AIA Advocate for Absolute Returns

The AIA "Advocate For Absolute Returns", an on-line publication of The Association for Investor Awareness, Inc., tracks market trends, industry news, the SEC, global trade and finance and Washington developments for you because they affect your investments. But who doesn't? Many sources simply report these issues as abstract facts.

We feel that's not enough. The AIA Advocate's job is to warn you of what's important and how these developments translate to ground-level forces and threats that directly affect your wealth as well as your current investment opportunities. Not just information, but information you can use. Until next time…

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  • Association of Investor Awareness - Week of 11/20/2008

    In This Issue:

    Stocks Search For A Bottom
    High Energy Prices Will Return
    Commodities Will Also Rebound
    Infrastructure Spending Is Likely To Soar
    The Bottom Line This Week

    Stocks stumbled badly again last week as deteriorating economic news caused another round of investors to throw in the towel. By Friday afternoon, the Dow and the Nasdaq were down an additional 5.0% and 7.9%. The declines left the two indices down 35.9% and 42.8% for the year. Ouch!

    This week got off to an equally bad start. Although we had a 151 point gain on Tuesday, it was overshadowed by a 651 point slide on Monday and Wednesday.

    ...

  • Association of Investor Awareness - Week of 11/26/2008

    Special Issue:

    When Deflation Comes,
    Cash Is King

    When everybody is certain the economy and stocks will move a particular way, usually just the opposite occurs. That's just what happened this summer when deflation suddenly overtook inflation as America's primary economic problem. Mr. Murphy, of Murphy's Law, seems to take particular pleasure in messing up the plans of investors.

    Deflation, of course, is just the opposite of inflation. Instead of seeing the value of money fall and the prices of goods rise, cash becomes much more valuable and prices decrease.

    Deflation is clearly in control today as homes, oil, and even precious metals plummet in price. Now food costs are beginning to sink. Jobs are being lost in most industries. Most experts think that wages will also begin to fall within a few months.

    The public is starting to show the effects of the deflationary squeeze. People are selling motor homes, pleasure boats, and many other big ticket items to raise badly needed cash. A disturbing 10% of Ohio's adult population is on food stamps. Of course, retail sales are also weakening.

    ...

  • Association of Investor Awareness - Week of 12/04/2008

    In This Issue

    Black Friday May Suggest A More Optimistic Outlook
    Most Insiders Are Not Selling
    Bear Market History: How We Compare
    Get Paid While You Wait
    The Bottom Line This Week

    Last week when everyone was stuffing themselves with turkey and other goodies, the urge to consume in abundance spilled over to Wall Street. By the time the market closed on Friday, the Dow and the Nasdaq were up an impressive 9.7% and 10.9% respectively. It was the first five day rally we've seen in over a year.

    The enthusiasm for stocks wasn't completely due to holiday cheer. Investors got wind of the fact that Black Friday sales were likely to be better than was first expected. As it turned out, instead of a miniscule 0.9% sales increase, Joe and Sally MidAmerica gave the retail industry a 3% boost. Shoppers were so eager to spend money, they trampled several people who got in their way, one of whom died.

    As we are sure you know by now, the enthusiasm didn't survive the weekend. The terrorist attack in Mumbai plus a dismal economic report sent the market down 680 points on Monday. Stocks recovered 442 points on Tuesday and Wednesday but the rebound seems unlikely to last very long.

    ...

  • Association of Investor Awareness - Week of 12/11/2008

    In This Issue:

    The Long-Awaited Bear Rally May Be Starting
    Although Weak, Some Hopeful Economic Signs Are Emerging
    Credit Is Slowly Opening Up Again
    If Fear Subsides, The Outlook Will Improve Immediately
    A Recovery Will Bring Unwelcome Inflation
    The Bottom Line This Week

    As we reported in our previous issue, the sharp stock market advance over the Thanksgiving holiday came to a crashing end on December 1. However, prices have been stronger since then. Although the gains weren't enough to fully erase the earlier plunge, the Dow and the Nasdaq managed to end last week down just 2.2% and 1.7% respectively. From Monday to Wednesday of the current week, the market managed to make some additional gains.

    It's significant that the price increases occurred while more bad economic news was breaking. A manufacturing decline, an auto sales plunge, and more job losses should have pushed stocks down several more notches. The fact that investors largely ignored the negatives may indicate that the bear market is close to a bottom.

    ...

  • Association of Investor Awareness - Week of 12/18/2008

    In This Issue:

    The Economy Is Bad, But Stocks Are Priced For Worse
    Stocks Outshine Their Competition
    Behold The Halo Effect
    A January Bounce Seems Likely
    Energy And Foreign Growth Are Positives
    We May Be Halfway Through The Economic Downturn
    What Everybody Knows...
    The Bottom Line This Week

    Last week we received additional signals that a bear rally is probably in the works. During the five day period, investors were treated to a smorgasbord of bad news. Congress turned thumbs down on bailing out the Big Three automakers. Unemployment surged to a 26 year high. T-Bill returns dropped to essentially zero. Many bellwether companies issued earnings warnings. Several firms cut their dividends, and investors were shocked by a $50 billion hedge fund collapse.

    So what did the market do? It barely budged. The Dow eased down less than 0.1%. The Nasdaq actually rose 2.1%. The market was also strong during the first three days of the current week. In our opinion, such resilience in the face of disturbing economic events indicates that investors are probably getting ready to do some buying.

    ...

  • Association of Investor Awareness - Week of 01/01/2009

    In This Issue:

    The New Year Should Bring Investors Some Relief
    Consumers Have More Money Than Holiday Sales Suggest
    Most Corporations Are In Good Financial Shape
    Economy Gains From Cheaper Dollars, Oil, And Interest Rates
    The Faster The Pain, The Quicker The Gain?
    If You Don’t Play, You Can’t Win
    The Bottom Line This Week

    Investors who hoped that Santa might bring them some cheer over Christmas were sorely disappointed. The usually-jolly old gentlemen dropped off a rather large bag of coal. Even that gift was worth a lot less than would have been true a few months ago.

    In any event, when the stock market closed on Christmas week, the Dow and the Nasdaq were down another 0.7% and 2.2% respectively. The mood brightened over the weekend when unemployment claims dropped unexpectedly. During the last three trading days of 2008, the market went up 260 points. We suspect that the occasion will be celebrated with a little extra bubbly on New Years Eve.

    Of course, Wall Street’s revelers will need to overlook the fact that the S&P 500 went down a dismal 41% during 2008. It wasn’t the worst annual performance in history, but it was the worst in the memory of most investors living now.

    ...

  • Association of Investor Awareness - Week of 01/08/2009

    In This Issue:

    It's Time To Start Looking Beyond Current Woes
    A Big Cash Horde Is Always Bullish
    When It Comes To Rebounds, Too Early Beats Too Late
    Eight Blue Chips Many Pros Are Buying
    The Bottom Line This Week

    There's nothing like the start of a new year to shake investors out of a funk. It happened again a few days ago when the market rallied as the first of January approached. The week the calendar turned over, the Dow and the Nasdaq went up an impressive 6.1% and 6.7% respectively. It was an encouraging end to a dismal year that saw the two indices plunge 33.8% and 40.5% - the third worst performance in recent memory.

    Alas, it is far too early to declare an end to the bear market. With manufacturing and home sales dropping to very low levels, it is clear that the economy is still sinking. But as we will discuss later, that doesn't mean that a recovery is off the table for late 2009.

    ...

  • Association of Investor Awareness - Week of 01/15/2009

    In This Issue:

    Sometimes Good News Can Be Bad News
    Treasury Bonds May Be A Bubble
    It’s Time To Choose Shorter Bond Maturities
    Three Ways To Win If Treasuries Decline
    Investing In Times Of Extremes
    Staying Healthy During Impossible Times
    The Bottom Line This Week

    The optimistic mood that lifted the stock market two weeks ago didn’t last very long. In fact it might have been the smallest January bounce on record. After the 2nd, prices started to move back down again.

    There is some solace in noting that the market is still up some 20% from where the zigzag rally started on November 21. Despite all the turmoil, it may turn out that the bear market reached bottom at that time. We shall know soon enough.

    In any event, by the time last Friday afternoon rolled around, the Dow and the Nasdaq were down 4.8% and 3.7% respectively. During the first three days of this week, the market continued to decline sharply as more disturbing economic numbers were announced.

    ...

  • Association of Investor Awareness - Week of 01/22/2009

    In This Issue:

    Credit Rebound Coming From Unexpected Sources
    Signs Of Life Are Returning To Some Real Estate Markets
    A Home Town Advantage With Stocks
    Forget The Bottom, Focus On Value
    Two Leading Stocks Look Especially Good Right Now
    The Bottom Line This Week

    As the inauguration of the new American president approached, many analysts expected the market would have an "Obama bounce." Alas, that happy event did not occur. On the contrary, as further economic and banking industry worries continued to mount last week, the Dow and the Nasdaq dropped another 3.7% and 2.7% respectively.

    The market fell another 332 points on Tuesday, when our new president took office. (Nothing personal, Mr. Obama. As the Godfather used to say, "it's just business.")

    On Wednesday, however, the mood brightened and the market rebounded 279 points.

    ...

  • Association of Investor Awareness - Week of 01/29/2009

    In This Issue:

    Reasons For Cautious Optimism Continue To Appear
    Many Promising Stocks Attract Long-Term Investors
    The Bottom Line This Week

    The stock market continued to lose ground last week as the Dow and the Nasdaq declined an additional 2.5% and 3.4% respectively.

    A growing number of analysts believe the stock slide will continue until the market tests (reaches) the low point it made on November 20. If so, it will be a classic correction to a bear market rally.

    A much bigger issue is what will come next if the November lows are reached. Pessimists believe the market will continue to decline until blue chip P/E ratios get closer to 10. If so, the S&P 500 would drop from today's 832 to 750, or so. Super bears think the index might fall another hundred points.

    On the other hand, optimists believe the market will bounce back in a classic stage two bear market rebound. If history repeats, the second time should be the charm as a new rally would typically test its former highs – and then continue up. The 298 point jump the market took during the first three days of this week suggests that the optimists may be right.

    ...

  • Association of Investor Awareness - Week of 02/26/2009

    In This Issue:

    The Federal Bailout Is A Mixed Bag
    Capitulation May Have Been Reached
    Some Blue Chip Stocks Will Win Blue Ribbons
    A Speculation Is Also Attractive
    Gold Regains Its Appeal, But There Are Problems
    An Economic Indicator That We Can Love
    The Bottom Line This Week

    Since our last newsletter on January 29, the stock market took a sharp turn for the worse. In fact, calling it a "turn" is an understatement. "Plunge" would better describe the 9.6% and 4.4% declines in the Dow and the Nasdaq. The slide left the market at a 12 year low.

    Curiously, the plunge isn't due to another panic. At this point in the long bear market, most investors are too tired to sprint for the exits. Instead, many of them are dropping their gear and are simply walking off the field.

    ...

  • Association of Investor Awareness - Week of 03/26/2009

    In This Issue:

    Banks And Auto Stocks Led The Way Down, And Now Up
    Yes, The Rebound Could Be Another Bear Trap
    If There Ever Was A Time To Use Stops, It’s Now!
    In Many Cities, Real Estate May Be Set To Rise
    The Bottom Line

    Over the past month, the stock market staged a strong reversal as the Dow and the Nasdaq rose 6.9% and 9.1% respectively. As often happens when investment optimism begins to replace a long period of pessimism, small stocks did better than their larger cousins.

    However, many blue chips also performed very well. For example, our first three picks from last month, JP Morgan Chase (JPM), Archer Daniels Midland (ADM), and Ford (F) jumped 21.5%, 5.3%, and 42.3% respectively. Our fourth pick, SPDR Gold Trust (GLD), dropped 2.4%.

    ...

  • Association of Investor Awareness - Week of 04/30/2009

    In This Issue:

    Signs Of A Better Economy? (Or At Least Not As Bad?)
    Stocks For A Weak Recovery
    The Bottom Line This Week

    Last month investors received another booster shot from Wall Street as the Dow and the Nasdaq rose an additional 1.2% and 5.5% respectively. The gains left stocks up 26% from the rally's jumping off point. With any luck, and a few encouraging numbers from the economy, the rally could continue for another few weeks.

    Lest anyone think the bear is finished, however, we must remind you that the market never moves in a straight line very long. Even if this is the start of a new bull market, we must expect to get some nasty shocks along the way. After such a strong rally, the first correction may be close at hand.

    ...

  • Association of Investor Awareness - Week of 05/28/2009

    In This Issue:

    Is The Economy Finally Turning Around?
    Companies With Cheap Eats Are Doing Well
    China's Economy Is Still Hot (Compared With Everybody Else)
    Energy Investments Are Looking Good Again
    The Bottom Line This Week

    The stock market rally that started on March 9 is proving to have longer legs than even the most optimistic investors dared hope. Through the end of May, the S&P 500 was up 30 percent even though the economy was continuing to decline.

    Over the past month, however, the market's performance suggests that the rally may be getting short of breath. Since our last newsletter, the Dow gained an unremarkable 1.1% and the Nasdaq barely rose 0.7%. It remains to be seen if stocks will get a second wind and run for another few laps, of if a correction is on the way.

    ...

  • Association of Investor Awareness - Week of 06/25/2009

    In This Issue:

    Mixed Economic Signals Worry Investors
    Another Kind Of Bailout Is Also A Concern
    A New Economic Reality Is Emerging
    For Efficient Companies, Slow Growth Can Be Profitable
    Your Best Strategy Now
    Three Analysts And A Fool Have Recommended This Stock
    The Bottom Line This Week

    In our last issue we remarked that 'the rally may be getting short of breath.' Shortly thereafter, the huffing and puffing began in earnest. On Monday of this week, definite wheezing sounds were heard as the bull dropped to its knees just short of pushing the market into positive territory for the year. Perhaps the old boy was out of shape after letting the bear take over for six months.

    In any event, since May 28 the Dow dropped 0.8% while the Nasdaq managed to squeak ahead a miniscule 0.8%. More importantly, both measures slipped 3.0% and 1.7% last week - and they are even lower now.

    ...
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