Cru Jones

The DJIA's Dangerous Indexing Philosophy

It is what it is. Look at the bright side - IBM, trading at very modest multiple by historical standards, has 9 times the weight of troubled GE or Alcoa. I agree that their weightings are ridiculous - hell Google had no chance to join DJIA in the recent rebalancing b/c it would've been over 20% of the index - but in some ways the DJIA weightings are exactly why I like its prospects better than the S&P500. And looking at the correlation with the broader index, I wouldn't call the DJIA indexing methodology "dangerous." Dumb maybe, but not dangerous.

The U.S. commercial paper market grew for a ninth straight week, up $27.1B to $1.326T. Analysts say the market, which the Fed had to rescue from paralysis last year, is functioning much more smoothly than a few months ago. (Fed, Reuters)

At some level, CP is "fake borrowing." It's nice, but there's a reason borrowing costs on real debt are not in the single digit basis point range. If the government isn't there to fund this market then it doesn't work.

The Changing Role of Financial Advisers

Not helping matters is that over a third of financial advisers surveyed said they don't feel "fully" qualified to do their job.

www.nytimes.com/2009/0...

S&P 500's PE Ratio of 139 Isn't Sustainable

The Shiller PE is reasonable, but the 139 PE is nonsense. Even S&P doesn't understand how to calculate its own index' earnings(alphaninja.blogspot.co...).

The 139 PE logic would be similar to owning $90 of a stock with a 15PE and $10 of a stock with a 200PE and saying your portfolio had a PE of 107. S&P lets a company with almost zero weight in their index wipe out the same dollar amount of earnings of a company with 100times the weight. It's amazing that they get it so wrong.