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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
October 5, 2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata
Financial
Last week, the tail of the market (the dollar)
continued to wag the dog. With each weakening of the dollar, the market
rallied and each strengthening was followed by a decline. We also saw the
effects of Q3-end window dressing continue to goose the market higher until
Wednesday (September 30, the last day of the quarter) as some portfolio
managers bought the quarter’s winners to “dress-up” their
portfolios that will be reported to investors at quarter end. It
doesn’t help their performance a whit but they believe it will help
them justify keeping their jobs, another example of Wall Street looking out
for you, the little guy. The believers in a “V-shaped” recovery
suffered the most as results reported, for the most part, did not meet
expectations. Jobless claims rose and the purchasing manager’s report
and ISM were disappointing. Car sales dropped to an annual rate of 9+ million
from 14+ million in the clunker-induced previous month. These weak tidbits were
being tolerated well as the influence of the dollar limited losses until
Thursday when Goldman Sachs revised their September unemployment estimate downward
(-250k from -200k) for the announcement coming the following morning. As
estimates street-wide were for -175k, there was nothing left to do but reduce
growth expectations and sell, which they did. Goldman’s prescient call
and the ensuing selloff helped keep Friday’s morning decline manageable
as the actual report came in at -263k. We opened lower, but rallied as the
dollar weakened and a few upgrades were announced, even turning positive for
a time, before selling off mildly toward the close. From Washington, we
learned that the FDIC, the branch of our government that guarantees that
banking deposits are safe, ran out of cash last quarter. No worries as they
will ask their source of funds, the banks we bailed out, to pre-pay the next
3 years of dues to replenish the coffers. This kicked the can down the road (standard
Washington playbook) as it put off the day when we, the taxpayers, will have
to go into our own savings (taxes/debt) to pay to protect our own savings
(sounds like a line from Catch-22, doesn’t it?) Our president reached
the limits of his international charisma as he attempted to sway the International
Olympic Committee to award Chicago the rights for the 2016 edition. He came
up empty through no fault of his own (nor Michelle’s or Oprah’s)
as this group seems more politicized than our own Congress. Other interested
points of interest were that Tiger Woods has become the first billion dollar
athlete (where is Chris Dodd[salary regulation] when you need him?) and that
babies born in the U.S. this century can expect to live an average of 100
years (might want to tweak our Social Security and Medicare programs, not to
mention health care.) A personal note: October 5th is my
daughter’s 25th birthday, so a special shout-out to her. She
has brought me long-term joy. More to your interest, the Dow Jones Industrial
Average (DJIA) opened at 1,187 on the day she was born and now 25 years later,
after the 1987 market crash, the NASDAQ meltdown, 9/11 and last year’s
disaster, the DJIA will open at 9,487, over eight times higher (not including
dividends paid). It’s still the best place for long-term wealth
building. Conclusion: Government-sponsored liquidity is fighting the
market’s desire to cleanse itself with a true correction. The
“buy the dippers” have lost the last few rounds and the
appearance of a true correction is now on the radar. I’ll continue to
move sell-stops up on spikes to protect profits against its potential arrival.
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