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Examiner
  • Ron Finke: Stocks lately have bucked the trend

  • Ordinarily, financial markets in the late summer take a snooze or at worst, take a bad fall. You may have tried to forget about last year, when the Dow 30 and the S&P 500 dropped 12 and 14 percent in the third quarter, but some drop in value is usually the pattern to expect.

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  • Ordinarily, financial markets in the late summer take a snooze or at worst, take a bad fall. You may have tried to forget about last year, when the Dow 30 and the S&P 500 dropped 12 and 14 percent in the third quarter, but some drop in value is usually the pattern to expect.
    Thankfully this year, Mr. Market – in both stocks and bonds – has been consistently, if surprisingly, positive. We can speculate about various reasons for this, but if you have benefited with your investment assets, just be thankful in this harvest season. If you are still sitting in cash, you are paying too much attention to doomsday prophets and not enough to actions of major money managers. Actions are definitely more important than words in that regard.
    Billions are still being siphoned each month from stock mutual funds, where most retail investors hold their stocks. Most of this appears to be going into bond funds for the illusion of safety and higher income. Since stocks and their indexes are still rising in value, it only makes sense to me that larger institutional managers have been buying. In some cases, hedge funds are apparently making up for lost time when they missed the fall and winter rally. Others may be already betting on which way the presidential election will turn out.
    In any event, the trend has favored health care (especially biotech companies), silver, gold and the companies that mine them, heavy construction, radio broadcasters, and Internet service providers. Appliances have also been strong, representing the new residential construction trend and formation of new households.
    Worst results came from consumer spending industries including electronics stores, music and video stores, toy and hobby producers, and photographic equipment. Business categories in value decline were trucking, computer peripherals, office supplies and education and training services.
    Among major indexes, the Dow 30 was led upward by Home Depot, JP Morgan Chase and Procter & Gamble, with 13 percent gains, and anchored by Intel with an almost 15 percent decline. Altogether, 22 of its stocks rose in value.
    In the S&P 500, there were 355 gainers, or 71 percent. Wireless companies led the pack with Metropcs, up 93, and our very own Sprint, up 69 percent in the quarter. Semiconductor manufacturing is on the skids and Advanced Micro Devices, a perennial also-ran to Intel, came in last with a 41 percent drop.
    Sirius XM Radio led all Nasdaq 100 companies with a 40 percent gain in the quarter, followed by Randgold Resources at 36 and Google at 30 percent gains. Almost two-thirds were positive for the quarter, but losers included Dell, Monster Beverage and Warner Chilcott, each down 21 percent or more. (I thought I was the only one not drinking that Monster stuff!) By the way, Apple Computer gained 14 during the quarter but has lost over 4 percent so far this month through Monday's close.
    Page 2 of 2 - Among bonds, foreign issues took top honors, followed by high income (read junk bonds), with longer term U.S. government bonds pulling up the rear with minor gains. Be very careful that you do not get caught buying those supposedly safe Treasury bonds before the bond bear market begins rolling downward for many years to come.
    (Past performance is no guarantee of future results. All returns from Worden Brothers Inc., TeleChart Platinum or Funds services, 2012.)
    Ron Finke is president of Stewardship Capital, a registered investment adviser. This is general advice and not meant to contain specific recommendations. Reach Finke at rcfinke@stewcap.com.
     
     
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