AIA Advocate for Absolute Returns

The AIA "Advocate For Absolute Returns", a weekly 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 report these issues as abstract facts.
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  • Association of 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.

    ...

  • Association of Investor Awareness - Week of 12/18/2008

    In This Issue:

    The Economy Is Bad, But Stocks Are Priced For Worse
    Stocks Outshine Their Competition
    Behold The Halo Effect
    A January Bounce Seems Likely
    Energy And Foreign Growth Are Positives
    We May Be Halfway Through The Economic Downturn
    What Everybody Knows...
    The Bottom Line This Week

    Last week we received additional signals that a bear rally is probably in the works. During the five day period, investors were treated to a smorgasbord of bad news. Congress turned thumbs down on bailing out the Big Three automakers. Unemployment surged to a 26 year high. T-Bill returns dropped to essentially zero. Many bellwether companies issued earnings warnings. Several firms cut their dividends, and investors were shocked by a $50 billion hedge fund collapse.

    So what did the market do? It barely budged. The Dow eased down less than 0.1%. The Nasdaq actually rose 2.1%. The market was also strong during the first three days of the current week. In our opinion, such resilience in the face of disturbing economic events indicates that investors are probably getting ready to do some buying.

    ...

  • Association of Investor Awareness - Week of 12/11/2008

    In This Issue:

    The Long-Awaited Bear Rally May Be Starting
    Although Weak, Some Hopeful Economic Signs Are Emerging
    Credit Is Slowly Opening Up Again
    If Fear Subsides, The Outlook Will Improve Immediately
    A Recovery Will Bring Unwelcome Inflation
    The Bottom Line This Week

    As we reported in our previous issue, the sharp stock market advance over the Thanksgiving holiday came to a crashing end on December 1. However, prices have been stronger since then. Although the gains weren't enough to fully erase the earlier plunge, the Dow and the Nasdaq managed to end last week down just 2.2% and 1.7% respectively. From Monday to Wednesday of the current week, the market managed to make some additional gains.

    It's significant that the price increases occurred while more bad economic news was breaking. A manufacturing decline, an auto sales plunge, and more job losses should have pushed stocks down several more notches. The fact that investors largely ignored the negatives may indicate that the bear market is close to a bottom.

    ...

  • Association of Investor Awareness - Week of 12/04/2008

    In This Issue

    Black Friday May Suggest A More Optimistic Outlook
    Most Insiders Are Not Selling
    Bear Market History: How We Compare
    Get Paid While You Wait
    The Bottom Line This Week

    Last week when everyone was stuffing themselves with turkey and other goodies, the urge to consume in abundance spilled over to Wall Street. By the time the market closed on Friday, the Dow and the Nasdaq were up an impressive 9.7% and 10.9% respectively. It was the first five day rally we've seen in over a year.

    The enthusiasm for stocks wasn't completely due to holiday cheer. Investors got wind of the fact that Black Friday sales were likely to be better than was first expected. As it turned out, instead of a miniscule 0.9% sales increase, Joe and Sally MidAmerica gave the retail industry a 3% boost. Shoppers were so eager to spend money, they trampled several people who got in their way, one of whom died.

    As we are sure you know by now, the enthusiasm didn't survive the weekend. The terrorist attack in Mumbai plus a dismal economic report sent the market down 680 points on Monday. Stocks recovered 442 points on Tuesday and Wednesday but the rebound seems unlikely to last very long.

    ...

  • Association of Investor Awareness - Week of 11/26/2008

    Special Issue:

    When Deflation Comes,
    Cash Is King

    When everybody is certain the economy and stocks will move a particular way, usually just the opposite occurs. That's just what happened this summer when deflation suddenly overtook inflation as America's primary economic problem. Mr. Murphy, of Murphy's Law, seems to take particular pleasure in messing up the plans of investors.

    Deflation, of course, is just the opposite of inflation. Instead of seeing the value of money fall and the prices of goods rise, cash becomes much more valuable and prices decrease.

    Deflation is clearly in control today as homes, oil, and even precious metals plummet in price. Now food costs are beginning to sink. Jobs are being lost in most industries. Most experts think that wages will also begin to fall within a few months.

    The public is starting to show the effects of the deflationary squeeze. People are selling motor homes, pleasure boats, and many other big ticket items to raise badly needed cash. A disturbing 10% of Ohio's adult population is on food stamps. Of course, retail sales are also weakening.

    ...

  • Association of Investor Awareness - Week of 11/20/2008

    In This Issue:

    Stocks Search For A Bottom
    High Energy Prices Will Return
    Commodities Will Also Rebound
    Infrastructure Spending Is Likely To Soar
    The Bottom Line This Week

    Stocks stumbled badly again last week as deteriorating economic news caused another round of investors to throw in the towel. By Friday afternoon, the Dow and the Nasdaq were down an additional 5.0% and 7.9%. The declines left the two indices down 35.9% and 42.8% for the year. Ouch!

    This week got off to an equally bad start. Although we had a 151 point gain on Tuesday, it was overshadowed by a 651 point slide on Monday and Wednesday.

    ...

  • Association of Investor Awareness - Week of 11/13/2008

    In This Issue:

    How Will The Obama Presidency
    Affect The Investment Markets?

    We had another roller coaster ride on Wall Street last week. Although the first day wasn't exciting, two others gave us a 553 point surge. On the two remaining days, the market plunged 930 points. When the shouting stopped on Friday afternoon, the Dow and the Nasdaq were down 4.1% and 4.3% respectively.

    The latest decline probably put the kybosh on the mid-cycle rally that appeared to be starting the week earlier, but it's not yet certain. As chaotic as the markets have been over the past two weeks, stocks were above where they started. Bear market rebounds often resemble walking up a sand dune where you move two steps forward and you slide back one. Sometimes it's hard to see if you're making progress.

    On Monday and Tuesday of this week stocks fell 73.3% and 176.6%, which was well under half the rate we saw several days ago. Perhaps the bear is running out of steam and stock prices will bounce back up again. The odds seem good, but bear rallies are of little use to value investors who benefit from lower prices. 

    ...

  • Association of Investor Awareness - Week of 11/06/2008

    In This Issue:

    The Rally May Have Legs – Or Not!
    A Banquet For Value Investors
    Dividends Shine In This Market
    A Yield Bonus That Few Investors Consider
    The Bluest Of The Blue Chips
    Love Those Dividend Aristocrats
    The Bottom Line This Week

    The mid-cycle rebound we have been expecting showed up last week with a spectacular opening. Even though the market on Monday showed a 203 point loss, huge gains over the remaining four days pushed the Dow and the Nasdaq up 11.3% and 10.9% respectively.

    This time the gains survived the weekend, but not for long. Monday was a yawn, but the market jumped 305 points on Tuesday as excitement about the presidential election boosted spirits. On Wednesday, however, America suffered a post-election hangover and stocks dropped a whopping 486 points. It looks like Wall Street plans to give President-elect Obama a very short honeymoon.

    ...

  • Association of Investor Awareness - Week of 10/30/2008

    In This Issue:

    A Big Rebound May Be Close
    Like Kids In A Candy Store
    Super Stocking Stuffers
    These Trends Are Your Friends
    The Bottom Line This Week

    Another bear trap snapped shut last week when the 4.8% stock market gain from October 6 - 10 turned into a 5.4% loss for the Dow and an ugly 9.3% plunge for the Nasdaq.

    As has been the usual pattern during this stock market plunge, the drop was larger than the previous bounce. One of our group compared the market to a slot machine that gives just enough money back to make people want to keep playing.

    We saw another inducement to play on Tuesday of this week when the market surged nearly 890 points when it became known that the Fed would lower interest rates again. When the official announcement came on Wednesday, stocks eased back 74 points. It was a textbook example of the old Wall Street rule to "buy on the rumor, sell on the news."

    ...

  • Association of Investor Awareness - Week of 10/23/2008

    In This Issue:

    It's Too Early For A Sustained Rebound
    But, There Are Finally Some Signs Of Relief
    What Everybody Knows Is Often Wrong
    Another Contrary Economic Outlook
    Cheaper Energy: The World's Biggest "Tax" Cut
    This High Yield Investment Looks Good
    The Bottom Line This Week

    Mother Market took pity on investors last week when she tossed a few points our way. Actually, it was more than just a few. The total for Monday and Thursday came to a whopping 1338. Since she took back "only" 937 points, the Dow and the Nasdaq ended the period up a welcome 4.8% and 3.8% respectively.

    When the closing bell finally rang on Friday and the week's gains were locked safely away, some of us let out a happy little "hurray." However, our killjoy number cruncher pointed out that with so many wild swings happening every week it was inevitable that the market would occasionally end on a high point. In other words, the bounce could have just been a random event. Rats!

    On Monday of this week the market jumped another 413 points, but it gave back 746 points on the following two days. Oh well, the mini-rally was fun while it lasted.

    ...

  • Association of Investor Awareness - Week of 10/16/2008

    The Biggest Danger Now Is A Series Of Bear Traps
    The Financial Crisis Has Further To Run
    Some Bear Market Investments Have Promise
    How Long The Bear Might Stick Around
    A Contrary Economic Outlook
    Another Shameless Plug For Blue Chip Stocks
    The Bottom Line This Week

    Stock volatility has become so extreme, we had to redraw the charts. Although there have been up and down days as large as those we have seen recently, never before have they come in such quick succession.

    Last week, as everyone from New Guinea to New York must know by now, the Dow and the Nasdaq fell 18.2% and 15.3% respectively. That would have been tough enough by itself, but what made the week even more hectic is it contained a 679 point jump that many investors believed was the start of a reversal. 

    The market leaped forward again this Monday with a breath taking 936 point surge when U.S and European leaders decided on a coordinated financial rescue plan. Stocks took a breather on Tuesday. Then it plunged 733 points the next day on poor consumer spending data. We must expect more whiplash days as the credit crisis continues to unfold. 

    ...

  • Week of 10/09/2008

    Bargains Are Starting To Appear
    A Bottom Fishing Check List
    The Bear Isn't Finished Yet
    Big Drops Lead To Big Rebounds
    Financial Stocks Attract More Attention
    There Is One More Shoe To Fall
    The Biggest Question: Will The Bailout Work?
    The Bottom Line This Week

    Wall Street's thrill ride continued over the past week as investors made king-sized moves after every drop in the economic outlook. By the time the closing bell rang on Friday, the Dow and the Nasdaq were down 7.3% and 10.8% respectively. A good time was definitely not enjoyed by all.

    Once again, investors saved their biggest gyrations for the following Monday when the market plunged some 800 points. Fortunately, the market regained 430 points before the end of the day. Stocks resumed their slide on Tuesday and Wednesday when they fell a total of 689 points.

    ...

  • Week of 10/02/2008

    In This Issue:

    A Nasty, But Not A Calamitous, Stock Plunge
    Our Contrary Opinion
    A Cure For The Crisis Is Already Being Applied
    It's Time To Do Some Cautious Buying
    Stock Buyers Should Sip, Not Gulp
    The Bottom Line This Week

    People who enjoy excitement must envy investors right now. Not even thrill seekers who travel to New Zealand for the world's highest bungee jump have anything on us. When it comes to big bounces, Wall Street is the place to be.

    On Monday of this week, we completed the jumping part of the stock market's bungee experience. The rebound on Tuesday was nearly as exhilarating. Wednesday, thank goodness, was a quiet day of recuperation.

    Of course the rubber cord could break at any time, in which case the game will be over. However, that seems very unlikely. If a crash was in the works, we think it would have happened on Monday when deep pessimism was rampant.

    The market action we are having now is all the more exciting because there was no hint of it last week. The Dow dropped a tepid 2.2% while the Nasdaq just about doubled it with a 4.0% decline. It was barely enough to be a good warm-up for this week's main event.

    ...

  • Week of 09/25/2008

    In This Issue:

    Most Economists Believe The Rescue Plan Will Work
    Others Say It Will Only Postpone The Inevitable
    We Think The Optimists Are Right
    Meanwhile, Here's An All-Weather Investment Plan
    The Bottom Line This Week

    We've been suspicious for several weeks that Mother Market was not happy about taking a back seat to the recent Olympic games in China. To gain back some of the limelight she has been making bigger swings, jumps, and dives than anything we saw in Beijing. Her efforts are clearly working because nothing else has been able to push financial news off the front pages.

    Last week, the market made yet another volatility record, not that anybody wanted to see it. On four of the five days, prices changed over 300 points. Nevertheless, when the dust settled, and the bodies were swept up, the Dow was only down a miniscule 0.3%. The Nasdaq actually managed to rise 0.6%. If you happened to be in Transylvania during the festivities, you might not have known how much fun the rest of us had.

    The race for new records continued when the market opened on Monday of this week, and stocks dropped 373 points. Prices started to settle down on Tuesday and Wednesday when stocks fell 162 points and 29 points respectively. Given the circumstances, it is too much to hope that the high volatility will end anytime soon.

    ...
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  • Week of 09/18/2008

    In This Issue:

    Stocks Plunged, But The Expected Crash Didn't Occur
    Many Investors Were Pleased To See Some Bailouts End
    A Recession Is More Likely, But It Isn't Assured
    Many Companies Are Having A Good Year
    It's Time For Bottom Fishers To Unfold Their Nets
    The Dollar Rebound May Be Over
    The Bottom Line This Week

    Looking back at the stock market of last week is like looking at the distant past. Compared to the big changes that have occurred since then, the five day period belonged to a different era. For the record, the Dow and the Nasdaq gained 1.8% and 0.2% respectively.

    As everybody knows by now, this week opened with a 504 point plunge after the government failed to find a buyer for Lehman Brothers. The news was a shock because investors expected a repeat of the Bear Stearns shotgun marriage to J.P. Morgan that prevented a stock market quake in March. When the rescue attempt for Lehman fell apart, many investors headed for the door.

    There was a brief rebound on Tuesday but stocks plunged another 449 points the next day. High volatility seems likely to continue for quite some time.

    ...
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