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SRC Stock Charts - Profit at-a-glance. Market Insight Newsletter

A Topsy-Turvey August and This Time is Different? Plus NASDAQ and NYSE go head to head.


August has been a topsy-turvy month for all of us. We hope our August issue of Insights at-a-glance will help bring things into perspective. In this issue Mike Carr asks if "This Time is Different," looking at investors' famous last words. Also in this edition Paul Schneider looks at NYSE vs. NASDAQ in a head to head perfformance duel...and Nino RInaldi discusses the ins and outs of dividend trends.

Dividend Trends Are Your Friend.

Federal Reserve Chairman Ben Bernanke plans to keep interest rates at zero percent for at least the next two years in order to help stimulate the economy and keep a lid on conventional savings yields.

The past few weeks have brought extraordinary daily volatility and huge stock declines some in excess of 35%. The period between July 22nd and August 8th has been among the worst ever on Wall Street. In just eleven trading days, the S&P 500 fell by 17%, as shown in chart below.


NASDAQ vs NYSE Stocks: Which Outperform?


This is a question I set out to answer for our long term portfolio of 24 stocks. Twelve happened to be NYSE stocks and the other 12 NASDAQ stocks. All of these were purchased over the years without regard to which exchange they were listed on.

This study is based on the time period as indicated by the arrows on the DJIA chart below. It incorporates the 7th month of the 2006 “buy” period and the 7th month of the 2011 “sell period”. The study is from point to point without any knowledge or regard to what happened to the markets in between, such as the Dow peak of 14,200 in 2007 and the depth of the Dow low of below 6,500 in 2009.


This Time is Different.


This time is different." Many traders cite those four words as the most expensive phrase in the English language. When investors become overly euphoric, they find new ways to justify high stock market valuations because this time is different and therefore the old tools which point to a possible bubble must be wrong. Believing that this time is different allows them to ignore the signs that a disaster is possible.

It was just a little more than a decade ago when everyone knew it was different this time because of the internet. Price-to-earnings ratios didn’t matter because companies didn’t need earnings, some argued. Growing companies could be valued with a new P/E ratio, and the price-to-eyeballs ratio found its way into investment analysis.

 

August 2011


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