Wikinvest Wire

What's Hot, What's Not

Saturday, January 03, 2009

The right-most column below is about as close as you'll get to a 2008 version of this graphic from the Wall Street Journal and, interestingly, over the last week, everything was up. IMAGE Over the last 52 weeks, the dollar comes out on top at +8.4 percent, but treasuries really should be added to this list as they about doubled that gain last year. That's one of the very big questions for 2009 - what will treasuries do?

Gold had a very good start last year but it declined yesterday, so its 2008 gain of about 6 percent shrunk to just a couple percent when looked at on a 52-week basis.

Similarly, broad equity markets had a horrible start last year but a fantastic day yesterday causing the 52-week loss to narrow sharply. For example, the Nasdaq was down 40.5 percent in 2008 but the 52-week change shrunk to -34.8 percent as shown above.

The one-day improvement for international stocks may have been even greater.

One of the best graphics in the Money and Investing section of the WSJ print edition is shown below from yesterday's paper which captures the final 2008 results.

The only country with a single-digit decline, Venezueala, has an official inflation rate of about 33 percent, so don't get too excited about investing with Hugo Chavez who now seems intent on taking over mining properties since the price of oil has plunged.

Remember that you need a 100 percent gain to recover from a 50 percent decline so, even if these stocks go up 20 percent this year, they'll still be down 40 percent from where they started 2008. If they go up 40 percent, they'll still be down 30 percent.

They really need to fix how these advance/decline percentages work!!




Anonymous said...

Happy 2009.

The hot thing I'm still looking at is a broken Treasury yield curve and trying to make sense as to how long that will take to be mended and thus how long it will take people to re-value the value of money. This systemic failure may well be a $15 Trillion problem connected to market inefficiencies that could be three times that, thus it seems highly unlikely that any Obama-nium-like stimulus attempt, will fall far short of what will be needed to shock the patient back to robust health.

I found these old tid-bits hanging around which set a tone for the pending recovery which will have headwinds of ZIRP, non-existent Treasury yields, diminished dividends and meaningless bonds, worthless stocks that have highly limited growth and a destabilized housing market -- linked to increased foreclosures that are linked to increased unemployment and immobility.

1. Using a new measure of house prices, the Fed now says consumers have lost a staggering $7.1 trillion in net worth since the third quarter of 2007.

2. The equity sell-off has eviscerated some $4.6 trillion of global stock market wealth in the past three weeks alone, according to the market capitalization loss on MSCI's main world equity index.

> I guess I'm somewhat with Roubini and thinking that 2009 will be somewhat of a wash, i.e, not a crash and not a turn around, but just continued bad news that will be priced in (then ignored) while cash-burn adds to volatility and stagflation like purgatory. 2010, on the other hand will a time to dig out from the next mess: Fears over earthquake 'swarm' at Yellowstone National Park

Anonymous said...

Just read this and wondered if it was on the radar anywhere?

>> Fed has abandoned monetary policy, critic says

FYI: Taylor said the U.S. Congress has a legitimate right to demand a say in who the Fed lends money to. The outcome would be "radical reform" that would risk monetary policy independence, he said.

This concern was echoed somewhat by the president of the St Louis Federal Reserve Bank, James Bullard, who also took part in the panel discussion. He said the close collaboration between the Fed and U.S. Treasury in fighting the crisis could have unintended consequences.

Tim said...

I think it's fair to say that our gubment has set all kinds of nasty new precedents over the last year.


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