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REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.

Another View of Stocks in 2011

On January 4, 2012, in Stocks, by Tim

In their latest Daily Chart, The Economist has another one of those “Stocks in 2011″ summary graphics that, despite all the buzz about large-cap stocks in the U.S., reinforces the point that it was a rather dismal year for equities around the world.

Don’t get too excited about equity markets in Venezuela – inflation there is running at 29 percent, a level that, according to The Economist’s weekly Output, Prices, and Jobs makes them an extreme outlier in a world of generally low reported inflation. Only two other countries have double-digit inflation – VietNam at 18 percent and Pakistan at 10 percent.

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Was 2011 a Good Year for Stocks?

On January 2, 2012, in Stocks, by Tim

Much was made of the major U.S. stock market indexes finishing in positive territory for the year, however, it was a very different story elsewhere in the world as indicated in red below via the December 31st print edition of the Wall Street Journal.

While the S&P500 and Nasdaq indexes both finished slightly in the red, the widely held ETFs that track them produced modest gains while the big stocks in the Dow Jones Industrial Average saw a 5.5 percent improvement or, an 8.1 percent return including dividends.

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Fear and the Gold Price

On December 29, 2011, in Commodities, Stocks, by Tim

The Economist has a set of nine charts that depict what happened in financial markets in 2011 as part of their Daily Chart section today. Below are the last two in the series showing the S&P500 Volatility Index atop selected commodity prices.

Clearly, there’s a pretty good correlation between volatility in U.S. stocks and the gold price, but, as shown above, the former follows the latter – maybe not what you might think at first. Most of the other charts are related to the global economy, credit and currency markets where there are no doubt more relationships to explore, such as the coincident peaks in late-April for the euro and oil (and silver).

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Well, That Was Interesting

On December 8, 2011, in Commodities, Debt, Europe, Stocks, by Tim

The next day or so should be fairly exciting for financial markets as developments in the on-again, off-again rescue of the European public debt market reach some sort of a climax. Like most other assets, gold has become quite volatile as of late, surging by almost $20 an ounce earlier today and then diving about $25 an ounce in short order after the European Central Bank announced another interest rate cut.

The gold price is rebounding a bit now and commodity prices are mostly positive, but equity markets appear headed lower as U.S. markets prepare to open. A seat belt and a bottle of Maalox might not be a bad idea for the next 30 hours or so.

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Market Volatility is the New Normal

On December 1, 2011, in Stocks, by Tim

After yesterday’s big 490 point move higher for the Dow Jones Industrial Average to cap off a month of four 200+ point UP days to go along with four 200+ point DOWN days, it would appear that the stock market is settling into an extended period of heightened volatility.

Now entering the best two months of the year for equities, it seems unlikely that, over the near-term, we’ll get a repeat of the late-2008/early-2009 period that saw share prices plunge, but, that could set markets up for quite a tumble in the spring.

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John Paulson to Investors: “I’m Sorry”

On November 30, 2011, in Economy, Stocks, by Tim

CNBC reports that hedge fund manager John Paulson apologized to investors for misreading macroeconomic conditions in 2011 that led to spectacularly bad performance by his funds.

From the CNBC story, here’s a summary of the performance of Paulson’s funds this year:

  • Paulson Advantage: -32.57 percent
  • Advantage Fund: -45.35 percent
  • Credit Opportunities Funds: -19 percent
  • Credit Opportunities II: -15.31 percent
  • Paulson International Ltd.: -10.40 percent
  • Paulson Partners LP: -9.89 percent
  • Paulson Enhanced Ltd.: -22.11 percent
  • Paulson Partners Enhanced: -19.83 percent
  • Paulson “Recovery funds”: -31 percent
  • Paulson’s gold funds: +1 percent
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