May 2007

The big news this morning is the change in tax rules for trading in China.? Officials are trying to get the recent rampant speculation under control (the SSEC is up 186% in the last 12 months) .? The Shanhai composite traded down 6.5% overnight.

The 6.5% is barely a blip so far in the parabolic curve of the market, but this could start to shake things up…

The big drop on Feb. 27 was preceded by a similar change in legal regulations in China, but it doesn’t look like western markets are too worried about today’s change — pre-market futures are down around 0.5% for US markets.

You may have heard the old saying: a recession is when your neighbor loses his job, a depression is when you lose your job.

Bad news, the mortgage loan debacle is no longer happening to other people… my bank has been hit by it and may be about to go out of business.

NetBank Agrees to Sell Assets at a Loss to EverBank

Not to worry, their retail accounts are being sold to Everbank. The changes are primarily bad for investors, not for account holders. The accounts are FDIC insured, though I’m sure it would have sucked to have to collect on the insurance if someone like Everbank hadn’t stepped up to buy the accounts.

While many finance professionals that I respect (like John Bogle) claim Value funds outperform Growth funds, there are investment opportunities when one class of funds dramatically outperforms another. Currently, Value funds have been kicking the pants off Growth funds, but that might be helping set the stage for a contrarian trend that favors Growth in the next 1-3 years. (more…)

In April, the S&P 500 went up 4.3%. If it were to continue at the same pace every month, in a year it would be up over 50%.

Anyone want to bet whether this type of rise is sustainable?