then hovering near its recent " Apple bottom", and TUP is up 35%. Shockingly, with "the whole club watching", AAPL responded to Einhorn's comments by acknowledging that it has more cash than it needs and by stating that the board is investigating ways to enhance shareholder value. Instead of "shawtin'" the stock, I bought a small position.
I reiterate. If your plan permits, take control of your retirement account through self direction. By doing so, you improve the odds that upon retirement, you can rap (like T-Pain and Yung Joc) that
"I got money in the bank
Shawty, what you think 'bout that!
Saturday, February 2, 2013
February 2, 2013 Bubbly
Risk/Reward Vol. 155
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"I've been awake for a while now/You've got me feelin' like a child now
Cause every time I see your bubbly face/I get the tingles in a silly place."---lyrics from "Bubbly" by Colbie Caillat
"Sha-shake with every boom/Involuntary muscle contraction
Ignoring/And drinking musical gas fueled euphoria."---lyrics from "And One" by Linkin Park
"Downtown people on the corner watching other people play
And while the people watch them play
The players watch the people/On a Wall Street kind of day."---lyrics from "Wall Street Village Day" by the Four Seasons
Talk about "Bubbly!" Having reached heights in January not attained since 2007, the Dow Jones Industrial Average (DJIA) started February "feelin' like a child now", closing Friday at 14,009 (a 149 point gain), up 6.91% year to date! That performance causes me to have "tingles in a silly place." What makes it even more special is that it occurred in the "face" of non "bubbly" news like the fact that the nation's gross domestic product actually shrunk in the last quarter of 2012 and the fact that the unemployment rate remains at 7.9%. Clearly, the market's animal spirit has "been awake for a while now." Let's hope it continues.
But will it? Or will it like "every boom" experience an "involuntary contraction" which in turn will "Sha-shake" investor confidence? I think not. At worst, I see short, shallow and expected corrections occurring periodically absent, of course, some exogenous event (i.e.Israel, Syria and Iran). The recent market "euphoria" is "fueled" by inexpensive domestic "gas" and oil, tranquility on the domestic political front, stability in Europe and growth in China---a concatenation of stabilizing events we have not experienced for quite some time. Moreover, where is an investor to go for a decent return, other than the stock market? With the above described stability prevailing and thus no reason for a flight to safety, no rational investor should accept a 2% yield from 10 year Treasuries, a fact that is confirmed by the 6.6% increase in my TBT (Treasury double short) since I purchased it on January 18th. As exuberant as the past month has been, the broad market as measured by the S&P 500 Index still is trading at only 17 times 2012 earnings, and at only 13 times projected 2013 earnings. Thus, it has more room to run before reaching its normative level of 15 times earnings. So let's keep "ignoring" the naysayers and keep on "drinking" the good news.
With the broad market (S&P 500 and DJIA) doing so well, how does one "play" "Wall Street" in its entirety? Thanks to exchange traded funds (ETF's) individual investors are no longer relegated to "watching other people play." Now they can have "other people", even those on "Wall Street" "watch them play". Many players, including yours truly, use a combination of IWB and IWM which gives exposure to the 3000 large, mid and small cap companies found on the Russell 2000 and Russell 1000 indices. I also own DIA which tracks the DJIA and QQQ which tracks the NASDAQ. The largest and oldest ETF is SPY which tracks the S&P500 index. Had you invested in these at the dawning of 2013 you would be up 6% or more YTD already.
What a difference five weeks make--from handwringing over the Fiscal Cliff to a 14,000 Dow---"sad rags into glad rags" for sure. But, Mr. Market, pray answer Frankie Valli
"Is this a lasting treasure/Or just a moment's pleasure
Can I believe the magic of your sight/Will you still love me tomorrow?"
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"I've been awake for a while now/You've got me feelin' like a child now
Cause every time I see your bubbly face/I get the tingles in a silly place."---lyrics from "Bubbly" by Colbie Caillat
"Sha-shake with every boom/Involuntary muscle contraction
Ignoring/And drinking musical gas fueled euphoria."---lyrics from "And One" by Linkin Park
"Downtown people on the corner watching other people play
And while the people watch them play
The players watch the people/On a Wall Street kind of day."---lyrics from "Wall Street Village Day" by the Four Seasons
Talk about "Bubbly!" Having reached heights in January not attained since 2007, the Dow Jones Industrial Average (DJIA) started February "feelin' like a child now", closing Friday at 14,009 (a 149 point gain), up 6.91% year to date! That performance causes me to have "tingles in a silly place." What makes it even more special is that it occurred in the "face" of non "bubbly" news like the fact that the nation's gross domestic product actually shrunk in the last quarter of 2012 and the fact that the unemployment rate remains at 7.9%. Clearly, the market's animal spirit has "been awake for a while now." Let's hope it continues.
But will it? Or will it like "every boom" experience an "involuntary contraction" which in turn will "Sha-shake" investor confidence? I think not. At worst, I see short, shallow and expected corrections occurring periodically absent, of course, some exogenous event (i.e.Israel, Syria and Iran). The recent market "euphoria" is "fueled" by inexpensive domestic "gas" and oil, tranquility on the domestic political front, stability in Europe and growth in China---a concatenation of stabilizing events we have not experienced for quite some time. Moreover, where is an investor to go for a decent return, other than the stock market? With the above described stability prevailing and thus no reason for a flight to safety, no rational investor should accept a 2% yield from 10 year Treasuries, a fact that is confirmed by the 6.6% increase in my TBT (Treasury double short) since I purchased it on January 18th. As exuberant as the past month has been, the broad market as measured by the S&P 500 Index still is trading at only 17 times 2012 earnings, and at only 13 times projected 2013 earnings. Thus, it has more room to run before reaching its normative level of 15 times earnings. So let's keep "ignoring" the naysayers and keep on "drinking" the good news.
With the broad market (S&P 500 and DJIA) doing so well, how does one "play" "Wall Street" in its entirety? Thanks to exchange traded funds (ETF's) individual investors are no longer relegated to "watching other people play." Now they can have "other people", even those on "Wall Street" "watch them play". Many players, including yours truly, use a combination of IWB and IWM which gives exposure to the 3000 large, mid and small cap companies found on the Russell 2000 and Russell 1000 indices. I also own DIA which tracks the DJIA and QQQ which tracks the NASDAQ. The largest and oldest ETF is SPY which tracks the S&P500 index. Had you invested in these at the dawning of 2013 you would be up 6% or more YTD already.
What a difference five weeks make--from handwringing over the Fiscal Cliff to a 14,000 Dow---"sad rags into glad rags" for sure. But, Mr. Market, pray answer Frankie Valli
"Is this a lasting treasure/Or just a moment's pleasure
Can I believe the magic of your sight/Will you still love me tomorrow?"
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