StreetSmartPost

Nasdaq back to 2000 peak but what about investors’ portfolios?

Tuesday, March 3, 9:25 a.m.

I hope Wall Street and CNBC don’t insult the intelligence of investors who were fully invested at the Nasdaq top in 2000 by claiming that ‘the market has come back’.

Because if ever there was a market that was not the same as the market that went away, it’s the Nasdaq.

The important question is, have Nasdaq investors’ portfolios come back to their levels of 2000? And we know the answer to that.

The claim that ‘the market always comes back’ is one of the the biggest scams Wall Street dumps on investors (right behind the claim that buy and hold investing is a viable strategy).

It’s not just how long an investor often has to wait for ‘the market’ to come back, but that the market that comes back is never the same one that went away. They constantly change the stocks that comprise the indexes, throwing out companies that no longer represent the changing economy, replacing them with strong stocks that do.

I don’t have the numbers on the overall Nasdaq.

But in just the seven years from 1999 to 2006 there were 109 changes in the stocks that comprise the Nasdaq 100, an index that only contains 100 stocks. Since 2006, an average of six more changes were made each year.

It isn’t just the Nasdaq.

For instance, 23% of the stocks that were in the Dow at the market peak in 1999 were no longer in that index by 2004, just five years later. They had been replaced a few at a time by stocks of newer, stronger companies that were more representative of the changing economy. Microsoft, Intel, SBC Communications and Home Depot replaced Chevron, Goodyear Tire, Union Carbide and Sears Roebuck. Verizon replaced AT&T. Pfizer replaced Eastman Kodak. AIG Group replaced International Paper.

More recently, in 2013, Dow Jones Inc. made three more changes in the 30-stock Dow. Goldman Sachs, Nike, and Visa replaced poor performing stocks Alcoa, still down 82% since the market peak in 2007, Bank of America, still down 72%, and Hewlett Packard, still down 59%.

In just 11 years from 1988 to 1999 there were 256 changes made in the stocks that comprise the S&P 500, an index of only 500 stocks. More recently in the 6 years from 2009 through early 2015 there were 64 more changes made in the S&P 500 index.

You get the picture.

The point is; what does it really mean to investors that the market always comes back, if the stocks that previously made up the indexes fell out of favor, or were acquired by another company, and were replaced with stronger stocks? Meanwhile, many of the previously popular stocks (dotcoms?), which investors really need to come back if their portfolios are to come back, have been dropped from the index, and in some cases no longer even exist?

That the Nasdaq is back at its peak of 2000 is meaningless.

To read my weekend newspaper column click here: Investors Are Mistakenly Assured By Two Shaky Generalities

Subscribers to Street Smart Report:

In addition to the charts and signals in your premium content area of this blog, the next issue of the newsletter will be out tomorrow in your secure area of the Street Smart Report website.)

Yesterday in the U.S. Market.

A positive day, a triple digit gain for the Dow. The Nasdaq closed back at it high of 2000. (Took only 15 years for that part of the market to ‘come back’). Volume average at 0.7 billion shares traded on the NYSE.

The Dow closed up 155 points, or 0.9%. The S&P 500 closed up 0.6%. The NYSE Composite closed up 0.4%. The Nasdaq closed up 0.9%. The Nasdaq 100 closed up 1.0%. The Russell 2000 closed up 0.8%. The DJ Transportation Avg. closed up 0.9%. The DJ Utilities Avg closed down 1.9%.

Gold closed down $7 an ounce at $1,206 an ounce.

The U.S. dollar etf UUP closed up 0.2%.

Bonds (TLT) closed down 2.1%.

European Markets closed down yesterday.

The Europe Dow closed down 0.7%. Among individual countries:

The London FTSE closed down 0.1%. The German DAX closed up 0.1%. France’s CAC closed down 0.7%. Belgium closed down 0.1%. Denmark closed down 0.5%. Finland closed up 0.2%. Greece closed down 2.5%. Ireland closed down 0.3%. Italy closed down 0.2%. Netherlands closed up 0.4%. Norway closed down 0.4%. Portugal closed down 0.7%. Spain closed unchanged. Switzerland closed up 0.5%.

Asian Markets closed mixed last night.

The Asia Dow closed up 0.1%. Among individual countries:

Australia closed down 0.4%. China closed down 2.2%. Hong Kong closed down 0.7%. India closed up 0.5%. Indonesia closed up 0.1%. Japan closed down 0.1%. Malaysia closed up 0.1%. New Zealand closed up 0.1%. South Korea closed up 0.2%. Singapore closed up 0.5%. Taiwan closed up 0.1%. Thailand closed down 1.2%.

Subscribers Premium Content Area.

For Street Smart Report subscribers only, used to provide additional info to that provided in the newsletter, mid-week reports, and hotlines.

NOTE: To gain access call our subscription office at 1-386-943-4081 (week-days only). If you can afford two cups of coffee a week you can afford the cost of 25.95 a month ($6.50 a week). For that you also receive the full Street Smart Report advisory service (newsletter, hotlines, in depth mid-week reports on stocks, gold ,bonds, etc.). Or to subscribe online click here:https://streetsmart.securesites.net/order.html

*Premium Content*

Please Login or Subscribe to view this content.

Markets This Morning:

European markets are down this morning.

The Europe Dow is down 0.4%. Among individual countries:

The London FTSE is down 0.3%. The German DAX is down 0.3%. France’s CAC is down 0.3%. Belgium is down 0.7%. Denmark is down 0.2%. Finland is up 0.1%. Greece is up 1.3%. Ireland is down 0.5%. Italy is down 0.6%. Netherlands is down 0.5%. Norway is up 0.2%. Portugal is up 0.1%. Spain is down 0.7%. Switzerland is down 0.4%.

This Morning in the U.S. Market:

Oil is down 1.1% at $49.23 a barrel.

Gold is up $2 an ounce at $1,208 an ounce.

This week’s Economic Reports:

This week will be another full week for potential market-moving economic reports, including the the ISM Mfg Index, auto sales, the ADP Monthly Jobs Report, Factory Orders, the U.S. Trade Deficit, the Labor Department’s Monthly Employment Report for February, etc. To see the full list and times click here, and look at the left side of the page it takes you to.

Yesterday’s reports were that Consumer Incomes were up 0.3% in January, but Consumer Spending declined 0.1% for the second straight month. The Fed’s favorite inflation measurement, the PCE Index, declined 0.5% in January, and the core rate, excluding food and energy, was up only 0.1%. The ISM Mfg Index ticked down from 53.5 in January to 52.9 in February. And Construction Spending declined a seasonally adjusted 1.1% in January, missing the consensus forecast of an increase of 0.3%.

This morning’s reports will be auto sales, which will be released by the individual automakers through the morning. So far Chrysler has reported its sales were up 5.6% in February, missing the consensus forecast of 8.9%. Forecasts are that overall auto sales ticked up to 16.7 million units in February from 16.6 in January.

Our Pre-open Indicators:

Our pre-open indicators are pointing to the Dow being down 50 points or so in the early going.

To read my weekend newspaper column click here: Investors Are Mistakenly Assured By Two Shaky Generalities

Subscribers to Street Smart Report:

In addition to the charts and signals in your premium content area of this blog, the next issue of the newsletter will be out tomorrow in your secure area of the Street Smart Report website.)

Non-Subscribers:

SUBSCRIBE NOW! To get all of this:

(The equivalent of four or five normal newsletters at the cost of one)

Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.
A 6-page Mid-Week Markets Report every week.
A 4 to 6 page Gold, Bonds, U.S. Dollar Report every three weeks.
A 4 to 6 page Global Market Report every three weeks.
The 8-page Street Smart Report newsletter every 3 weeks.
Hotline Updates whenever signals or recommendations change.
Two specific portfolios (Seasonal Timing & Technical Analysis Timing)
Sy’s weekly column on markets and the economy every Friday.

Market, sector, stock, gold, bond, and dollar buy and sell signals, short-sales, long-side and ‘inverse’ etf’s, mutual funds. Highly regarded and in our 26th year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

This blog appears every Tuesday, Thursday, and Saturday morning!

**** End of Today’s post*****

Is market at another short-term top?

Saturday, February 28, 12 noon.

Not seeming to care anything about economic reports, good or bad, and with the 4th quarter earnings reporting period ended, and Fed Chair Yellen’s anticipated Congressional testimony providing no surprises, the market stalled this week.

Was it just resting after three straight weeks of gains, or about to pull back and keep the months of short-term volatility and 5% pullbacks going?

Looks like the latter, unless the bullish euphoria that always accompanies Warren Buffett’s annual letter to shareholders, released yesterday, and his usual appearances the next few days on financial networks, works its magic on investors.

What happened to the history of best/worst months?

For decades it has been quite dependable that December and January would be strong months. February has a history of being a negative month within the market’s six-month favorable season.

What has happened to that history lately?

The market was sideways to down in December, down sharply in January, and up sharply in February. Here comes March, which is historically a strong month. ???

Other Voices:

Albert Edwards, Societe Generales: “Investors are transfixed by the Fed and when it will tighten rates and can’t see the woods for the trees. The Fed’s focus on payrolls, a lagging indicator, is most perplexing but not unusual at this stage in the cycle. The reality is that the vast bulk of economic, as well as earnings, data (even outside the energy sector), has been simply dreadful."

Scott Krisiloff, CEO Avondale Asset Management: “There have been only two years since 1900 that the S&P Composite has risen despite weak earnings growth when it was already at a high P/E multiple, and had risen by a significant amount in the year before: 1997 and 1998.”

Peter Schiff, economist and CEO of EuroPacific Capital Inc.:”Oil prices were propped up by the Fed. So were home prices. So were stock prices. And if the Fed is not going to be there anymore, all the prices that were influenced by QE are going to come down. And since the U.S. recovery was a function of inflated asset prices, as these asset prices deflate, then the recession is going to return. And, of course, what is the government’s response? It’s going to be more QE. But the real issue is that the recession is part of the healing process. It’s part of what is necessary.”

To read my latest newspaper column click here: Investors Are Mistakenly Assured By Two Shaky Generalities

Subscribers to Street Smart Report:

In addition to the charts, signals, and analysis (stocks, gold, bonds), in the subscribers area of today’s blog, there is an in-depth Markets Update from Wednesday in your secure area of the Street Smart Report website. The next issue of the newsletter will be out next Wednesday.

Yesterday in the U.S. Market..

A down day on increased volume of 0.85 billion shares traded on the NYSE.

The Dow closed down 81 points, or 0.5%. The S&P 500 closed down 0.3%. The NYSE Composite closed down 0.2%. The Nasdaq closed down 0.5%. The Nasdaq 100 closed down 0.5%. The Russell 2000 closed down 0.5%. The DJ Transportation Avg. closed down 0.6%. The DJ Utilities Avg closed up 0.1%.

Gold closed up $1 an ounce at $1,212 an ounce.

The U.S. dollar etf UUP closed up 0.1%.

Bonds (TLT) closed up 0.8%.

Asian markets closed mixed in their last session of the week.

The Asia Dow closed down 0.3%. Among individual countries:

Australia closed up 0.4%. China closed up 0.4%. Hong Kong closed down 0.3%. India closed up 1.7%. Indonesia closed down 0.1%. Japan closed up 0.1%. Malaysia closed up 0.1%. New Zealand closed up 0.3%. Singapore closed down 0.7%. South Korea closed down 0.4%. Taiwan closed down 0.8%. Thailand closed down 0.4%.

European markets closed up yesterday.

The Europe Dow closed up 0.4%. Among individual countries:

The London FTSE closed down 0.1%. The German DAX closed up 0.7%. France’s CAC closed up 0.8%. Belgium closed up 0.1%. Denmark closed up 0.8%. Finland closed up 0.1%. Greece closed down 2.7%. Ireland closed up 1.4%. Italy closed up 0.8%. Netherlands closed up 0.3%. Norway closed down 0.6%. Portugal closed up 0.6%. Spain closed up 0.4%. Switzerland closed down 0.4%.

Global markets for the week.

A flat week in the U.S. after three straight positive weeks. A strong month of February.

THIS WEEK (Feb. 27)

DJIA 18132 -0.1%

S&P 500 2104 -0.3%

NYSE 11062 -0.4%

NASDAQ 4963 +0.2%

NASD 100 4440 -0.1%

Russ 2000 1233 +0.2%

DJTransprts 9024 -1.2%

DJ Utilities 594 -1.0%

XOI Oils 1,376 -0.9%

Gold bull. 1,212 +0.8%

GoldStcks 76.94 +3.6%

Canada 15234 +0.4%

London 6946 +0.5%

Germany 11401 +3.2%

France 4951 +2.5%

Hong Kong 24,823 -0.1%

Japan 18797 +2.5%

Australia 5898 +0.9%

S. Korea 1985 +1.2%

India 29220 -0.1%

Indonesia 5450 +0.9%

Brazil 51583 +0.7%

Mexico 44190 +1.5%

China 3468 +1.9%

LAST WEEK (Feb. 20)

DJIA 18140 +0.7%

S&P 500 2110 +0.7%

NYSE 11108 +0.6%

NASDAQ 4955 +1.3%

NASD 100 4443 +1.4%

Russ 2000 1231 +0.7%

DJTransprts 9131 +1.1%

DJ Utilities 600 +1.1%

XOI Oils 1,388 -1.9%

Gold bull. 1,202 -2.2%

GoldStcks 74.28 -3.7%

Canada 15172 -0.6%

London 6915 +0.6%

Germany 11050 +0.8%

France 4830 +1.5%

Hong Kong 24,832 +0.6%

Japan 18332 +2.3%

Australia 5845 +0.2%

S. Korea 1961 +0.2%

India 29231 +0.5%

Indonesia 5400 +0.5%

Brazil 51237 +1.2%

Mexico 43551 +1.1%

China 3402 +1.4%

PREVIOUS WEEK (Feb. 13)

DJIA 18019 +1.1%

S&P 500 2096 +2.0%

NYSE 11042 +1.8%

NASDAQ 4893 +3.1%

NASD 100 4384 +3.7%

Russ 2000 1223 +1.5%

DJTransprts 9034 +1.1%

DJ Utilities 594 -3.2%

XOI Oils 1,415 +3.1%

Gold bull. 1,229 -0.4%

GoldStcks 77.12 +0.3%

Canada 15264 +1.2%

London 6873 +0.3%

Germany 10963 +1.1%

France 4759 +1.5%

Hong Kong 24,682 +0.1%

Japan 17913 +1.5%

Australia 5835 +1.1%

S. Korea 1957 +0.1%

India 29094 +1.3%

Indonesia 5374 +0.6%

Brazil 50635 +3.8%

Mexico 43072 +0.8%

China 3356 +4.2%

Premium Content Area.

For Street Smart Report subscribers only, used to provide additional info to that provided in the newsletter, mid-week reports, and hotlines.

In the premium content area this morning: The U.S. stock market, gold, and bonds, signals (long-term, intermediate-term, and short-term), and analysis of each.

NOTE: To gain access subscribe online click here: https://streetsmart.securesites.net/order.html or call our subscription office at 1-386-943-4081 (week-days only). If you can afford two cups of coffee a week you can afford the cost of 25.95 a month ($6.50 a week). For that you also receive the full Street Smart Report advisory service (newsletter, hotlines, in depth mid-week reports on stocks, gold ,bonds, etc.).

*Premium Content*

Please Login or Subscribe to view this content.

Next week’s Economic Reports:

Next week will be another important week for potential market-moving economic reports, including the ISM Mfg Index, auto sales, the ADP Monthly Jobs Report, Factory Orders, the U.S. Trade Deficit, the Labor Department’s Monthly Employment Report for February, etc. To see the full list and times click here, and look at the left side of the page it takes you to.

To read my latest newspaper column click here: Investors Are Mistakenly Assured By Two Shaky Generalities

Subscribers to Street Smart Report:

I’ll be back with the next blog post on Tuesday morning at 9:25 a.m.

Non-Subscribers:

SUBSCRIBE NOW! To get all of this:

(The equivalent of four or five normal newsletters at the cost of one)

Access to Premium Content area of this Blog, Tuesday, Thursday, and Saturday a.m.
A 6-page Mid-Week Markets Report every week.
A 4 to 6 page Gold, Bonds, U.S. Dollar Report every three weeks.
A 4 to 6 page Global Market Report every three weeks.
The 8-page Street Smart Report newsletter every 3 weeks.
Hotline Updates whenever signals or recommendations change.
Two specific portfolios (Seasonal Timing & Technical Analysis Timing)
Sy’s weekly column on markets and the economy every Friday.

Market, sector, stock, gold, bond, and dollar buy and sell signals, short-sales, long-side and ‘inverse’ etf’s, mutual funds. Highly regarded and in our 26th year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

This blog appears every Tuesday, Thursday, and Saturday morning and at occasional times in between! Follow it via the RSS feed or follow it in Twitter (the ‘handle’ is @streetsmartpost) so you won’t miss any posts.

**** End of Today’s post*****

Do earnings no longer matter – again?

Thursday, February 26, 9:25 a.m.

Back in 1998 and 1999, when warnings were widespread that the market was extremely overvalued, that the Price/Earnings ratio was much higher than at any previous market peak, Wall Street kept the party going by declaring that earnings no longer mattered, particularly for the tech sector and dotcoms. All that mattered was the Price/Sales ratio, and activity and sales for those companies were soaring.

This time around, normal methods of measuring market valuation, like the P/E ratio based on reported earnings, Shillers CAPE10 ratio of stock prices to inflation adjusted 10-year earnings, Warren Buffett’s favorite; total market cap to GDP, the Tobin Q ratio of stock prices to replacement value of assets, etc., have shown for some time that the market is more overvalued than at all previous market peaks except the 2000 bubble.

But Wall Street has convinced investors that those methods of measuring market valuation no longer matter. All that matters as a valuation measurement is the P/E ratio based on Wall Street’s forward-looking estimates for the year ahead.

By keeping their year-ahead estimates high and only lowering quarterly estimates as each quarter’s earnings reporting period approached, and corporations provided guidance that their estimates for the quarter were too high, they made sure quarterly earnings would beat the estimates. And they would leave their long-term projections high to support a P/E ratio based on year-ahead estimates that showed the market to be fairly valued, not over-valued.

Okay. Let’s give them the benefit of the doubt, that other methods of valuation no longer matter, only the P/E based on their forward earnings estimates matters.

Corporate earnings growth has been slowing dramatically, and as Barron’s reported last weekend, Wall Street is scrambling to cut its forward earnings estimates, in fact at the fastest pace since 2008.

As the market continues higher and their year ahead earnings estimates decline, thus raising the P/E ratio even by that dubious method, how can they now claim that the market is not significantly over-valued?

But the market does not seem to notice or care.

To read my weekend newspaper column click here: Are Conditions Setting the Market Up for a Summer Washout-

Subscribers to Street Smart Report:

There is a hotline from last evening and an in-depth markets report (stock market, gold, bonds) from yesterday in your secure area of the Street Smart Report website.)