Sunday, September 21, 2008

Weekly Markets Summary









S&P 500




10-yr Note*


-2 3/32


Source: Dow Jones, Reuters

The huge up move of the stock market today, while heartening and probably temporary, is in the direction most in the market would prefer, as the numbers above show. The volatility that went with it is another story.

Each weekend, I peruse Barron's magazine. Specifically, I dive into the market lab pages and copy certain mutual fund results and then get busy with my markers and pens.....I was very curious after all the whipsaw market actions of the past week to find out exactly which funds would come out ahead in the mutual fund charts.

Of course, I keep checking this all week long. The end of the week is an arbitrary cut-off day, especially in these days when what happened this week would probably have taken months or longer pre-electronic trading. The 600,000+ volume of shares in the Nasdaq market handled the first few minutes Friday was more than the total number generally sustained in a day until the late nineties.

The funds up the most this week would not have satisfied anyone in years past. For example, Fidelity's Home Finance Select Fund (FSVLX) that is up 10% this week is down -38.6% year-to-date (YTD) and also down an amazing -55.8 percent cumulatively over the last three years!

In general, it seems nearly all mutual funds are down since the beginning of the year, with the exceptions of tax-related ones which are up slightly. I would have added, "of course", until the unprecedented actions of the last few weeks that temporarily appeared to destabilize the money-market and bond markets.

Most other funds are negative YTD in shocking numbers. For example, Fidelity's Latin America Fund (FLATX) that did spectacularly well the last three years until mid-May, hitting over +225% cumulatively, is down to +81.2% over the last three years accounting for the recent drop.

Gold and energy services funds are also up the best over the last three years and were up this week, too. And these are the best funds!

Some of the REIT funds are showing signs of life, but I am not sure if they are showing signs of leadership yet.

How much of this week's action can be attributed to the changes brought on by electronic trading that has gradually replaced more and more investment jobs (higher and higher up the food chain) with computerization?

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