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Rate Type Month Last Change
Fed Funds Rate October .25 0.0
Unemployment September 5.9% -.2%
Rate Type Month Last Change
Inflation (average) August 1.76% -.01%
Gold (oz) September $1,193 -$76
 
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Discipline

Jan 07, 2012

If the most recent jobs report was something to write home about the Dow Jones Industrial Average wouldn’t have laid an egg since the news broke.  The report revealed that the unemployment rate – not unemployment per se – decreased a mere .1%.  Excuse me if I don’t throw a party.

First, 200,000 jobs isn’t nearly enough when you’re in the mess We are – especially when considering that these jobs were added in December – the busiest spending season in the American market by far.  Second, the unemployment rate does not consider those workers who fall out of count because of expiring benefits.  It’s not that these people got jobs, it’s that they no longer factor into the unemployment rate because they can’t receive benefits.  Bottom line: the unemployment rate still stands at a painful 8.5% level.

That’s why "the market" didn’t show any mojo after its bold 200 point surge on the first day of trading in the New Year.  Remember, the first part of last year was nothing like the second.

In the first half of the year there is less consequence to overzealous stock market valuations.  First quarter shortfalls can easily be made-up in the three quarters to follow.  No reason to worry.  And in a different vain, great first quarter numbers are speculated to continue for the remainder of the year just as easily.

Here’s how the Dow performed during the first six months of last year.    

1sthalf2011

Not bad at all. "The market" was up 8.7% half way through 2011.

And then Wall Street woke up and read the news that had been there all along. 

·         Unemployment was 9% and economic growth was slow

·         Europe was falling apart, and

·         Consumers were falling behind 

This, of course, is not to mention the worldwide collapse of prudent monetary and fiscal policies from central governance – which caused revolutions across the globe, like in Egypt, Libya, Syria, just to name a few.  Accurately, the Dow showed a completely different picture in the second half of 2011, losing a few points, before ending up 5.5% for the year.  Here it is.  

2half2011

The point of this blog is to alert you that "the market’s" behavior can be much different in the first of a year than the second.  There’s more room to speculate in the beginning because at least 75% of the year still remains.  It’s easy to be overly optimistic early in the year.

It’s the kind of optimism that all professional sport teams experience as they break camp – all with hopes and dreams of championship runs.  But then it gets halfway through and pretty much everyone knows the score for the year.  The same is true with the stock market.

To that end, maintain your investment discipline, base your decisions on Market fundamentals, and stay true to your life experiences.  They’ll rarely lead you astray.

Stay tuned…

 

Xref:

Asset Allocation

 

 

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COMMENTS (2 Comments)

I'd vneutre that this article has saved me more time than any other.
Adonica 3:03 PM Jan 23rd
 
Thanks Dan. Finally someone has the guts to tell us what the boldface shameless liars in the media and govt. won't. " Unemployment looking good" The President and his lackies[ the media] puttin on the spin. Real unemployment is 14.5%, but hell, what's 6 percentage points among friends. The govt. still treats us like we can't handle the truth. Traitors all of them. Maybe if they stopped sucking our blood w/ income taxes and told the truth we could make informed decisions and act accordingly. We are still the greatest nation in history despite the current administrations attempt to turn us all into eurotrash.
wpelle 12:05 PM Jan 8th
 

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