While the Wall Street spin machine continues to scare investors into oblivion, consumers were buying everything in sight on Black Friday. I even got into the craze and bought several items from a company started by a young man by the name of Ralph Rueben Lifshitz- better known as Ralph Lauren (Polo).
I stopped by Best Buy (BBY), and the store was jammed. People were walking out pushing large pallets stacked with computers and large screen TV's. I asked the manager of the store what was the big seller of the day. He responded, "everything."
I looked, and watched, and consumers were buying, and buying big.
Here's the skinny on the Wall Street Spin Machine. As long as you're scared, as long as you sell and create bargains in the market, this allows them time to accumulate stocks. Please keep in mind the "Snake and the Mouse" analogy I describe to you a few weeks ago.
Last week, the Investment Company Institute reported that "retail money market funds increased by $3.71 billion to $1.277 trillion", and "institutional money market funds increased by $29.40 billion to $2.438 trillion". The total amount of cash now on the sidelines stands at an astounding $3.715 trillion dollars.
Clearly the snake has gotten the mice to sell. As the mice were selling, investors like Carlos Slim and Warren Buffett were scooping up bargains.
It reminds me of Mr. Potter from "It's a Wonderful Life."
As a contrarian, I like to position myself ahead of the $3.715 trillion before it re-enters the market. When the money comes pouring back in, it will be like wild herd of elephants rushing in to buy.
Here's an interesting observations. Clearly the "Man behind the Curtain" loves Barrack Obama.
Heck, it seems every time Obama speaks, the market rallies. That's okay with me. This being said, I don't think the "Man behind the Curtain" will allow a huge rally until Mr. Obama takes office in January 09.
What's a little disturbing is Obama’s “hope and change” transition or appointments are being filled with promoters of globalization and NAFTA supporters. So, those who fear that America will retrench into protectionism can rest at ease since 32 people named for the new administration one served in the Clinton Administration.
The other fear that needs to be dispelled is the one about taxes. The democrats want to be re-elected in 2012, they aren't going to do anything to hurt those chances. While taxes may rise for some, it will not hurt the economy.
Here are our Top 10 ETF's for the week of December 1st:
1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) VTI: Vanguard Total Stock Market ETF
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) KBE: KBW Bank ETF- Not Rated
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust
Here are our Top 10 Fidelity Sector Funds for December 2008
1) FSCHX: Chemicals
2) FBIOX: Biotechnology
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSRBX: Banking
10) FSVLX: Home Finance
For the Week:
The Dow Jones Industrials were up about 15% in the last four trading days of November. For the week, the Dow rose 782 points, or 9.7%, the S&P 500 was up 96, or 12%, and the NASDAQ gained 151, or 10.9%. Since November 21st, the S&P 500 is up 19.1%. Prior to the recent advance, on November 20th the S&P 500 was down 45.5% for the year.
Black Friday's sales were up about 3% y/o/y, and this gave investors hope that the resilience of the economy and the steps taken by the Fed and Treasury will bear fruit in the months ahead.
The sad news of the week was the Wal-Mart employee who was trampled to death by a herd of mutants at a mall in Valley Stream, N.Y. I've said many times before that some parts of our society have turned into "Mutants" with no sense of honesty, decency, or morality. Unfortunately, this situation in New York is a classic example.
Given the liquidity issues surround the hedge fund community, the major market averages may attempt to retest the recent lows of 747 on the S&P, and 7449 on the Dow.
The November consumer confidence index rose to 44.9 from 38.8, much higher than the forecast of 38.0. With energy prices down significantly, it seems that the moods of consumers are improving, and with it, consumer spending may improve as well.
President-elect Obama's economic team is working an "aggressive" stimulus plan that should be passed and signed by January.
The Case-Shiller index showed that home prices fell 17.4% y/o/y in September. Existing-home sales fell in October, but in all honesty more people were preoccupied with the possibility of their bank failing than buying a new home. September and October were clearly the "deer caught in headlights" month for consumers.
Oddly, given all the negative news, our Bozo economists here in the U.S. have not officially declared we are in a recession. If the fourth quarter GDP numbers come in negatively, the "all seeing, all knowing" Bozo's will finally concede.
Given all the economic data (negative) that will be released this week, I am looking for a pullback from last weeks gain, or at least a pause in the action. Since I am not a day trader, the big picture gains over the next few years far outweighs the small gains of trading in and out.
I am still of the opinion that we are witnessing the best buying opportunity of our investing lifetimes. Any periods of extreme weakness are in my opinion great opportunities for future gains.
-Gold
-The U.S. Dollar
Our current asset allocation is as follows;
95% Equities: (Normally 95%) Aggressive
80% Equities: (Normally 80%) Moderately Aggressive
60% Equities: (Normally 60%) Moderate
40% Equities: (Normally 40%) Moderately Conservative
20% Equities: (Normally 20%) Conservative
