October 2008 - AIA Advocate for Absolute Returns

The AIA "Advocate For Absolute Returns", an on-line publication of The Association for Investor Awareness, Inc., tracks market trends, industry news, the SEC, global trade and finance and Washington developments for you because they affect your investments. But who doesn't? Many sources simply report these issues as abstract facts.

We feel that's not enough. The AIA Advocate's job is to warn you of what's important and how these developments translate to ground-level forces and threats that directly affect your wealth as well as your current investment opportunities. Not just information, but information you can use. Until next time…

  • Association of Investor Awareness - Week of 10/30/2008

    In This Issue:

    A Big Rebound May Be Close
    Like Kids In A Candy Store
    Super Stocking Stuffers
    These Trends Are Your Friends
    The Bottom Line This Week

    Another bear trap snapped shut last week when the 4.8% stock market gain from October 6 - 10 turned into a 5.4% loss for the Dow and an ugly 9.3% plunge for the Nasdaq.

    As has been the usual pattern during this stock market plunge, the drop was larger than the previous bounce. One of our group compared the market to a slot machine that gives just enough money back to make people want to keep playing.

    We saw another inducement to play on Tuesday of this week when the market surged nearly 890 points when it became known that the Fed would lower interest rates again. When the official announcement came on Wednesday, stocks eased back 74 points. It was a textbook example of the old Wall Street rule to "buy on the rumor, sell on the news."

  • Association for Investor Awareness - Week of 10/23/2008

    In This Issue:

    It's Too Early For A Sustained Rebound
    But, There Are Finally Some Signs Of Relief
    What Everybody Knows Is Often Wrong
    Another Contrary Economic Outlook
    Cheaper Energy: The World's Biggest "Tax" Cut
    This High Yield Investment Looks Good
    The Bottom Line This Week

    Mother Market took pity on investors last week when she tossed a few points our way. Actually, it was more than just a few. The total for Monday and Thursday came to a whopping 1338. Since she took back "only" 937 points, the Dow and the Nasdaq ended the period up a welcome 4.8% and 3.8% respectively.

    When the closing bell finally rang on Friday and the week's gains were locked safely away, some of us let out a happy little "hurray." However, our killjoy number cruncher pointed out that with so many wild swings happening every week it was inevitable that the market would occasionally end on a high point. In other words, the bounce could have just been a random event. Rats!

    On Monday of this week the market jumped another 413 points, but it gave back 746 points on the following two days. Oh well, the mini-rally was fun while it lasted.

  • Association for Investor Awareness - Week of 10/16/2008

    The Biggest Danger Now Is A Series Of Bear Traps
    The Financial Crisis Has Further To Run
    Some Bear Market Investments Have Promise
    How Long The Bear Might Stick Around
    A Contrary Economic Outlook
    Another Shameless Plug For Blue Chip Stocks
    The Bottom Line This Week

    Stock volatility has become so extreme, we had to redraw the charts. Although there have been up and down days as large as those we have seen recently, never before have they come in such quick succession.

    Last week, as everyone from New Guinea to New York must know by now, the Dow and the Nasdaq fell 18.2% and 15.3% respectively. That would have been tough enough by itself, but what made the week even more hectic is it contained a 679 point jump that many investors believed was the start of a reversal. 

    The market leaped forward again this Monday with a breath taking 936 point surge when U.S and European leaders decided on a coordinated financial rescue plan. Stocks took a breather on Tuesday. Then it plunged 733 points the next day on poor consumer spending data. We must expect more whiplash days as the credit crisis continues to unfold. 

  • Week of 10/09/2008

    Bargains Are Starting To Appear
    A Bottom Fishing Check List
    The Bear Isn't Finished Yet
    Big Drops Lead To Big Rebounds
    Financial Stocks Attract More Attention
    There Is One More Shoe To Fall
    The Biggest Question: Will The Bailout Work?
    The Bottom Line This Week

    Wall Street's thrill ride continued over the past week as investors made king-sized moves after every drop in the economic outlook. By the time the closing bell rang on Friday, the Dow and the Nasdaq were down 7.3% and 10.8% respectively. A good time was definitely not enjoyed by all.

    Once again, investors saved their biggest gyrations for the following Monday when the market plunged some 800 points. Fortunately, the market regained 430 points before the end of the day. Stocks resumed their slide on Tuesday and Wednesday when they fell a total of 689 points.

  • Week of 10/02/2008

    In This Issue:

    A Nasty, But Not A Calamitous, Stock Plunge
    Our Contrary Opinion
    A Cure For The Crisis Is Already Being Applied
    It's Time To Do Some Cautious Buying
    Stock Buyers Should Sip, Not Gulp
    The Bottom Line This Week

    People who enjoy excitement must envy investors right now. Not even thrill seekers who travel to New Zealand for the world's highest bungee jump have anything on us. When it comes to big bounces, Wall Street is the place to be.

    On Monday of this week, we completed the jumping part of the stock market's bungee experience. The rebound on Tuesday was nearly as exhilarating. Wednesday, thank goodness, was a quiet day of recuperation.

    Of course the rubber cord could break at any time, in which case the game will be over. However, that seems very unlikely. If a crash was in the works, we think it would have happened on Monday when deep pessimism was rampant.

    The market action we are having now is all the more exciting because there was no hint of it last week. The Dow dropped a tepid 2.2% while the Nasdaq just about doubled it with a 4.0% decline. It was barely enough to be a good warm-up for this week's main event.