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We've reached a new all-time high on the S+P 500 (in nominal terms, anyway) with today's close of 1,658.78.
Four years from the March 2009 bottom, we're up nearly 1,000 points on the SPX. If we go back to the weekly close of 1,576 from the last bull market high (in October 2007), that's a 1,902 point round-trip in the S+P. We've gone down, and back up, the mountain in that time.
There has been broad participation in this latest move higher, with over 90% of S+P 500 stocks trading above their 200 day moving average. The trend is up and the market continues to climb the (increasingly global) wall of worry. Not to mention, as Ray Dalio learned some time ago, "currency depreciation and money printing are good for stocks".
Related posts:
1. Bonds vs. stocks: March 2009 - April 2013.
2. Lessons from Hedge Fund Market Wizards: Ray Dalio.
Shared this relative performance chart of bonds vs. equities on StockTwits this morning, and wanted to post it here for our readers.
Here is TLT (US Treasury bonds) vs. the returns of QQQ (Nasdaq 100 ETF) and SPY (S&P 500 ETF), from March 13, 2009 to April 30, 2013.
As you can see from the chart above, TLT has gained about 20 percent (not including dividends) in this 4 year period. QQQ is up 144 percent and SPY is up 110 percent from the start of this recent bull market in equities.
In terms of price (directional) correlation, you'll note that while the QQQ and SPY are very closely linked, the two stock index ETFs seem negatively correlated with TLT. When stocks are up, government bonds are lagging and vice versa, at least for the period in question.
A quick look at the year-to-date performance of futures and stocks on Finviz.
Natural gas tops the futures list for relative performance. Nat gas is up 27% YTD.
Right behind it is the Nikkei 225 index, up 27%, getting a boost from the latest BOJ monetary easing efforts (note: Yen is down 12% YTD). The Dow Industrials are up 13.5% YTD and the S&P 500 is up 11%. Remember what we learned from Ray Dalio: currency depreciation and money printing are good for stocks (at least in nominal terms).
Gold and silver have been selling off in recent weeks. The precious metals took a hard spill today as the markets mulled a possible winding down of the Fed's QE program. It seems, in this instance, simply scaling back "money printing" efforts is enough to push gold and silver into free fall mode.
Individual stocks have done pretty well year-to-date. Of all US-listed stocks, Finviz shows 4,713 are up (show a positive return) YTD vs. 1,744 down YTD. A simple screen of liquid stocks (greater than 100k avg. volume) shows 443 stocks up 30 percent or more year-to-date.
The best performing industries YTD are: Credit Services (96%), Music and Video Stores (85%), Electronic Stores (69%) and Memory Chips (48%).
The worst performing industries YTD include: Gold (-30%), Silver (-29%), Personal Computers (-17%), and Industrial Metals (-14%).
You can follow me on Twitter and StockTwits for more real-time market updates and trading info.
Bitcoin, the virtual currency on everyone's lips, surged through the $100 mark this week.
Bitcoin is currently trading at $117.2 on Mt. Gox (click through for current quotes and market depth), one of the most liquid bitcoin exchanges. Having traded near $15 in early January, bitcoins are now up over 750 percent in US dollar terms year to date.
Here's a chart of the bitcoin/Euro price, currently at €92.18 on Mt. Gox. Interest in the bitcoin market recently exploded across Europe as Cyprus' banking crisis led savers to wonder if their bank deposits would be seized to help bail out ailing banks.
As the New Yorker explains in their piece on, "The Bitcoin Boom":
"...That a number of panicked Europeans appear to have reckoned the
wildly volatile, vulnerable, and tiny bitcoin market a preferable
alternative to their own banking system, even temporarily, signals a
serious widening of the cracks between the northern and southern E.U.
countries in the wake of the euro-zone debt crisis.
It also illustrates
the broader collapse of trust that is threatening the world of global
banking and fiat money. The weakness in existing currencies stems from lack of faith in
institutions—particularly central banks, which are often in league with
commercial and investment banks.
When a government bails out a failed
bank or insurance company—in essence, by printing money—the net effect
is that the currency as a whole is debased, in favor of a few and at the
literal expense of everyone else, which amounts to a fair description
of today’s global financial system. Hence the sudden appeal of bitcoins,
which appear, for the moment, at least, to be immune to the
machinations of inept or crooked bankers and politicians."
I've been reading and tweeting about bitcoins and the future of virtual currencies quite a bit in recent months. Recent events seem to have sparked a great deal of interest in this area, even for those (like myself) who have yet to transact in the virtual currency market.
We've seen a previous boom and bust cycle in Bitcoin prices, with a passing media frenzy ("it's a bubble!", "an unregulated ponzi scheme!") to match. The last peak in Google web search interest came in June 2011, amidst official alarm over the "untraceable peer-to-peer currency's" alleged role in online money laundering and the drug trade.
Now that we're seeing a near-parabolic rise in bitcoin prices across the globe, we can probably expect another new peak and cyclical crash (or maybe a slightly calmer consolidation period) to follow soon.
However, if the decentralized issuance of bitcoins remains steady over time, we could see a flourishing market for virtual currencies develop longer-term. Whether it's Bitcoin or some other innovation that stands the test of time, we'll be watching this trend with interest. On that note, I'll leave with you with the following quotes.
Needed to find a new RSS reader in the wake of Google's recent decision to kill off Google Reader, which takes effect on July 1. I'm guessing some of you are still hunting for an ideal replacement too.
After some initial reading and experimentation, I've decided to go with The Old Reader, the best free alternative styled after, wait for it... the old Google Reader. You can see a screenshot of the reader (and my newly imported RSS subscriptions) below.
Since the Old Reader development team (a small, volunteer crew) was caught off guard by Google's announcement and the influx of new users, there was a queue for new users importing feeds into TOR (see: "How to export your Google Reader feeds").
If you want to import your feeds into The Old Reader, you'll probably be placed in the queue but it shouldn't take more than a week or so. In the meantime, you might want to try some of the other Google Reader alternatives for Mac, PC, and mobile users.
Personally, I found patience to be a virtue here, even though I was just experimenting with the import of a small RSS list (I'm sure I could've just as easily added my RSS subscriptions manually). I really like the simple, clean layout and interface of The Old Reader - it's my favorite of the lot.
Hope this RSS solution helps you out, and don't forget to subscribe to our feed to keep up with the latest.
While looking through some archived interviews at Financial Sense, I found this 2004 interview on hedge fund legend, Julian Robertson with author Daniel Strachman.
Although Strachman's book on Julian Robertson was not terribly well received (see reader reviews), this interview does offer some worthwhile anecdotes and insights on one of the hedge fund industry's great investors. Let me share a few with you here.
1. Hedge funds began as an alternative investment vehicle for high-net worth individuals. Later, they came to fill the void of liquidity in the marketplace left by the trading operations of once-private firms such as Goldman Sachs, J. Aron, Lehman Bros., JP Morgan, etc.
2. The strength of Tiger Management was in its highly focused research efforts (pre-web) and Robertson's willingness to follow his conviction on a trade or investment.
Julian was unmoved by price movements that went against his positions if he had conviction in a trade and the fundamental story. This worked in his favor at times (copper in the mid-'90s) but proved to be a disadvantage at other times (shorting tech stocks during the earlier part of the dot.com bubble - though he refrained from shorting them again in '99).
3. Robertson is very competitive and also able to delegate research and decisions to his team, utilizing their expertise in order to get the best investment results. He is a Graham and Dodd investor, but he also found great success by applying aspects of this investing philosophy beyond the world of stocks (in currencies, commodities, etc.).
4. Julian met hedge fund pioneer, Alfred Winslow Jones and from Jones he learned lessons on business organization and the advantages of delegating research work. He also learned that the hedge fund structure could be very profitable and he brought his investing talents to bear in this format.
5. Among the factors that led to Tiger Fund's demise in 2000: Robertson's decision to avoid participating in the dot.com bubble led to a decline in AUM. Also, younger managers who had helped build Tiger (the "Tiger cubs") went off to start their own hedge funds and were gradually replaced by Wall St. veterans. Younger and hungrier workers who had been the lifeblood of the firm left, taking their performance abilities with them.
6. When asked what he most admires about Julian Robertson, Strachman relates the story of their first meeting, which "deeply affected" him. He was nervous about the meeting, but was struck by Robertson's ability to make people feel welcome and valued, "a great skill". Julian is incredibly driven to win, but he also knows there is "no I in team" and he leverages the strengths of those around him.
In addition to Strachman's book, Sebastian Mallaby's book on hedge funds also carries some background on Julian Robertson and Tiger Fund, as well as other industry pioneers.
You can check out our related posts to hear more from Julian Robertson, including his thoughts from some of his more recent interviews. You'll also learn more about hedge fund pioneer Alfred Winslow Jones, who was mentioned in Strachman's interview.
Related posts:
1. Julian Robertson interview with FT.com.
2. Julian Robertson interview with CNBC.
3. Julian Robertson on hedge fund strategy and competition (Bloomberg).
4. A.W. Jones and the history of hedge funds.
Ben Franklin explains that our Constitution describes our right, as citizens, to pursue happiness and property. However, it can not grant us that happiness. We must earn it for ourselves.
A free society should strive for equality of opportunity, where all men ("persons") are equal in the eyes of the law. We cannot, and should not, promote or promise a utopian vision of equal outcomes for all.
We are all individuals of differing abilities and makeup. Every one of us has a unique drive, personality, and outlook on life. Can we therefore expect everyone to outperform and achieve a certain prescribed level of happiness, wealth, and personal fulfillment?
In our recent interview with "Trader Vic" Sperandeo, Victor pointed out that some of his friends were happy driving a bus while others were driven to work 70-80 hours a week on Wall Street in an effort to get rich. In real life, people are driven by different desires and passions. While some would label their difference in situation an "inequality", our society acknowledges their right to pursue happiness and a living in the manner of their choice.
As for the end result, as old Ben says, we have to catch it for ourselves.
Related posts:
1. Lessons from Benjamin Franklin.
2. Marc Faber's advice to young people and the meaning of success.
