Lorimer Wilson

Sell in May, Go Away?

Sell in May and go away? – No, this year turn a deaf ear!

April – despite being called “the cruelest month” by T.S. Eliot – was pretty kind to investors this year.

Month to date through April 29, the S&P 500 rose 9.5%. What’s more, the S&P/Citigroup Pure Value Index bested the Pure Growth Index by a two-to-one margin, and nine of the 10 sectors in the “500” advanced on the month, with Financials posting the sharpest rise and Utilities recording the only loss. To top that, only 14 of the 134 sub-industries in the S&P 500 (about 10%) declined on the month.

Investors have piled back into stocks in general, and have favored the beaten up groups in particular. Except for Information Technology, all of the sectors that fell more than the “500” from 10/9/07 through 3/9/09 have outperformed the market since then. Ditto for sub-industries. And while there remains an abundance of red ink in the “since 10/9/07” column, investors are beginning to feel encouraged by a new dawn, green shoots or even inauguration optimism, as the S&P 500 has risen 8.5% since the 1/20/09 close.

Of course now investors are wondering if they should be prepared to “Sell in May, and then go away.” Indeed, had an investor heeded this old saying in 2008, they would have avoided the 30% decline the S&P 500 experienced from 4/30/08 through 10/31/08.

Well if history is any guide – it’s never gospel – investors may be wiser to “turn a deaf ear this year.” During or just after the 14 bear market bottoms since 1932, the S&P 500 rallied during the traditionally sleepy May through October period, registering an average 12.2% advance and rising in 12 of 14 occasions.

America's Financial Oligarchy Still Rules

Below are some more emails I received from readers regarding my article on Johnson's insights into America's Financial Oligarchy which may be of interest (continued).

8. "I did enjoy your article, and I fully share your views on the oligarchy and its power.
What concerns me is that I do not see a way to get rid of it, short of a global economic disaster. Those who criticize the present system have too many different answers to the problem, and have been unable to start a more general resistance movement. Too many answers make it very difficult for people to get together in a search for the most effective alternative.
I look forward to continue reading your articles on this crisis."

9. "Read with interest your recent article "America's Financial Oligarchy Still Rules".
What I cannot fathom is why so many knowledgeable, intelligent commentators still do not get the true underlying problem. It is not the banks, not the Fed nor the Treasury, not international finance not the government but rather it is THE DERIVATIVES. This is why nothing must fail and why trillions of $ are being created and thrown at the resulting chaos.
Fannie, Freddie and Lehman almost took the whole world financial system down. Ergo no bank or major company can ever be allowed to fail in the future! The best we can ever hope for is for a temporary delay in the resulting coming debacle. There is no answer to this problem other than collapse. The derivative market is so huge and controlling (particularly the CDS portion) that there is not enough money in the world to resolve this mess.
If unsophisticated boobs like me can see this problem clearly, I can't understand why others don't get the big picture. Maybe most are too scared to lay the truth out there or maybe psychologically most commentators can't handle the ultimate horror. When examined in the light of the real problem, the derivatives, everything that is going on makes perfect sense. Start with the real problem and work backwards and you will see that the real answer is that there is no answer."

10. "Since this crises has started I never read such a usefull article on this issue and very honest. I agree that the financial sector has a problem with basic element of functionality - all we need is more regulations and less greed. I come from Bosnia and Herzegovina and in the past 20 years we felt the power of big finanaciers - we had a war and now we have a poor economy. Right now I work for an commercial bank from Austria as a middle level manager in retail sector so I have a lot of information about it first hand. YOU HAVE RIGHT."
11. "I am a modest professor of economics for political science students at a local university, in Lisbon, Portugal. After some thought I cannot come up with a better solution for the present crisis than this: Universal pardon of all debt, whether private or state, full nationalization of the banking system worldwide, and a fresh start for everybody, free of debt."

America's Financial Oligarchy Still Rules

I have had a number of readers email me today with their comments and I would like to share them with you.

1. "Your article referencing simon Johnson is on balalnce an excellent article but I diverge from calls for more taxes – a lethal toxin to any economy especially in the huge doses it takes now – whether directly through payments to the irs or to the federal reserve / treasury in the form of bonds with artificially manipulated interested rates.
What I applaud is your recognition that an occult powerful elite controls the government lock stock and barrel. The treasury is but another division of goldman sachs and the legislators both conservative and liberal nothing but pages for these plutocrats.
As an advocate of limited government I was in favor of reduced regulation but see that some of it was overdone. There is a strong need to ride heard on these ravenous pigs on wall street who are destroying this country. Many belong in jail – including the “respectable” ones.
Although many abuses you cite are immediate causes of our problems, the more insidious problems we face are due to unbridled capital destruction which has run amok since the 1970s….until that problem is repaired america’s economy continues to disintegrate. The federal reserve and banks are insolvent. The suspension of mark to market is corruption of the most venal kind.
American icarus cannot save us and it was preposterous that anyone thought that those old hackneyed knee-jerk retro-30s policies could do so as they failed the first time around.
We definitely come from different political angles but your article was a net positive to the discussion and a sober view towards a solution."

2. "Brilliant! I am what you would call a "visceral" economist ,although I am not an economist per se. You have, sufficiently for me, described what the US economic culture has become. The English did this 80 or so years ago, at the end of their empire and so we are here. The "financial world" spread to every corner of our society...i.e. why produce real goods and services when you can make "money" in the financial world. A beautiful recipe for the kind of price inflation this country has never experienced. So let the current"D" continue till it remorphs into 25% price inflation or maybe worse dictatorship and oppression."

3. "Enjoyed your America's Financial Oligarchy, you are on the scent but it's much bigger."

4. "Loved your writing on America's Financial Oligarchy!!!!!! Very insightful and precise, right on the money."

5. "I thought your article was quite compelling.
The points I made to my people when I forwarded it to them are the same I would make to you, for what they're worth...
I completely disagree with Johnson's solution to nationalize the banks (let 'em fail), but he's a central banker's central banker, so you have to consider the source. That said, I agree completely with his diagnosis and his fingering of the banking power elite. What I find funny is that he writes as if the bankers are somehow a separate entity from government officialdom. Ha. The bankers ARE the government and everything that's done is ...surprise surprise...designed to funnel money from you to them and keep them alive and bonused up, even when they should be wearing a toe tag.
Alternative 2 is what we'll get. The fascist "elite"will drag us down. Understand this and you understand just about all you need to know.
Thanks for brining this to people's attention. Goldman IS the Treasury and JPMorgan IS the Fed."

6. "I just completed reading your article "America’s Financial Oligarchy Still Rules." I'm also 75 years old and have been around a while. And, I just don't understand why you writers don't really name who these mystery entities are and how much obvious financial clout they really wield over our whole lives. Just in case you, for some reason, don't know the name of just one of the biggest foreign corporations that is eating our lunch, I've attached a couple of Excel documents that show their latest published public holdings along with their rank amongst shareholders. Want more?—e-mail me."

7. "Your article makes sense.
The FDIC is part of the problem. Sheila Bair has failed in her responsibilities. It should seize and shut down any all insolvent banks including the likes of Citibank.
The Federal Reserve, the private offshore for profit bank cartel, that serves the purposes of the finance oligarchs, and not the needs of the public, should be seized and brought into the US Government as a department within the the Treasury. This government bank could then issue credit to the real economy, not the fictitious economy of the oligarchs.
The 1.5 quadrillion in derivatives on the books, reported by the Bank for International Settlements ("BIS"), has to be wiped out, not pushed off the backs of the oligarchsand on to the backs of the public.
Anything short of these measures is folly."

Jeffrey Saut: How to Keep the Money We've Made

What, pray tell, would you or any of your ilk know about how investors should go about saving what little money they have made in the past month when the financial/investment advisors of your firm (and those of most other financial services companies to be honest) failed miserably in advising clients on how to avoid the dramatic decline in the market from September onwards?

You disrespect the major losses that your firm's clients suffered by carrying on as though you, as a representative of Raymond James, are still in a position to give timely, insightful advice.

Let the investment public know what your firm has learned from the failure of its financial/investment advisors and analysts and how you plan to educate them better to deal with such abnormal situations in the future and we will be all ears to what you have to say.

Until then please make better use of your time providing better research, technical indicators and market/economic/fiscal knowledge to your "advisors" so they will be better equipped than the "average joe" investor as to how best to grow their portfolios and avoid major market declines.

Comparing and Evaluating the Gold Indexes

Sakata,
When you get your junior mining stock indexes completed I would appreciate you sharing them with me (and perhaps in an article posted on seekingalpha).


On Mar 12 09:53 AM Sakata wrote:

> An interesting article, but the only really important thing it says
> is that the first four indexes are, for all practical purposes, equivalent
> and of little value if you are interested in junior mining stocks.
> The fifth of these, while more useful for junior investing, is broader
> than the PM market.
>
> For several months now I have been trying to put together my own
> indexes for the various subsector of the junior mining industry.
> This is very possible to do using Excel and letting it download the
> info on all stocks overnight. Separate indexes for production, exploration,
> Toronto-listed, Vancouver tier 1, tier 2, etc. leads to very interesting
> possiblilities. Unfortunately, due to limited time available, I have
> not got perfected my algorithms but I hope to have it done later
> this year when I expect that some of these subsectors will really
> take off.
>
> Knowing how each individual area within the PM is behaving will,
> I hope, allow me to fine tune my investments and direct my efforts
> in the area which are likely to be most productive.

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On Dec 11 06:46 AM Roger Knights wrote:

> Please list the symbol of the Goldcorp warrant and the company names
> and symbols of other gold miner warrants.