James Earnest Investments - Latest Blog Entries

MILTON LUCE

Mon, 26 Dec 2011 18:48:00 -0600

Milton Hayes Luce, Jr passed away December 16, 2011 at age 89 years. My former partner and mentor will be sorely missed

SELL IN MAY?

Sun, 12 Jun 2011 06:26:00 -0500

A favorite Wall Street saying - "Sell in May and go away." This would have worked well again this year, as the Dow Jones Industrial Average has lost ground for six straight weeks, falling 6.7% since late April.

According to The Wall Street Journal, the Dow Jones Industrial Average over its entire 115-year history, has fallen an average of 0.04% in May, one of three months that have a negative average. (The others are February and September.)

PANIC SELLING

Wed, 30 Mar 2011 09:02:00 -0500

An excerpt from our March 2011 Newsletter regarding panic selling, that I found informative:

It rarely pays says Mark Hulbert on marketwatch.com. "Perhaps the closest recent analogy to what Japan is going through right now is the 9-11 terrorist attacks on the World Trade Center and the Pentagon. Just as is the case with the Japanese stock market, Wall Street plunged on the day it eventually reopened following those attacks. But the market quickly recovered. Consider an investor who was unlucky enough to have invested in the stock market on Sept 10, 2001, the day before the attacks. Believe it or not, within just two months that investor would have been in the black. You might object that it's dangerous to draw investment conclusions from this one turn of events. But the market's behavior after 9-11 was right in line with historical precedent. Consider a study conducted by Ned Davis Research, the quantitative research firm. It identified what it considered to be the 28 worst political or economic crises over the six decades prior to the 9-11 attacks - beginning with the Fall of France in 1940 and Pearl Harbor in 1941. In 19 of these 28 cases, according to the firm, the Dow Jones Industrial Average was higher six months after the crisis began. The average six-month gain following all 28 crises was 2.3%." ...... MarketWatch.com

JAN 2011 DOW JONES PERFORMANCE (CNBC)

Mon, 31 Jan 2011 18:29:00 -0600

The Dow Jones Industrial Average rose 68.23 points, or 0.6 percent, to close at about 11891.93, after falling 1.4 percent on Friday. For the month, the Dow gained 314.42 points or 2.72 percent, its best January performance since 1997 and its first January gain in four years. ...... From CNBC

2010 STOCK MARKET PERFORMANCE

Mon, 17 Jan 2011 05:40:00 -0600

Dow Jones Industrial Average +11.02%

S&P 500 Index +12.78

Nasdaq Composite Index +16.91%

(returns with no re-invested dividends)

STOCK MARKET CORRECTION

Sun, 30 May 2010 01:42:00 -0500

A stock market correction is generally defined as short term price decline of 5% to 20%.The decline of May 2010 would qualify as "a market correction."

BAD MAY FOR THE MARKET

Fri, 28 May 2010 15:52:00 -0500

The S&P 500 fell from 1186.69 to 1089.41 during May 2010, a loss of 8.2%, and the biggest monthly loss since February 2009.

2009 FINAL STOCK MARKET PERFORMANCE

Mon, 18 Jan 2010 12:23:00 -0600

With dividends reinvested, 2009 returns for major stock market indices:

Dow Jones 22.68%

S & P 500 26.46%

Nasdaq 43.89%

Russell 2000 27.17%

2009 STOCK MARKET PERFORMANCE as of December 15

Wed, 16 Dec 2009 04:33:00 -0600

Dow Jones Industrial Average +16.0%

Standard and Poors 500 +18.5%

NASDAQ +28.4%

Russell 2000 +17.6%

2009 STOCK MARKET PERFORMANCE as of September 8

Wed, 09 Sep 2009 03:59:00 -0500

Dow Jones +7.6%

S&P 500 +11.9%

Nasdaq +22.6%

Russell 2000 +13.3%

2008 STOCK MARKET PERFORMANCE as of December 31

Wed, 14 Jan 2009 02:35:00 -0600

Dow Jones Industrials -33.8%

S & P 500 -38.5%

Nasdaq -40.5%

Russell 2000 -34.8%

Disinflation vs deflation

Tue, 02 Dec 2008 03:27:00 -0600

From Investopedia.com:

Disinflation - A slowing of the rate at which prices increase. Typically, this occurs during a recession, as sales drop and retailers are not able to pass on higher prices to customers.

Deflation - a period during which prices actually drop.

LIBOR

Fri, 10 Oct 2008 05:15:00 -0500

London Interbank Offered Rate (from Investopedia)

An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Banker's Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' deposit rates for larger loans with maturities between overnight and one full year.

This rate is quite high now, reflecting the reluctance of banks to lend to one another, and thus the "credit crisis" we are now experiencing.

West Texas Intermediate - WTI

Fri, 27 Jun 2008 08:05:00 -0500

From Investopedia:

Light sweet crude oil, commonly referred to as "oil" in the Western world. WTI is the underlying commodity of the New York Mercantile Exchange's oil futures contracts.

WTI is considered a "sweet" crude because it is about 0.24% sulfur, a higher concentration than North Sea Brent crude. WTI is high quality oil that is easily refined.

Commodity

Fri, 27 Jun 2008 07:44:00 -0500

A basic good used in commerce that is interchangeable with other commodities of the same type (grains, gold, beef, natural gas and oil are examples). Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as basis grade.

The basic idea is that there is little differentiation between a commodity coming from one producer and the same commodity from another producer - a barrel of oil is basically the same product, regardless of the producer. Compare this to, say, electronics where the quality and features of a given product will be completely different, depending on the producer......Investopedia

Oil

Fri, 27 Jun 2008 06:34:00 -0500

Oil prices have been dominating the headlines for months now. The stories generally talk about "sweet crude". So, what is sweet crude oil?

According to Investopedia, sweet crude is the name given to barrels of crude oil that meet certain content requirements, such as low levels of sulfur and hydrogen.

Sweet crude futures contracts are the most popular oil contracts traded on commodity markets. This type of oil is much easier to refine than sour crude.

Inflation

Tue, 20 May 2008 10:04:00 -0500

Investopedia says: Inflation is the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year.

Most countries' central banks will try to sustain an inflation rate of 2-3%.

Core Inflation

Tue, 20 May 2008 09:56:00 -0500

Investopedia defines "core inflation" as: "a measure of inflation that excludes certain items which face volatile price movements. Core inflation eliminates products that can have temporary price shocks because these shocks can diverge from the overall trend of inflation and give a false measure of inflation."

"Core inflation is most often calculated by taking the Consumer Price Index and excluding certain items from the index, usually energy and food products. Other methods of calculations include the outliers method, which removes the products that have had the largest price changes."

GDP (Gross Domestic Product)

Fri, 09 May 2008 04:59:00 -0500

According to Investopedia.com:

GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

Recession

Fri, 09 May 2008 04:51:00 -0500

Investopedia defines recession "as a significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income, and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's GDP" (gross domestic product).