09 Aug 2002

Posted at 15:58h in The Friday Brief by
July was the worst month for the S&P 500 since September 2001.  Few stocks were spared abuse.  Most of the best performers were stocks bouncing off oversold bottoms as telecommunications and technology stocks were among the leaders.  As mentioned in last weeks’ Brief, short covering accounted for most of the gains in stocks.  Lately, though, market specialists say they are seeing some real buying.  It may be due to money managers re-balancing their portfolios towards equities as bonds have become over-weighted during the past couple of years. 

02 Aug 2002

Posted at 16:01h in The Friday Brief by
Optimism is a wonderful trait, and we Americans seem to own the rights to it.  We are born with it in vast supply and our unique culture richly nourishes it.  Entrepreneurs, CEO’s, investors, and stock analysts are poster children of American optimism.  Problem is, it got out of hand in the late 90’s and we must now pay the price, as economic and company results fall relentlessly short of expectations.  In truth, the results aren’t really quite so bad as they seem; it’s our expectations that are too high. 

26 Jul 2002

Posted at 16:16h in The Friday Brief by
What did Wednesday’s 500-point rally mean?  Event the bears can’t ignore the largest gain in 15 years - some discussion is warranted.  Was it the bottom of a long decline, was it a reflex action, did it mean anything at all?  One of my favorite writers, Caroline Baum of Bloomberg put it this way:  “a) the two houses of Congress agreed on a bill to overhaul existing securities and accounting laws; b) the sight of Adelphia Communications' John Rigas and his two sons being led away in handcuffs reassured investors the government is getting tough on white-collar crime; c) sellers took the day off; d) after a month of losses making July 2002 resemble October 1929, even the deadest cat can bounce; e) all of the above; f) none of the above.” 

19 Jul 2002

Posted at 16:19h in The Friday Brief by
Think back to March of 2000 and you might recall those strong the public statements that were bandied about by the government’s Microsoft trustbusters.  Their tone of retribution was the impetus, in the opinion of many, that launched the first phase of the ‘great bear market of 2000 to 200?.’  The question that keeps me awake at night is this; could the bear be prolonged indefinitely as our congress and administration posture to ‘reform’ securities laws, and in so doing, drive away investors and CEOs who fear that the new regulations will be too restrictive to promote effective capital formation or excessive penalties?  It is plausible that the markets are not so worried that every company is crooked as they are that Washington will overreach in addressing a problem that is not as widespread the big-government proponents would have us believe.