August 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…

  • Week of 08/28/2008

    In This Issue:

    Tensions Between The U.S. And Russia Are Serious
    Oil And Commodities React To The Threat
    Defense Stocks Look Even Better Than Last Week
    And So Does The Dollar
    Inflation vs Deflation Contest Heats Up
    But Inflation Should End Up With The Gold
    The Bottom Line This Week

    Last week the stock market revealed that it has more underlying strength than world events would seem to justify. If the market is once again acting as a leading indicator of the future, the outlook is brighter than is generally supposed.

    Despite the fact that a new cold war seems to be underway, the Dow was only off 0.3% last week. The Nasdaq declined 1.5%. The market dropped 242 points when it reopened on Monday, but it regained nearly half the loss on Tuesday and Wednesday.

    Our feeling is that investors want to be buyers and can only be held back by disturbing news. That's a big difference from a bear market mentality when bad news drives prices and good news is ignored.

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  • Week of 08/21/2008

    In This Issue:

    Inflation Spike Seems Unlikely To Last
    The Dollar Rally Gathers Strength
    Russians In Georgia Have Investors Spooked
    The Outlook Is Good For U.S. Defense Companies
    In A Low Yield World, Dividends Shine
    The Bottom Line This Week

    The stock rally lost some ground last week which made many investors worry that the run may be coming to an end. That fear was justified since the main engine behind the rally -falling oil prices- continued to play their part. Even with oil moving down to the $112 range, the Dow fell 0.6% for the week.

    Small stocks moved in the opposite direction to their larger cousins as the Nasdaq posted a 1.6% advance. In its own way, the small stock upturn also made investors nervous. The bounce was another in a long list of confusing situations that are at work in the market today.

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  • Week of 08/14/2008

    In This Issue:

    Surprise! Oil Prices Can Plunge As Well As Soar
    Russia-Georgia Conflict Shows Oil Retreat Has Legs
    The Dollar Is Rebounding By Default
    We Know We've Said This Before, But "Buy The Bargains"
    The Bottom Line This Week

    Last week, the stock market continued to make the big swings that started several days earlier. This time, however, we were delighted to see that the pattern was skewed towards the positive. Thanks to a 332 point gain on Tuesday and another 303 point jump on Friday, the Dow and the Nasdaq ended the week up 3.6% and 4.5% respectively.

    Those were very nice numbers for a five day period, especially since poor economic news –and the Russian/Georgian war- continued to dominate the headlines. However, none of it could overcome the enthusiasm investors had for the recent plunge in oil prices that brought the magic $100 level within sight. If oil gets that low we will see rejoicing on both Wall Street and on Main Street. We might even raise a glass ourselves.

    Meanwhile, Mother Market is testing our resolve. After rising 49 points on Monday, stocks dropped 250 points through Wednesday. More gyrations are undoubtedly on the way.

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  • Week of 08/07/2008

    In This Issue:

    Investors Are Searching For Direction
    The Ying And The Yang Of Today's Market
    Chase Value, Not The Rally
    Many See The Merrill Lynch Write-down As Positive
    The Oil Price Decline Will Help The Economy
    If Energy Costs Go Down, These Investments Should Go Up
    The Bottom Line This Week

    Last week stock prices had some of the biggest ups and downs we've seen in months. After tanking 240 points on Monday, stocks shot up 267 points on Tuesday and another 186 points on Wednesday. The next day they dropped back 206 points and we started to reach for the Dramamine. On Friday, however, the market eased back a more tranquil 52 points.

    As it turned out, the market's gyrations came to nothing. When the numbers for the five days were tallied, the Dow was only off 0.4% and the Nasdaq was essentially flat.

    Nothing much happened on Monday of this week either. Then oil prices fell to $118 and the Fed decided to leave interest rates alone for awhile. The market immediately shot up 332 points on Tuesday, and another 40 points yesterday.

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