Yearly Archives: 2010

  • Was it really a Lost Decade?

    Many have claimed that the decade of the 2000s was a lost decade for stock investors. When you look at the returns of the S&P 500 index over the decade, it is hard to challenge the validity of this claim. For the period of December 31, 1999 through December 31, 2009, the S&P 500 index had an annualized simple price return of -2.72%. When dividends are factored in, the results do not get much better as annualized total return for the S&P 500 index (with dividends reinvested back into the index) over the same timeframe was -0.95%. This marked the first time since the 1930s that a decade produced a negative simple price return for the S&P 500 index and the only decade that the S&P 500 index ever produced a negative total return since our data sources began tracking the index back in 1926 ... Read More

  • Fears of Double-Dip Recession Receding

    We, at Hennion & Walsh, believe the U.S. economy will continue to struggle to build any type of sustainable recovery in the face of historically high levels of unemployment, continued fears over potential sovereign defaults and political uncertainties leading into this fall's mid-term elections. Our primary concern centers on job growth. According to the Bureau of Labor Statistics, the current U-3 unemployment rate stands at 9.6%. However, when one considers the wider encompassing U-6 unemployment rate, which counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts marginally attached workers and those working part-time for economic reasons, of 16.5%, it begins to become very difficult to imagine a scenario where consumers will start to spend at the levels needed to build a sustainable economic recovery. Despite this, we view a double-dip recession scenario as extreme and unlikely based upon several different economic data points. Read the entire post by clicking on the title ... Read More

  • Can the U.S. Housing Rebound stand on its Own?

    In our July 22, 2010 post entitled, “The Broader Implications of a Housing Rebound,” we questioned how much of the surge in existing home sales seen thus far in 2010 was solely attributable to the federal tax credit program. While the final answer has yet to be determined, initial feedback seems to be pointing to a significant level of attribution ... Read More

  • What most Individual Investors do Wrong?

    Nationally recognized research firm Dalbar recently produced the results of a study on the overall performance effects of individual investor behavior. In doing so, they compared the returns of the stock market (as defined by the S&P 500 index for these purposes) and the returns of the average individual investor in equities over a 20 year period that started on December 31, 1989 and ended on December 31, 2009. Interestingly, the study showed that the average return of the S&P 500 over that period was 8.20% while the average return of the individual investor was just 3.17% over the same time period. This represents a relatively stark 5%+ difference ... Read More

  • The Broader Implications of a Housing Rebound

    We, at Hennion & Walsh, are observing growing momentum towards the stabilization of the residential real estate market as well as an intriguing opportunity for inclusion of this alternative asset class in diversified growth portfolios ... Read More

  • The S&P 500 200 Day Moving Average Revisited

    In terms of the potential for a near-term pullback in the equities market, our research suggests that the probability of occurrence may be increasing. As you will recall from an earlier Portfolio Strategy News post on June 4, 2009, we contend that the S&P 500 200 Day Moving Average, with a 5% margin of safety, can be utilized, in conjunction with other market data, as a fairly reliable overall market timing statistic. It is our opinion, at Hennion & Walsh, that merely crossing through the 200 Day Moving Average is not a sufficient signal alone. When markets are moving quickly in the midst of seemingly trendless volatility, the average could be crossed in both directions on multiple occasions without presenting any clear market signals. As a result, we utilize a 5% margin of safety for our own internal assessments ... Read More

  • Consumers Losing Confidence

    It should not be surprising to see that consumer confidence is waning and yet the market appears to have been caught off-guard by the magnitude of the recent decline in consumer confidence. While reports showing that growth in China is beginning to slow down may have contributed to the turnaround in the equity markets, the major culprit appears to have been the Conference Board's consumer confidence reading for June which showed the index dropping from 62.7 to 52.9 - close to a 16% month over month decline! The drop even caught the experts by surprise as economists were expecting a reading of 62.8 ... Read More

  • The Tale of the Chinese Yuan

    The markets stormed out of the gates this morning on news that the Chinese government planned to lift the 2 + year old artificial peg of its Yuan, or Renminbi, currency to the U.S. Dollar. While only minor increases in the value of the currency are expected initially, market professionals are taking a positive, long term view to this announcement ... Read More

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