It really doesn't get more boring than this. As the financial channels keep flashing "new all-time high" on the Dow, I can't help but think of the many ways a cap weighted index can influence the emotions of so many people.
Energy stocks continue to rebound from their lows set a week ago. News that OPEC will agree to cut production at a meeting this week continues to lite a fire under the group. We told you a few weeks ago that this would probably happen.
What this market needs to reveal its true colors is an end to the election "magic" that seems to be casting a spell on its daily upward gyrations.
Today, Goldman Sachs Downgraded Home Depot to neutral from buy, and UBS Downgraded GE to neutral from buy. Here are examples of two big bell weather stocks receiving downgrades, and the media is ignoring the future ramifications of these downgrades.
After the University of Michigan's mid-October sentiment came in at a better than expected 92.3% the 10-year T-note yield rose to its the highest yield in three weeks at 4.80%. In addition, the rate cut that the market had given a 54% chance of happening a few weeks ago vanished. And what was the stock market's "magical" response? Yep, it went up.
Here is a little know comment from Warren Buffett's last Berkshire Hattaway shareholders meeting;
"Between Dec 31.1899-Dec 31, 1999, the Dow rose from 66 to 11,497. The compounded annual return according to Warren Buffett amounts to a gain of 5.3%. To achieve an equal rate of gain in the 21st century, the Dow will have to rise by Dec 31, 2099 to- brace yourself- precisely 2,011,011.23. Bacically, the six years of this new century, the Dow has not gained at all."
Given this valuable information, I think I'll sit back and enjoy my risk free 5.2% cash position.
