The Tasgall Group

It’s amazing to see the Dow above 13,000… an all-time high. But it’s interesting to realize what that means… what is really at an all-time high? The Dow is a price weighted index (read how splits and dividends are included if you really want to know), which means that not every component contributes the same amount to its ups and downs…

Different weighting is actually normal, but the Dow has an unusual weighting — it’s components are weighted based on price. That means that stocks with higher prices have a higher impact on the index (with some caveats — nothing is simple). In contrast, the S&P 500 is market-cap weighted, which can cause it’s own caveats and unusual behaviors…

A side effect of the price weighting is that (relatively) smaller companies like Boeing, 3M, and Caterpillar have a larger impact than larger companies like GE, Microsoft, and Pfizer. (more…)

I found a good little blurb (and a good chart) on Ticker Sense regarding the S&P 500’s 5% decline and previous such declines…

With today’s near 1% decline, the S&P 500 is now down 5.86% form its peak on 2/20. This is the seventh time during this bull market that the S&P 500 has declined by 5% or more from a peak. In [the chart], we plot the S&P 500 highlighting each correction in red. The lower chart shows the percentage decline in each correction on a cumulative basis (from peak to trough).

On average, declines have lasted an average of 74 calendar days. Once the market does reach its low point, it has taken an average of 64 calendar days to recoup the losses.

While looking at historical patterns can mislead as easily as it can enlighten, it is worth noting that we’re not talking about a short-term one-week dip and one week recovery here.  With an average decline timeframe of 74 calendar days, we aren’t going to see the markets make new highs tomorrow if/when a recovery starts. (more…)

Another pretty picture from RealtyTrac via The Big Picture… this one shows the real estate/housing foreclosures by state… the redder the states, the more foreclosures per capita.

While the residential real estate market continues to soften, REITs are still going ganbusters (thanks to the EOP buyout), and homebuilders are doing quite well too.

From FT Alphaville:

Red Kite Management, a $1bn metals-trading hedge fund, has suffered losses of up to 15 per cent so far this year… The news sparked heavy falls on the metals markets…

The report had a marked impact in the metals markets on Friday afternoon. In trading on the London Metal Exchange the price of copper fell 6 per cent, while aluminium was down 3 per cent and zinc slumped more than 8 per cent. “Fund liquidation…a lot of stops triggered…a lot of the stuff on the back of the Red Kite news,” another trader told Reuters.

While a 15 to 20% loss doesn’t seem so bad, the fact that it has occurred in the last 5 weeks may be a harbinger of more trouble… (more…)

If you’re a hippy and are interested in lowering your carbon footprint, you might find an unexpected place to do so in the stock market and be able to profit at the same time… consider investing in timber. Both Rayonier (RYN) and Plum Creek Timber (PCL) are publicly traded companies that own significant timberland, and if logic holds, the timberland absorb enough carbon dioxide to offset your own personal production. (more…)

Those crafty bookmakers over at TradeSports have decided to put the odds making to the probability of a US Recession in 2007… and here’s the result of the betting on their website:

(more…)

I have mentioned the closed-end fund IGR before, and now is a good time to bring them up again… IGR is the “ING/Clarion Global Real Estate Income Fund”. While the full name is a mouth-full, it is quite a good fund, and a good fund to know about.

If you like REITs but think that the US based REITs are a bit overpriced or at least late in a bull cycle, you might want to consider diversifying some or all of your holdings into an internationally based fund like this. (more…)

I just read this interesting blurb from Stratfor…

…Today, for mining companies seeking to expand capacity, the ocean floor is emerging as a focus of attention. Particularly in the eastern Indian and western Pacific oceans, the ocean floor contains a number of boulders rich in minerals like gold, nickel and copper — a tempting prospect for those who think they can develop the technology to bring those rocks to the surface.

(more…)

It seems that the financial news lately has been full of stories like this (via the FT):

Oil producers shun dollar - Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.

The cover of The Economist last week even taunted a falling dollar: (more…)

Titled “Out-of-the-box Thoughts on the Yield Curve”, Steve Saville throws out some very good commentary on the current yield curve inversion. I have to admit that his commentary has defined my own understanding of what yield curve inversion really means and what (if anything) it forecasts. (more…)