Breaking With Bogle

In his Washington Post column yesterday, Barry Ritholtz treated us all to a pretty terrific five minute course on investing, both giving praise to and taking issue with that venerable godfather of index buy-and-hold trading, the one and only John Bogle.  I'm sure you're all familiar with that legendary name, the man who founded Vanguard Group 40 years ago and has since revolutionized the financial services industry with currently an astounding $3 trillion dollars under management.  This is really fun reading.  Enjoy and try not to let the coming mammoth snow storm spoil your Super Bowl weekend.

Wall St. closes down for January, Shake Shack rallies in debut

Another genuine rout today, but it didn't look that way for most of the day.  The morning started out tough with the Dow down more than 150 points by noon, but then rallied again.  As late as 3 p.m. all the losses were recouped and the day came very close to ending in positive territory.  Then very suddenly in the last hour a selloff sent the index plummeting 252 points.  What happened to explain this?  Not much.  Sure, there were a couple of negative Q4 reports.  But until today they'd been mostly positive and the overall Q4 picture remains so.  Yet, just one hour of bad trading now has all the skeptics believing again that we are headed for doom.  Yes, we found out that business investment in Q4 was half of that in Q3.  But then, we already knew that several days ago.  Yes, Greece issued a statement that it would not cooperate with the EU; but then, with the election results last Sunday, that was already a given.  Didn't they say on Monday that the market had already factored that in?  Little did they know.  And yes, there is continued concern that Europe may drag down U.S. corporate earnings but, not only has that concern been out there for quite some time now, but so far Q4 results have belied it.  There was also quite a lot of good news.  Consumer spending  is at its fastest pace since 2006.  Energy had a great day, with crude rising 8% upon news that the oil companies have drastically reduced the number of operating oil rigs, in fact the biggest decline in drilling since 1987, a sign that we're finally addressing the glut problem by cutting production.  Consumer sentiment is at its highest in 11 years due to positive job and wage prospects.  And anyone who got in on the Shake Shack IPO saw their investment more than double today.  So why the big selloff in the last hour?  The answer is -- who knows?  The only thing that seems to be consistent in this market is that no one knows anything.  But then I think we've always known that.  If there's any truth to trends, my guess is that it will be back up again on Monday.  Volume was very strong at 8.5 billion shares.

Wall St. finishes higher in afternoon rally as oil gains

I predicted Tuesday that the next hint of good news would spark another big rally.  That's exactly what happened today when positive reports from Apple and Boeing sent the Dow soaring 225 points.  But it was a rocky day, dropping a hundred points right out the gate but then soaring more than another 300 before closing the session.  Good news also came from the energy sector with crude soaring a whopping 8 cents.  Yes, not much, but the psychological impact was significant enough to send the entire energy index back into positive territory after starting the day with more than  a 0.5% loss.  We also received one of the most encouraging labor reports in years, unemployment applications falling to their lowest levels in 15 years, signaling that hiring remains bullish.  Volume was robust at 7.7 billion shares.

Wall Street ends lower after Fed statement, oil drop

Another big down day to the tune of 196 points on the Dow.  And why?  Because the Fed issued one of its most positive reports to date giving a glowing evaluation of the nation's economic recovery and reiterating once again that long overdue interest rate hikes are still in our future, though probably not until near year-end.  It seems investors haven't quite yet made up their minds as to whether they really want a recovery.  The low interest rates have made it possible for many companies to raise capital cheaply which has lead to more product, more sales, more profit and the desirable rise in stock and mutual fund prices.  But this good news also means that the economy should be weaned off the government umbilical cord and that means that interest rates must eventually be market-driven again. The market doesn't seem to know whether it wants that or not.  The Fed's rosy report also had the predictable outcome of strengthening the dollar which in turn hit oil and other commodities harder with the energy index once again dipping 4% and crude falling to $44.31 per barrel.  Bonds also benefited from the report and when bonds do better, stocks do worse.  All in all, a bad reaction to good news.  Volume was heavier than usual at 7.6 billion.

Wall Street falls 1 percent on earnings; Apple rallies late

Another shellacking on The Street today with the Dow plunging a whopping 291 points.  This was all mostly due to a number of major bellwether companies reporting disappointing Q4 earnings, with their respective prices plunging along with the index.  Among these large companies were such noteworthy names as Microsoft, Caterpillar, P&G and DuPont.  Another blow to today's market was a report of business investment unexpectedly falling in December, taken as a sign that those in the know expect trouble.  On the plus side, consumer confidence was rated its highest since August 2007, no doubt as a consequence of all the extra cash people have due to the low price of gas.  Of course the biggest plus is that, even though a few major companies have disappointed, most of the companies that have so far submitted Q4 reports have had results that have exceeded expectations.  But today, the few losers are what caught investors' attention.  Some experts have dismissed this as mere profit-taking, other more cynical observers take it as confirmation of their fears of a poor Q4.  My guess is that the next positive report will shoot the index right back up again.   Volume was 6.5 billion shares, below 2015 averages but above 2014.

Wall Street rises after Greek elections; energy climbs

For weeks now Wall Street (and the global markets in general) have been dreading yesterday's election in Greece fearing that Syriza, the anti-EU party, would win.  So what happens?  Syriza wins, and nothing happens to the market since, as they put it, "Syriza was priced into the market already."  The Dow did drop this morning a hundred points right out the gate but gained the whole thing back during the course of the session ending up with a 6 point gain.  This uptick was mainly due to OPEC finally coming out and reassuring  the energy markets that, contrary to last week's prediction from Iran, they now believe that oil has bottomed out and will soon be on the rise again, giving the energy index a 1.4% boost.  As of today, 19% of S&P companies have reported Q4 earnings and almost 72% of these have topped expectations.  But due to the historic blizzard that is now pounding the whole of the Eastern seaboard and NYC in particular, volume was light at 6.2 billion.

Succinct Summation of Week’s Events 1/23/15 (& bonus)

Here's the usual Sunday night eye-shot plus a really good explanation about what happened at the European Central Bank on Thursday and how their newly announced QE program is both similar to and different from the one our own Fed has been engaged in the last several years.