January 2009 - 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 for Investor Awareness - Week of 01/15/2009

    In This Issue:

    Sometimes Good News Can Be Bad News
    Treasury Bonds May Be A Bubble
    It’s Time To Choose Shorter Bond Maturities
    Three Ways To Win If Treasuries Decline
    Investing In Times Of Extremes
    Staying Healthy During Impossible Times
    The Bottom Line This Week

    The optimistic mood that lifted the stock market two weeks ago didn’t last very long. In fact it might have been the smallest January bounce on record. After the 2nd, prices started to move back down again.

    There is some solace in noting that the market is still up some 20% from where the zigzag rally started on November 21. Despite all the turmoil, it may turn out that the bear market reached bottom at that time. We shall know soon enough.

    In any event, by the time last Friday afternoon rolled around, the Dow and the Nasdaq were down 4.8% and 3.7% respectively. During the first three days of this week, the market continued to decline sharply as more disturbing economic numbers were announced.

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  • Association for Investor Awareness - Week of 01/29/2009

    In This Issue:

    Reasons For Cautious Optimism Continue To Appear
    Many Promising Stocks Attract Long-Term Investors
    The Bottom Line This Week

    The stock market continued to lose ground last week as the Dow and the Nasdaq declined an additional 2.5% and 3.4% respectively.

    A growing number of analysts believe the stock slide will continue until the market tests (reaches) the low point it made on November 20. If so, it will be a classic correction to a bear market rally.

    A much bigger issue is what will come next if the November lows are reached. Pessimists believe the market will continue to decline until blue chip P/E ratios get closer to 10. If so, the S&P 500 would drop from today's 832 to 750, or so. Super bears think the index might fall another hundred points.

    On the other hand, optimists believe the market will bounce back in a classic stage two bear market rebound. If history repeats, the second time should be the charm as a new rally would typically test its former highs – and then continue up. The 298 point jump the market took during the first three days of this week suggests that the optimists may be right.

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  • Association for Investor Awareness - Week of 01/01/2009

    In This Issue:

    The New Year Should Bring Investors Some Relief
    Consumers Have More Money Than Holiday Sales Suggest
    Most Corporations Are In Good Financial Shape
    Economy Gains From Cheaper Dollars, Oil, And Interest Rates
    The Faster The Pain, The Quicker The Gain?
    If You Don’t Play, You Can’t Win
    The Bottom Line This Week

    Investors who hoped that Santa might bring them some cheer over Christmas were sorely disappointed. The usually-jolly old gentlemen dropped off a rather large bag of coal. Even that gift was worth a lot less than would have been true a few months ago.

    In any event, when the stock market closed on Christmas week, the Dow and the Nasdaq were down another 0.7% and 2.2% respectively. The mood brightened over the weekend when unemployment claims dropped unexpectedly. During the last three trading days of 2008, the market went up 260 points. We suspect that the occasion will be celebrated with a little extra bubbly on New Years Eve.

    Of course, Wall Street’s revelers will need to overlook the fact that the S&P 500 went down a dismal 41% during 2008. It wasn’t the worst annual performance in history, but it was the worst in the memory of most investors living now.

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  • Association for Investor Awareness - Week of 01/08/2009

    In This Issue:

    It's Time To Start Looking Beyond Current Woes
    A Big Cash Horde Is Always Bullish
    When It Comes To Rebounds, Too Early Beats Too Late
    Eight Blue Chips Many Pros Are Buying
    The Bottom Line This Week

    There's nothing like the start of a new year to shake investors out of a funk. It happened again a few days ago when the market rallied as the first of January approached. The week the calendar turned over, the Dow and the Nasdaq went up an impressive 6.1% and 6.7% respectively. It was an encouraging end to a dismal year that saw the two indices plunge 33.8% and 40.5% - the third worst performance in recent memory.

    Alas, it is far too early to declare an end to the bear market. With manufacturing and home sales dropping to very low levels, it is clear that the economy is still sinking. But as we will discuss later, that doesn't mean that a recovery is off the table for late 2009.

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  • Association for Investor Awareness - Week of 01/22/2009

    In This Issue:

    Credit Rebound Coming From Unexpected Sources
    Signs Of Life Are Returning To Some Real Estate Markets
    A Home Town Advantage With Stocks
    Forget The Bottom, Focus On Value
    Two Leading Stocks Look Especially Good Right Now
    The Bottom Line This Week

    As the inauguration of the new American president approached, many analysts expected the market would have an "Obama bounce." Alas, that happy event did not occur. On the contrary, as further economic and banking industry worries continued to mount last week, the Dow and the Nasdaq dropped another 3.7% and 2.7% respectively.

    The market fell another 332 points on Tuesday, when our new president took office. (Nothing personal, Mr. Obama. As the Godfather used to say, "it's just business.")

    On Wednesday, however, the mood brightened and the market rebounded 279 points.

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