Top 10 Tech Trends of the Coming Decade
Ba
10/22/2010
Walter Price, portfolio manager for the Allianz RCM Technology Fund, discusses the key themes that will drive growth in the technology sector over the next decade.
When the market evaluated the internet’s potential in 1999-2000, it enthusiastically anticipated robust tech earnings growth but it was too early and too extreme. Ten years on after numerous adjustments, we are about to enter a new secular growth era in the technology industry, as a number of key developments are coming together to provide the potential for positive change. The technology sector will continue to evolve over the next couple of years, setting the stage for what we believe will be an extended extraordinary growth in corporate profitability.
Walter Price, portfolio manager for the Allianz RCM Technology Fund, comments: In today’s world of short memories and short–term focus, it is easy to overlook the continued rapid fundamental changes that have taken place over the last decade in the technology sector. When looking forward to the next ten years, while there are a number of key areas we have already seen growth in, such as the LED TV, there are also some brand new developments in this sector which are still yet to be widely adopted. Therefore, these are the areas to watch for future investment opportunities as they will be the products which will potentially have the most rapid and increased growth over the next 10 years. The top 10 technological trends that we believe will play a key part in this growth over the next 10 years are:
1. Internet TV / video
The function of the PC will transform, primarily, into a consumption device for information and entertainment. We expect recommendation engines will grow significantly in importance and media content will be freely available over the internet.
2. LED technology
LEDs can offer 90 per cent energy savings and a significantly longer lifespan in comparison to regular light bulbs. Over the next few years, LED technology will likely cross quality and cost thresholds for widespread replacement of indoor and outdoor lighting, starting a considerable investment cycle.
3. Cloud computing
This is the biggest trend in enterprise computing since the late 1980s, and it is enabling businesses to move to a more efficient IT model. Cloud Computing offers large cost savings and a great amount of scalability and flexibility. For most large companies this will be a two part journey moving to an internal cloud of fewer, large data centers before eventually moving to external cloud vendors
4. Smart grid/energy infrastructure
The electrical grid is often referenced as the world’s most complicated machine, yet it is hopelessly outdated, and it can no longer adequately balance future supply and demand without huge investments. Neither higher penetration of renewable nor large scale electric car deployment will be feasible without smart grid investments.
5. Proliferation of access points and democratization of computing
Access to computing resources, for a long time the domain of the desktop computer and later the laptop, is fast being complemented by many others, such as smart phones, tablets, TVs and navigational devices. Interaction is moving away from keyboards to a variety of touch, voice and gesture–aided access.
6. Solar
Prices are falling every year so that within the foreseeable future solar power systems will likely come much closer to delivering electricity at grid parity in even challenging environments.
7. Display technology
A transition to OLED display in the coming decade has started, which can provide thin, low–power, better–picture, bendable and low-cost displays.
8. Rechargeable batteries
Significant growth in storage batteries will be required for mobile devices, hybrid cars and power plant electricity storage. This is in addition to the progress currently underway to increase energy density of storage systems.
9. Gesture recognition and the evolution of the user interface
The Windows-icon-mouse-pointer–based user interface has been around for almost 40 years. The introduction of motion-based technologies from game consoles and the evolution of user-device interaction (gesture recognition, eye tracking, speech-to-speech translation, etc.) may lead to a complete refresh cycle of hardware, software and peripherals—the iPad is just a first initial step in this direction.
10. Global connectivity: 50 billion connected devices in 10 years’
time The vision of a tenfold increase in wirelessly connected devices over the next ten years, we believe, will continue to be one of the biggest drivers of technology this decade, with the next billion first-time users coming via smart phones, not the PC world.
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Showing posts with label common stocks. Show all posts
Showing posts with label common stocks. Show all posts
How to Make Money from Inflation (WSJ)
WEEKEND INVESTOR
FEBRUARY 5, 2011.How to Profit From Inflation
The Scourge of Rising Prices Hasn't Hit Home Yet, but the Underlying Signs Point to Trouble Ahead. Here's What You Should Do Now.
By BEN LEVISOHN and JANE J. KIM
Inflation,long a sleeping giant, is finally awakening. And that could present problems—along with opportunities—for investors.
A quick glance at the overall inflation numbers might suggest there is little reason to worry. The most recent U.S. Consumer Price Index was up just 1.5% over the past year. Not only was that lower than the historical average of about 3%, but it was uncomfortably low for Federal Reserve Chairman Ben Bernanke, who prefers to see inflation at about 2%.
What to Do Now
Sell
Cash and Bonds: Treasurys, long-term bonds
Stocks: Financials, utilities and consumer staples
Hard Assets: Gold, real estate
Buy
Cash and Bonds: Floating-rate funds, inflation-linked CDs
Stocks: Small-company value stocks
Hard Assets: Commodities, real-return funds
Yet it is a much different situation overseas, particularly in the developing world. In South Korea, the CPI rose at a 4.1% clip in January from a year earlier, higher than the 3.8% estimate. In Brazil, analysts expect prices to rise 5.6% this year, exceeding the central-bank target of 4.5%. China, meanwhile, has been boosting interest rates and raising bank capital requirements to keep inflation, which rose to 4.6% in December, in check.
"Emerging market economies are overheating," says Julia Coronado, chief economist for North America at BNP Paribas in New York. "They need to slow growth or inflation will become destabilizing."
Even some developed economies are seeing rising prices. Inflation in the U.K. surged to 3.7% in December, while the euro zone's rate climbed to 2.4% in January, the fastest rise since 2008.
Much of the uptick has been driven by commodity prices. During the past six months, oil has jumped 9%, copper has gained 36% and silver has shot up 56%. Agricultural products have soared as well: Cotton, wheat and soybeans have risen 100%, 24% and 42%, respectively. That's a problem because rising input prices "work their way down the food chain to CPI," says Alan Ruskin, global head of G-10 foreign-exchange strategy at Deutsche Bank.
Of course, the main inflation driver is usually wages—and that isn't a factor in the U.S., where high unemployment has kept a lid on pay for three years.
Yet there isn't a historical blueprint for the inflation scenario that seems to be unfolding now. Not only has the global economy changed drastically since the last big inflationary run during the 1970s, but the lingering effects of the recent debt crisis remain a wild card.
For investors, that means traditional inflation busters such as real estate and gold might not work as expected, while other strategies might perform better.
So how should you position your portfolio? The best approach, say advisers, is to tweak asset allocations rather than overhaul them. That involves dialing back on some kinds of bonds, stocks and commodities and increasing holdings of others. Here's a guide:
What to Sell
• Bonds. The price of a bond moves in the opposite direction of its yield. When inflation kicks up, interest rates usually move higher, pressuring bond prices. Even buy-and-hold investors get hurt, because higher inflation erodes the real value of the interest payments you receive and the principal you get back when the bond matures.
'There is no historical blueprint for the inflation scenario that seems to be unfolding now.'.The drop is usually most extreme in longer-dated bonds, because low yields are locked in for a longer period of time. So inflation-wary investors should shorten the maturities of their bonds, say advisers.
The safest bonds, especially Treasurys, are usually hardest hit, because those are the most influenced by changes in rates—unlike corporate bonds, whose prices also move based on credit quality. From September 1986 through September 1987, for example, as inflation moved higher, Treasurys dropped 1.2%.
It might even make sense to dial back on Treasury inflation-protected securities, whose principal and interest payments grow alongside the CPI. That's because investors already have flooded into TIPS, driving up prices and driving down the real, inflation-adjusted yields. A typical 10-year TIPS, for example, yields just 1.1% after inflation, compared with an average of more than 2% in recent years.
With so little cushion, long-term TIPS carry a higher risk of loss for investors who are forced to sell before the bonds mature. "Even if inflation is rising, you can still lose money," says Joseph Shatz, interest-rate strategist at Bank of America Merrill Lynch.
• Hard assets. Real estate may be a classic inflation hedge, but it seems likely to disappoint investors this time around. Even though rising inflation should put upward pressure on home prices, the twin forces of record-high foreclosures and consumers reducing their debt loads are expected to mute price gains for several years, says Milton Ezrati, senior economist at asset manager Lord Abbett. That's a far cry from the 1970s, when the median home price rose 43%, according to U.S. Census data.
Gold is another traditional inflation hedge that might be less effective now. With prices already having more than quadrupled over the past nine years, many strategists see substantial inflation already factored into the price.
Hot Commodities
Commodities that are more closely tied to industrial or food production seem better positioned now than gold, say advisers.
Historically, gold has moved with the money supply. During the last 30 years, the correlation has been about 69%, according to FactSet data. (A correlation of 100% means two indexes move in lockstep all the time; a correlation of minus-100% means they move in perfect opposition.) Based on the money supply alone, gold is priced 25% above where it should be, says Russ Koesterich, chief investment strategist at BlackRock Inc.'s iShares.
• Stocks. Equities can be a decent hedge against creeping inflation, because companies are better able to pass off costs to customers. But when input costs suddenly jump, profit margins take a hit.
At the same time, the higher interest rates that accompany inflation prompt investors to demand more profits for each dollar invested. As a result, price/earnings ratios tend to shrivel. Over the past 55 years, the average trailing P/E ratio of a stock in the Standard & Poor's 500-stock index has fallen to 16.95 during periods with inflation running between 3% and 5%, from 19.24 during periods with inflation of 1% to 3%, the most common inflation range since 1955, Mr. Koesterich says.
Sectors that are sensitive to interest rates, including financials, utility stocks and consumer staples, are especially vulnerable, say advisers.
What to Buy
• Cash and bank products. Money-market mutual funds are more attractive in inflationary environments because the funds invest in short-term securities that mature every 30 to 40 days, and therefore can pass through higher rates quickly. In an extreme example, money funds posted yields over 15% during the inflation-ravaged 1970s and early 1980s, says Pete Crane of Crane Data, which tracks the funds.
A growing number of inflation-linked savings products are cropping up as well. Incapital LLC, a Chicago investment bank, says it has seen a pickup recently in issuances of certificates of deposit designed for a rising-rate environment. Savers, for example, can invest in a 12-year CD whose rate starts at 3% then gradually steps up to 4.25% starting in 2015, and peaks at 5.5% starting at 2019 until the CD's maturity in 2023.
A caveat: If inflation eases and rates fall, investors could get burned, since the issuer may call the CDs and investors would lose out on the higher rates at maturity.
• Bonds. One way to reduce the impact of rising inflation on bond holdings is to build a bond ladder—buying bonds that mature in, say, two, four, six, eight and 10 years. As the shorter-term bonds mature, investors can reinvest the proceeds into longer-term bonds at higher rates.
"A bond ladder is best for someone who doesn't mind holding them for up to 10 years," says Jeff Feldman, an adviser in Rochester, N.Y.
Highly cautious investors might prefer the I Bond, a U.S. savings bond that earns interest based on a twice-yearly CPI adjustment. Although the current yield on I Bonds is only 0.74%, that yield is likely to move higher on May 1, the next time the rate is adjusted. I Bonds aren't as volatile as TIPS and appeal to conservative, buy-and-hold investors. The interest may also be tax-free for some families for education expenses.
More adventurous types might consider the inflation-protected government debt of other nations, which carry higher yields along with greater risks. The SPDR DB International Government Inflation-Protected Bond Fund is an international inflation-protected bond exchange-traded fund designed to do well if inflation in overseas countries moves higher. The fund returned about 6.8% in 2010 and 18.5% in 2009, according to Morningstar Inc.
• Bank-loan funds. Another way to exploit rising inflation is through mutual funds that buy adjustable-rate bank loans, many of which are used to finance leveraged corporate buyouts. So-called floating-rate funds are structured so that if interest rates rise, they collect more money. During periods of rising rates, floating-rate funds usually outperform other bond-fund categories. In 2003, for example, as investors anticipated higher interest rates and a stronger economy, bank-loan funds gained 10.4% while short-term bond funds gained 2.5%.
Now, amid expectations of rising inflation, investors are once again flocking to these funds, pouring in about $7.6 billion into loan funds in the fourth quarter of last year, according to Lipper Inc.—more than double the previous quarterly record set in 2007. The pace has accelerated this year, with investors putting in about $3.4 billion thus far.
After gaining almost 10% last year, the funds shouldn't be counted on for much price appreciation, says Craig Russ, who co-manages $22.7 billion of floating-rate investments across three floating-rate funds and other accounts at Eaton Vance Corp., including the Eaton Vance Floating Rate Fund. But the funds generate plenty of income, yielding about 4% to 5% now, according to Morningstar.
Price Increases
From Aug. 2, 2010 through Feb. 4, 2011:
Cotton: +100%
Silver: +50%
Soybeans: + 42%
Copper: +36%
Wheat: +24%
.
Be warned: Floating-rate funds can get creamed when investors fear the underlying loans are too risky. In 2008, for example, bank-loan funds lost 29.7%, although they zoomed 41.8% in 2009, according to Morningstar. What's more, banks are beginning to make riskier "covenant-light" loans that carry fewer stipulations for corporate borrowers—a sign of frothier trends in the market.
Given the potential for volatility, floating-rate funds are best viewed as a complement to—not a replacement for—investors' core bond holdings. Among Morningstar's picks in this category is the Fidelity Floating Rate High-Income Fund, among the more conservative in the category.
• Commodities. Materials that are more closely tied to industrial or food production seem better positioned now than gold, say advisers. The trick is to find the best investment vehicle.
The easiest way for small investors to gain exposure to most commodities is through exchange-traded funds, many of which use futures contracts. But such funds can be dangerous because they often face "contango"—when the price for a future delivery is higher than the current price. The result: The ETFs lose money as they buy new contracts, even when prices are rising.
The losses can be extreme. In 2009, for instance, while the price of natural gas rose 3.4%, the United States Natural Gas Fund lost 56.5% as a result of rolling over futures contracts.
Some firms have rolled out ETFs that aim to address the problem. One of Morningstar's picks is the U.S. Commodity Index Fund, run by U.S. Commodity Funds LLC. The portfolio buys the seven commodities that are most "backwardated"—the opposite of "contango," so rolling contracts should result in a profit—along with the seven commodities with the most price momentum.
"USCI provides an outlet for investors who want broad commodities exposure but don't want to worry about the daily dynamics," says Tim Strauts, a Morningstar analyst.
Other funds play inflation by holding many different assets to protect against rising prices no matter where they show up. The IQ Real Return ETF, launched in 2009 by IndexIQ, aims to provide a return equal to the CPI plus 2% to 3% over a two- to three-year period. To get there, it invests across a dozen or so inflation-sensitive assets—including currencies and commodities.
• Stocks. One corner of the market tends to do better when prices rise suddenly: small-company value stocks. "Because value and small stocks tend to be fairly highly [indebted] companies, inflation reduces their liabilities," says William Bernstein of Efficient Frontier Advisors LLC, an investment-advisory firm in Eastford, Conn.
From January 1965 through December 1980, for example, inflation averaged 6.6% a year. The Ibbotson Small-Cap Value Index posted average annual returns of 14.4%, according to Morningstar's Ibbotson Associates, double the S&P 500's 7.1% gain.
Morningstar's picks in the small-cap value fund category include Allianz NFJ Small Cap Value, Diamond Hill Small Cap, Perkins Small Cap Value and Schneider Small Cap Value. Just be warned: Small value stocks have had a good run recently, returning 134%, on average, since March 6, 2009.
In the end, the particulars of any inflation-fighting plan may not be as important as developing a plan in the first place.
"The real problem you run into with any kind of inflation hedges," says Jay Hutchins, a financial adviser in Lebanon, N.H., "is that if you don't already have them when inflation is around the corner, you've missed the boat."
Write to Ben Levisohn at ben.levisohn@wsj.com and Jane J. Kim at jane.kim@wsj.com
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved
FEBRUARY 5, 2011.How to Profit From Inflation
The Scourge of Rising Prices Hasn't Hit Home Yet, but the Underlying Signs Point to Trouble Ahead. Here's What You Should Do Now.
By BEN LEVISOHN and JANE J. KIM
Inflation,long a sleeping giant, is finally awakening. And that could present problems—along with opportunities—for investors.
A quick glance at the overall inflation numbers might suggest there is little reason to worry. The most recent U.S. Consumer Price Index was up just 1.5% over the past year. Not only was that lower than the historical average of about 3%, but it was uncomfortably low for Federal Reserve Chairman Ben Bernanke, who prefers to see inflation at about 2%.
What to Do Now
Sell
Cash and Bonds: Treasurys, long-term bonds
Stocks: Financials, utilities and consumer staples
Hard Assets: Gold, real estate
Buy
Cash and Bonds: Floating-rate funds, inflation-linked CDs
Stocks: Small-company value stocks
Hard Assets: Commodities, real-return funds
Yet it is a much different situation overseas, particularly in the developing world. In South Korea, the CPI rose at a 4.1% clip in January from a year earlier, higher than the 3.8% estimate. In Brazil, analysts expect prices to rise 5.6% this year, exceeding the central-bank target of 4.5%. China, meanwhile, has been boosting interest rates and raising bank capital requirements to keep inflation, which rose to 4.6% in December, in check.
"Emerging market economies are overheating," says Julia Coronado, chief economist for North America at BNP Paribas in New York. "They need to slow growth or inflation will become destabilizing."
Even some developed economies are seeing rising prices. Inflation in the U.K. surged to 3.7% in December, while the euro zone's rate climbed to 2.4% in January, the fastest rise since 2008.
Much of the uptick has been driven by commodity prices. During the past six months, oil has jumped 9%, copper has gained 36% and silver has shot up 56%. Agricultural products have soared as well: Cotton, wheat and soybeans have risen 100%, 24% and 42%, respectively. That's a problem because rising input prices "work their way down the food chain to CPI," says Alan Ruskin, global head of G-10 foreign-exchange strategy at Deutsche Bank.
Of course, the main inflation driver is usually wages—and that isn't a factor in the U.S., where high unemployment has kept a lid on pay for three years.
Yet there isn't a historical blueprint for the inflation scenario that seems to be unfolding now. Not only has the global economy changed drastically since the last big inflationary run during the 1970s, but the lingering effects of the recent debt crisis remain a wild card.
For investors, that means traditional inflation busters such as real estate and gold might not work as expected, while other strategies might perform better.
So how should you position your portfolio? The best approach, say advisers, is to tweak asset allocations rather than overhaul them. That involves dialing back on some kinds of bonds, stocks and commodities and increasing holdings of others. Here's a guide:
What to Sell
• Bonds. The price of a bond moves in the opposite direction of its yield. When inflation kicks up, interest rates usually move higher, pressuring bond prices. Even buy-and-hold investors get hurt, because higher inflation erodes the real value of the interest payments you receive and the principal you get back when the bond matures.
'There is no historical blueprint for the inflation scenario that seems to be unfolding now.'.The drop is usually most extreme in longer-dated bonds, because low yields are locked in for a longer period of time. So inflation-wary investors should shorten the maturities of their bonds, say advisers.
The safest bonds, especially Treasurys, are usually hardest hit, because those are the most influenced by changes in rates—unlike corporate bonds, whose prices also move based on credit quality. From September 1986 through September 1987, for example, as inflation moved higher, Treasurys dropped 1.2%.
It might even make sense to dial back on Treasury inflation-protected securities, whose principal and interest payments grow alongside the CPI. That's because investors already have flooded into TIPS, driving up prices and driving down the real, inflation-adjusted yields. A typical 10-year TIPS, for example, yields just 1.1% after inflation, compared with an average of more than 2% in recent years.
With so little cushion, long-term TIPS carry a higher risk of loss for investors who are forced to sell before the bonds mature. "Even if inflation is rising, you can still lose money," says Joseph Shatz, interest-rate strategist at Bank of America Merrill Lynch.
• Hard assets. Real estate may be a classic inflation hedge, but it seems likely to disappoint investors this time around. Even though rising inflation should put upward pressure on home prices, the twin forces of record-high foreclosures and consumers reducing their debt loads are expected to mute price gains for several years, says Milton Ezrati, senior economist at asset manager Lord Abbett. That's a far cry from the 1970s, when the median home price rose 43%, according to U.S. Census data.
Gold is another traditional inflation hedge that might be less effective now. With prices already having more than quadrupled over the past nine years, many strategists see substantial inflation already factored into the price.
Hot Commodities
Commodities that are more closely tied to industrial or food production seem better positioned now than gold, say advisers.
Historically, gold has moved with the money supply. During the last 30 years, the correlation has been about 69%, according to FactSet data. (A correlation of 100% means two indexes move in lockstep all the time; a correlation of minus-100% means they move in perfect opposition.) Based on the money supply alone, gold is priced 25% above where it should be, says Russ Koesterich, chief investment strategist at BlackRock Inc.'s iShares.
• Stocks. Equities can be a decent hedge against creeping inflation, because companies are better able to pass off costs to customers. But when input costs suddenly jump, profit margins take a hit.
At the same time, the higher interest rates that accompany inflation prompt investors to demand more profits for each dollar invested. As a result, price/earnings ratios tend to shrivel. Over the past 55 years, the average trailing P/E ratio of a stock in the Standard & Poor's 500-stock index has fallen to 16.95 during periods with inflation running between 3% and 5%, from 19.24 during periods with inflation of 1% to 3%, the most common inflation range since 1955, Mr. Koesterich says.
Sectors that are sensitive to interest rates, including financials, utility stocks and consumer staples, are especially vulnerable, say advisers.
What to Buy
• Cash and bank products. Money-market mutual funds are more attractive in inflationary environments because the funds invest in short-term securities that mature every 30 to 40 days, and therefore can pass through higher rates quickly. In an extreme example, money funds posted yields over 15% during the inflation-ravaged 1970s and early 1980s, says Pete Crane of Crane Data, which tracks the funds.
A growing number of inflation-linked savings products are cropping up as well. Incapital LLC, a Chicago investment bank, says it has seen a pickup recently in issuances of certificates of deposit designed for a rising-rate environment. Savers, for example, can invest in a 12-year CD whose rate starts at 3% then gradually steps up to 4.25% starting in 2015, and peaks at 5.5% starting at 2019 until the CD's maturity in 2023.
A caveat: If inflation eases and rates fall, investors could get burned, since the issuer may call the CDs and investors would lose out on the higher rates at maturity.
• Bonds. One way to reduce the impact of rising inflation on bond holdings is to build a bond ladder—buying bonds that mature in, say, two, four, six, eight and 10 years. As the shorter-term bonds mature, investors can reinvest the proceeds into longer-term bonds at higher rates.
"A bond ladder is best for someone who doesn't mind holding them for up to 10 years," says Jeff Feldman, an adviser in Rochester, N.Y.
Highly cautious investors might prefer the I Bond, a U.S. savings bond that earns interest based on a twice-yearly CPI adjustment. Although the current yield on I Bonds is only 0.74%, that yield is likely to move higher on May 1, the next time the rate is adjusted. I Bonds aren't as volatile as TIPS and appeal to conservative, buy-and-hold investors. The interest may also be tax-free for some families for education expenses.
More adventurous types might consider the inflation-protected government debt of other nations, which carry higher yields along with greater risks. The SPDR DB International Government Inflation-Protected Bond Fund is an international inflation-protected bond exchange-traded fund designed to do well if inflation in overseas countries moves higher. The fund returned about 6.8% in 2010 and 18.5% in 2009, according to Morningstar Inc.
• Bank-loan funds. Another way to exploit rising inflation is through mutual funds that buy adjustable-rate bank loans, many of which are used to finance leveraged corporate buyouts. So-called floating-rate funds are structured so that if interest rates rise, they collect more money. During periods of rising rates, floating-rate funds usually outperform other bond-fund categories. In 2003, for example, as investors anticipated higher interest rates and a stronger economy, bank-loan funds gained 10.4% while short-term bond funds gained 2.5%.
Now, amid expectations of rising inflation, investors are once again flocking to these funds, pouring in about $7.6 billion into loan funds in the fourth quarter of last year, according to Lipper Inc.—more than double the previous quarterly record set in 2007. The pace has accelerated this year, with investors putting in about $3.4 billion thus far.
After gaining almost 10% last year, the funds shouldn't be counted on for much price appreciation, says Craig Russ, who co-manages $22.7 billion of floating-rate investments across three floating-rate funds and other accounts at Eaton Vance Corp., including the Eaton Vance Floating Rate Fund. But the funds generate plenty of income, yielding about 4% to 5% now, according to Morningstar.
Price Increases
From Aug. 2, 2010 through Feb. 4, 2011:
Cotton: +100%
Silver: +50%
Soybeans: + 42%
Copper: +36%
Wheat: +24%
.
Be warned: Floating-rate funds can get creamed when investors fear the underlying loans are too risky. In 2008, for example, bank-loan funds lost 29.7%, although they zoomed 41.8% in 2009, according to Morningstar. What's more, banks are beginning to make riskier "covenant-light" loans that carry fewer stipulations for corporate borrowers—a sign of frothier trends in the market.
Given the potential for volatility, floating-rate funds are best viewed as a complement to—not a replacement for—investors' core bond holdings. Among Morningstar's picks in this category is the Fidelity Floating Rate High-Income Fund, among the more conservative in the category.
• Commodities. Materials that are more closely tied to industrial or food production seem better positioned now than gold, say advisers. The trick is to find the best investment vehicle.
The easiest way for small investors to gain exposure to most commodities is through exchange-traded funds, many of which use futures contracts. But such funds can be dangerous because they often face "contango"—when the price for a future delivery is higher than the current price. The result: The ETFs lose money as they buy new contracts, even when prices are rising.
The losses can be extreme. In 2009, for instance, while the price of natural gas rose 3.4%, the United States Natural Gas Fund lost 56.5% as a result of rolling over futures contracts.
Some firms have rolled out ETFs that aim to address the problem. One of Morningstar's picks is the U.S. Commodity Index Fund, run by U.S. Commodity Funds LLC. The portfolio buys the seven commodities that are most "backwardated"—the opposite of "contango," so rolling contracts should result in a profit—along with the seven commodities with the most price momentum.
"USCI provides an outlet for investors who want broad commodities exposure but don't want to worry about the daily dynamics," says Tim Strauts, a Morningstar analyst.
Other funds play inflation by holding many different assets to protect against rising prices no matter where they show up. The IQ Real Return ETF, launched in 2009 by IndexIQ, aims to provide a return equal to the CPI plus 2% to 3% over a two- to three-year period. To get there, it invests across a dozen or so inflation-sensitive assets—including currencies and commodities.
• Stocks. One corner of the market tends to do better when prices rise suddenly: small-company value stocks. "Because value and small stocks tend to be fairly highly [indebted] companies, inflation reduces their liabilities," says William Bernstein of Efficient Frontier Advisors LLC, an investment-advisory firm in Eastford, Conn.
From January 1965 through December 1980, for example, inflation averaged 6.6% a year. The Ibbotson Small-Cap Value Index posted average annual returns of 14.4%, according to Morningstar's Ibbotson Associates, double the S&P 500's 7.1% gain.
Morningstar's picks in the small-cap value fund category include Allianz NFJ Small Cap Value, Diamond Hill Small Cap, Perkins Small Cap Value and Schneider Small Cap Value. Just be warned: Small value stocks have had a good run recently, returning 134%, on average, since March 6, 2009.
In the end, the particulars of any inflation-fighting plan may not be as important as developing a plan in the first place.
"The real problem you run into with any kind of inflation hedges," says Jay Hutchins, a financial adviser in Lebanon, N.H., "is that if you don't already have them when inflation is around the corner, you've missed the boat."
Write to Ben Levisohn at ben.levisohn@wsj.com and Jane J. Kim at jane.kim@wsj.com
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved
How to Recognize the Next Bull Market ( Futures Magazine)
Four stages of a bull market and how to profit - Financials - Futures Magazine
More money is likely made from bull markets than any other market condition. Understanding how to invest during these periods is key to long-term success. First, a simple definition: A bull market is a congestive market composed of an extended period of time in which the stock indexes continue to register higher highs. It is composed of four periods. Two of those four periods are relatively easy to identify, while the first and fourth periods are a blending of the bull and bear cycles and are more difficult to spot.
These periods are often difficult to define clearly because they are normally rife with conflict. The cycles never change from black to white or white to black, but rather evolve in stages of gray. One of the skills of reading the market is to be able to interpret this gray as it develops and to identify the actual reversal points before they become clear to the general public.
Although they often look orderly in retrospect, bull markets are less clear as they unfold. They take two steps forward and one step back. Bull markets normally stagger around with little discernible direction. During the bull cycle, 90% of all stocks will slowly follow the 100-day moving average north. The problem is that they tend to check out every side road and rest area in the process. Although bull cycles occasionally develop strong trends, they are normally identified by continuation patterns.
Scaling outward helps. Just like a bear market, these markets can be confirmed by observing an 18-month simple moving average (see "Riding the bear," Futures, June 2009). This occurred in the present cycle in October.
Period one
The first period of a bull market is marked by little, if any, public confidence and quiet accumulation by professionals. It is nearly impossible to identify this stage as it is happening. However, good fundamentals, improving earnings and bargain prices mark this as a period of accumulation by value buyers and institutions.
As this period develops, traditional reversal patterns in individual equities begin to appear. The average price is low and even the good stocks are cheap. Also, the price/earnings (P/E) ratios of the indexes are low. A few strong stocks now begin to break out of their sideways patterns. At the same time, isolated weekly and monthly highs occur as prices begin crossing their 100-day moving averages.
On balance, price action is dull and volume is low. While the violation of the 18-period moving average may have indicated a turning point in the overall market, it is not a guarantee that a particular stock will rebound soon. Many former market darlings will lie dormant for years.
Leading money managers now begin their accumulations based on the fundamentals. Because disillusionment with the market is the general temper of the public, good buying opportunities are abundant. Many companies with solid business strategies and strong competitive positions within their individual sectors offer real potential for price appreciation. Because most of those who found themselves in desperate need to sell have already done so, the supply is somewhat diminished. Therefore, to get strong stocks, traders now have to start giving higher prices to acquire them. Caution is still driving the bus.
Nevertheless, although values are good and the institutions are pursuing quiet accumulation, the public will not be back into stocks until they reach much higher prices. Most of the bottom pickers were slaughtered on the way down, and the reality is that there are only a limited number of players left.
Most people consider price as the determining factor that indicates the end of a bear market, but it really is time and fundamentals. For this reason, bottoms take much longer to form than it does for tops to collapse. Nowhere is this more apparent than in the opening stage of a bull market, and this is why it is hard to tell when you are in the first stage of a bull cycle and not in a bear market rally.
If you are looking for individual stock picks during this period, it is a good idea to watch for ones with good P/E ratios and return on equity values as they cross their 200-day moving averages.
Period two
In the second stage of a bull market, stock prices have been rising for several months and the mark-up is ready to commence in earnest. Market-leading equities are beginning to violate their 200-day moving averages. This is the time to buy the dips and ride the rallies higher.
Market newsletter writers and television pundits to the contrary, there is no magic in picking stocks in this period. In fact, you can pretty much select any stock and it will appreciate — the only question is by how much. If you are looking for individual stock picks during this period, it is a good idea to prospect the new highs found within the most-active lists.
Because money follows rallies, greed has been rekindled and more people are starting to think of the stock market as a wealth generator. Now there is competition by the public for a reduced supply, and accumulation is forcing prices higher. Some market participants are starting to show some impressive profits due to having bought early and simply holding. However, the larger public does not join the party just yet. Keep in mind that bull cycles take time to develop.
Market leaders are now rising to the top and the media loves them. Mutual fund inflows are increasing once it is apparent that the market is recovering. The Dow Jones Transportation Index now clearly reverses. It all comes down to markets being driven by liquidity and nothing else. Rallies are not caused by inflows, but rather inflows are the result of rallies — and rallies are the result of a series of higher highs. All of this is another way of spelling "greed."
Remember that it is not public demand that causes rising prices but the rising prices that cause public demand. The conclusion of this period is often marked by a significant retracement as the market pauses to catch its breath. However, too much greed is present for prices not to continue rising. As this retracement occurs, it is time to remember that bases must be built for the bull cycle to continue. Things are now getting in line for the third stage. Greed is driving the bus.
Period three
During this period, stock prices advance at a phenomenal rate. Cocktail parties are full of people with "hot tips." Most of the market participants are looking for easy money and little attention is paid to the underlying fundamentals of the larger market.
P/E ratios begin to achieve ever-higher levels, but that is immaterial. New stock market experts look upon all traditional fundamentals with disdain. Historical experiences are scorned, and the mantra of the day is that "it is different this time." New books about how to make millions in the stock market are common and fundamentals really do not seem to matter to anyone anymore.
About now, an initial public offering (IPO) craze hits the market. During period three, a plethora of new companies are formed to satisfy a public’s insatiable appetite for stocks of all kinds. The reason behind this is simple: There is more money to invest than there are shares available to sell.
In addition, a merger-mania also develops and buy-outs run rampant through corporate finance. The availability of leverage funds makes this possible. In other words, many companies are enjoying bloated stock prices to aid in the facilitation of any acquisition that might arouse corporate interest. As long as companies can convince others that their stock prices are valid, acquisitions are easy. Public relations and spin are now driving the bus.
Many leading issues actually will reach their highs during this period. They will then reverse long before the overall market shows any inclination to do so. This always leads to the last stage of a bull market and distribution begins. The professionals start to distribute some of the shares that were acquired in period one.
Period four
The main factors that have been leading the market to period four — and the coming market collapse — have been uneducated speculating and unrestrained leverage, both of which were aided by easy credit. This is finally becoming apparent to even the most unsophisticated market participants. Period four is rife with conflict and confusion. Slogans such as "if you would have put $10,000 in the market 50 years ago and never sold, you’d be a multi-millionaire today" are now common.
The market develops a theme. These themes culminate into an obvious bubble as the market seizes upon the theme and then goes slightly mad with it. These bubbles float on a sea of easy credit and greed and are rabidly pursued by the public as they dump ever more money into it.
We can go back over market history for hundreds of years and we will find bubble after bubble. There is one about every 20 years or so. These bubbles always are connected by corrective recessions or depressions but like the phoenix, a new bubble always springs forth from the ashes of the old as a new theme develops.
There has been the technology boom, where any company that had "tech" in its name was viewed as an instant path to riches. Then came the "nifty 50" where buying any of 50 blue chips stocks was considered a guaranteed path to wealth. The "conglomerate boom" was so volatile that it became the main concern of the academia that America was going to end up with only five to 10 public companies. Then came the "Internet boom" where all of the stores in America were going to close and people were going to buy everything, including their cat’s food, off of the Web. This incomplete list is to say nothing of the several real estate and commodity bubbles that connected them.
Normally, a bull market’s resolution is not the result of some cataclysmic occurrence or the result of a mature market, as the uninitiated tend to believe. It is the simple result of the inability to keep more and more money coming into the market. In other words, the market suffers from a shortage of players.
This is a period of high volume, high volatility and extreme vacillation. Profits achieved during period two and three have confirmed the belief of most investors that the bull market will continue forever. For these, the start of the upcoming decline is viewed as a gigantic buying opportunity. The truth is, those who see the lower prices as bargains are now the only ones sustaining the bull market. As prices continue to creep lower, the professional traders continue to sell into every rally. Clowns are driving the bus.
The market now begins to eat its own tail, effectively destroying any chance of the bull cycle continuing. We see many market-leading stocks react several points from their previous tops and then not retrace. Their race is obviously run. The best advice: When the press becomes euphorically bullish, but the cumulative advance/decline lines on the weekly chart of the indexes do not concur, tighten your stops, reduce your exposure and tread carefully.
The Tacoma Narrows
Anytime prices begin to print irrationally and your oscillators won’t behave, it is a head’s up to be careful. Extreme vacillation of price usually indicates that something is badly out of balance. Therefore, be wary of any market that seems unwilling to print decent charts. If a market won’t settle down and behave, the likelihood is that it is coming apart. Vacillation of the larger market indicates that something is seriously wrong. It is just that it is not widely apparent, at least not yet.
Whenever you see extreme vacillation in the larger market, it is a good time to remember the story of the Tacoma Narrows Bridge. In 1939, a bridge was built across the Columbia River at a place known as the Tacoma Narrows. Its purpose was to connect Portland, Ore., and Tacoma, Wash.
Unfortunately, the engineers never took the wind sheer of the river into consideration when they designed the bridge. After it was completed and in use, the wind forces created by the Columbia Gorge would whip the bridge up and down and side to side violently, eight to 20 feet at a time. In other words, the bridge was unstable. Although the bridge did not immediately fail, it should have been obvious to anybody who saw it that something was not right.
Nevertheless, it did not make much difference to the public. Despite the obvious weakness of the bridge, people continued to drive on it, walk across it and get their pictures taken while standing in the middle of it as it gyrated wildly above the river. They did this for over four months knowing full well that something was amiss. Fortunately, no one was killed in 1940, when the wind finally twisted the bridge badly enough that it broke up and fell 100 feet into the Columbia River.
As an interesting aside, starting with the year 1900, the length of the average bull cycle has been 40 months and three weeks, which is probably close enough for land mines and hand grenades. It should be noted that during a bull market, approximately 90% of all stocks follow the 100-day moving average higher.
Aubrae DeBuse has been engaged with the markets off and on since 1959 and is presently a proprietary trader for a family foundation.
More money is likely made from bull markets than any other market condition. Understanding how to invest during these periods is key to long-term success. First, a simple definition: A bull market is a congestive market composed of an extended period of time in which the stock indexes continue to register higher highs. It is composed of four periods. Two of those four periods are relatively easy to identify, while the first and fourth periods are a blending of the bull and bear cycles and are more difficult to spot.
These periods are often difficult to define clearly because they are normally rife with conflict. The cycles never change from black to white or white to black, but rather evolve in stages of gray. One of the skills of reading the market is to be able to interpret this gray as it develops and to identify the actual reversal points before they become clear to the general public.
Although they often look orderly in retrospect, bull markets are less clear as they unfold. They take two steps forward and one step back. Bull markets normally stagger around with little discernible direction. During the bull cycle, 90% of all stocks will slowly follow the 100-day moving average north. The problem is that they tend to check out every side road and rest area in the process. Although bull cycles occasionally develop strong trends, they are normally identified by continuation patterns.
Scaling outward helps. Just like a bear market, these markets can be confirmed by observing an 18-month simple moving average (see "Riding the bear," Futures, June 2009). This occurred in the present cycle in October.
Period one
The first period of a bull market is marked by little, if any, public confidence and quiet accumulation by professionals. It is nearly impossible to identify this stage as it is happening. However, good fundamentals, improving earnings and bargain prices mark this as a period of accumulation by value buyers and institutions.
As this period develops, traditional reversal patterns in individual equities begin to appear. The average price is low and even the good stocks are cheap. Also, the price/earnings (P/E) ratios of the indexes are low. A few strong stocks now begin to break out of their sideways patterns. At the same time, isolated weekly and monthly highs occur as prices begin crossing their 100-day moving averages.
On balance, price action is dull and volume is low. While the violation of the 18-period moving average may have indicated a turning point in the overall market, it is not a guarantee that a particular stock will rebound soon. Many former market darlings will lie dormant for years.
Leading money managers now begin their accumulations based on the fundamentals. Because disillusionment with the market is the general temper of the public, good buying opportunities are abundant. Many companies with solid business strategies and strong competitive positions within their individual sectors offer real potential for price appreciation. Because most of those who found themselves in desperate need to sell have already done so, the supply is somewhat diminished. Therefore, to get strong stocks, traders now have to start giving higher prices to acquire them. Caution is still driving the bus.
Nevertheless, although values are good and the institutions are pursuing quiet accumulation, the public will not be back into stocks until they reach much higher prices. Most of the bottom pickers were slaughtered on the way down, and the reality is that there are only a limited number of players left.
Most people consider price as the determining factor that indicates the end of a bear market, but it really is time and fundamentals. For this reason, bottoms take much longer to form than it does for tops to collapse. Nowhere is this more apparent than in the opening stage of a bull market, and this is why it is hard to tell when you are in the first stage of a bull cycle and not in a bear market rally.
If you are looking for individual stock picks during this period, it is a good idea to watch for ones with good P/E ratios and return on equity values as they cross their 200-day moving averages.
Period two
In the second stage of a bull market, stock prices have been rising for several months and the mark-up is ready to commence in earnest. Market-leading equities are beginning to violate their 200-day moving averages. This is the time to buy the dips and ride the rallies higher.
Market newsletter writers and television pundits to the contrary, there is no magic in picking stocks in this period. In fact, you can pretty much select any stock and it will appreciate — the only question is by how much. If you are looking for individual stock picks during this period, it is a good idea to prospect the new highs found within the most-active lists.
Because money follows rallies, greed has been rekindled and more people are starting to think of the stock market as a wealth generator. Now there is competition by the public for a reduced supply, and accumulation is forcing prices higher. Some market participants are starting to show some impressive profits due to having bought early and simply holding. However, the larger public does not join the party just yet. Keep in mind that bull cycles take time to develop.
Market leaders are now rising to the top and the media loves them. Mutual fund inflows are increasing once it is apparent that the market is recovering. The Dow Jones Transportation Index now clearly reverses. It all comes down to markets being driven by liquidity and nothing else. Rallies are not caused by inflows, but rather inflows are the result of rallies — and rallies are the result of a series of higher highs. All of this is another way of spelling "greed."
Remember that it is not public demand that causes rising prices but the rising prices that cause public demand. The conclusion of this period is often marked by a significant retracement as the market pauses to catch its breath. However, too much greed is present for prices not to continue rising. As this retracement occurs, it is time to remember that bases must be built for the bull cycle to continue. Things are now getting in line for the third stage. Greed is driving the bus.
Period three
During this period, stock prices advance at a phenomenal rate. Cocktail parties are full of people with "hot tips." Most of the market participants are looking for easy money and little attention is paid to the underlying fundamentals of the larger market.
P/E ratios begin to achieve ever-higher levels, but that is immaterial. New stock market experts look upon all traditional fundamentals with disdain. Historical experiences are scorned, and the mantra of the day is that "it is different this time." New books about how to make millions in the stock market are common and fundamentals really do not seem to matter to anyone anymore.
About now, an initial public offering (IPO) craze hits the market. During period three, a plethora of new companies are formed to satisfy a public’s insatiable appetite for stocks of all kinds. The reason behind this is simple: There is more money to invest than there are shares available to sell.
In addition, a merger-mania also develops and buy-outs run rampant through corporate finance. The availability of leverage funds makes this possible. In other words, many companies are enjoying bloated stock prices to aid in the facilitation of any acquisition that might arouse corporate interest. As long as companies can convince others that their stock prices are valid, acquisitions are easy. Public relations and spin are now driving the bus.
Many leading issues actually will reach their highs during this period. They will then reverse long before the overall market shows any inclination to do so. This always leads to the last stage of a bull market and distribution begins. The professionals start to distribute some of the shares that were acquired in period one.
Period four
The main factors that have been leading the market to period four — and the coming market collapse — have been uneducated speculating and unrestrained leverage, both of which were aided by easy credit. This is finally becoming apparent to even the most unsophisticated market participants. Period four is rife with conflict and confusion. Slogans such as "if you would have put $10,000 in the market 50 years ago and never sold, you’d be a multi-millionaire today" are now common.
The market develops a theme. These themes culminate into an obvious bubble as the market seizes upon the theme and then goes slightly mad with it. These bubbles float on a sea of easy credit and greed and are rabidly pursued by the public as they dump ever more money into it.
We can go back over market history for hundreds of years and we will find bubble after bubble. There is one about every 20 years or so. These bubbles always are connected by corrective recessions or depressions but like the phoenix, a new bubble always springs forth from the ashes of the old as a new theme develops.
There has been the technology boom, where any company that had "tech" in its name was viewed as an instant path to riches. Then came the "nifty 50" where buying any of 50 blue chips stocks was considered a guaranteed path to wealth. The "conglomerate boom" was so volatile that it became the main concern of the academia that America was going to end up with only five to 10 public companies. Then came the "Internet boom" where all of the stores in America were going to close and people were going to buy everything, including their cat’s food, off of the Web. This incomplete list is to say nothing of the several real estate and commodity bubbles that connected them.
Normally, a bull market’s resolution is not the result of some cataclysmic occurrence or the result of a mature market, as the uninitiated tend to believe. It is the simple result of the inability to keep more and more money coming into the market. In other words, the market suffers from a shortage of players.
This is a period of high volume, high volatility and extreme vacillation. Profits achieved during period two and three have confirmed the belief of most investors that the bull market will continue forever. For these, the start of the upcoming decline is viewed as a gigantic buying opportunity. The truth is, those who see the lower prices as bargains are now the only ones sustaining the bull market. As prices continue to creep lower, the professional traders continue to sell into every rally. Clowns are driving the bus.
The market now begins to eat its own tail, effectively destroying any chance of the bull cycle continuing. We see many market-leading stocks react several points from their previous tops and then not retrace. Their race is obviously run. The best advice: When the press becomes euphorically bullish, but the cumulative advance/decline lines on the weekly chart of the indexes do not concur, tighten your stops, reduce your exposure and tread carefully.
The Tacoma Narrows
Anytime prices begin to print irrationally and your oscillators won’t behave, it is a head’s up to be careful. Extreme vacillation of price usually indicates that something is badly out of balance. Therefore, be wary of any market that seems unwilling to print decent charts. If a market won’t settle down and behave, the likelihood is that it is coming apart. Vacillation of the larger market indicates that something is seriously wrong. It is just that it is not widely apparent, at least not yet.
Whenever you see extreme vacillation in the larger market, it is a good time to remember the story of the Tacoma Narrows Bridge. In 1939, a bridge was built across the Columbia River at a place known as the Tacoma Narrows. Its purpose was to connect Portland, Ore., and Tacoma, Wash.
Unfortunately, the engineers never took the wind sheer of the river into consideration when they designed the bridge. After it was completed and in use, the wind forces created by the Columbia Gorge would whip the bridge up and down and side to side violently, eight to 20 feet at a time. In other words, the bridge was unstable. Although the bridge did not immediately fail, it should have been obvious to anybody who saw it that something was not right.
Nevertheless, it did not make much difference to the public. Despite the obvious weakness of the bridge, people continued to drive on it, walk across it and get their pictures taken while standing in the middle of it as it gyrated wildly above the river. They did this for over four months knowing full well that something was amiss. Fortunately, no one was killed in 1940, when the wind finally twisted the bridge badly enough that it broke up and fell 100 feet into the Columbia River.
As an interesting aside, starting with the year 1900, the length of the average bull cycle has been 40 months and three weeks, which is probably close enough for land mines and hand grenades. It should be noted that during a bull market, approximately 90% of all stocks follow the 100-day moving average higher.
Aubrae DeBuse has been engaged with the markets off and on since 1959 and is presently a proprietary trader for a family foundation.
Updating the Model Portfolio (from thestreet.com)
Kass: Updating the Model Portfolio
Doug Kass
07/27/09 - 12:01 PM EDT
This blog post originally appeared on RealMoney Silver on July 27 at 8:38 a.m. EDT.
In late April, I initiated the Kass Model Portfolio, intended to represent the general construction of a long-only model portfolio with a six- to 12-month investment horizon. My hypothetical portfolio depicts an overall equity weighting and positioning relative to S&P 500 industry benchmarks and weightings.
As I did in calling for a generational bottom in early March, I am again adopting a variant and unpopular view, but this time it is a more negative call. It is important to emphasize that in my March call, I expected a resurgence of economic and investment optimism during the summer to be followed by a multiyear period of weak investment returns. Specifically, I expected a mini production boom and an asset allocation away from bonds and into stocks to be embraced and heralded by investors, who would only be disappointed again in the fall as it becomes clear that a self-sustaining economic recovery is unlikely to develop.
Today's opening missive has another major change in our model portfolio, with a further increase in the cash component of the portfolio from 29% to 43%. I am further reducing both equity and credit exposure after a huge run in both asset classes.
As I see it, the bull market argument is that we are exiting the recession just like the many that preceded the current one. Consequently, corporate profits will exceed consensus forecasts in tandem with:
the resumption of revenue growth (seen in three months of improvement in the leading economic indicator, signs of stabilization in housing, etc.);
the record fiscal stimulation;
an export-led Asian recovery; and
the operating leverage associated with productivity gains achieved through draconian cost cuts and influenced by tame wage inflation.
Besides productivity being underestimated the bulls, further argue Say's Law of Production -- that it is business that drives consumer incomes and spending. Finally, the bullish cabal argues that the high-tax health and energy bills introduced by the President have been recently set back as the blue dog democrats and the liberal leadership are already battling.
The bear market argument (that I now endorse) is that we are seeing nothing more than a second derivative recovery and that owing to a temporary replenishment of inventories, the economy is only getting less worse (or getting better from a depressed level). From my perch, the ingredients for a durable and self-sustaining recovery are missing. An economic double-dip grows more likely in a climate of corporate cost cuts, which elevates jobless rates and leads to continued pressure on personal consumption expenditures. The bears reject Say's Law of Production and view consumer incomes and spending as driving business.
Importantly, the economic downturn of 2007-2009 has already been different this time in scope and duration. For example, unlike the other post-depressions/recessions of the last century, we have already witnessed two consecutive quarterly drops in nominal GDP. As well, the 20-month-old recession has resulted in a near 4% drop in real GDP vs. drops of between 2.5% and 3.0% in the mid 1970s and early 1980s recessions. The U.S. economy came out quickly from those prior downturns, with recoveries to new peaks in economic activity taking only three or four quarters.
My view, however, is that it is different this time: The typical self-sustaining economic recovery of the past will not be repeated in the immediate future for 10 important reasons that will come to the fore:
Cost cuts are a corporate lifeline and so is fiscal stimulus, but both have a defined and limited life.
Cost cuts (exacerbated by wage deflation) pose an enduring threat to the consumer, which is still the most significant contributor to domestic growth.
The consumer entered the current downcycle exposed and levered to the hilt, and net worths have been damaged and will need to be repaired through higher savings and lower consumption.
The credit aftershock will continue to haunt the economy.
The effect of the Fed's monetarist experiment and its impact on investing and spending still remain uncertain.
While the housing market has stabilized, its recovery will be muted, and there are few growth drivers to replace the important role taken by the real estate markets in the prior upturn.
Commercial real estate has only begun to enter a cyclical downturn.
While the public works component of public policy is a stimulant, the impact might be more muted than is generally recognized. There may be less than meets the eye as most of the current fiscal policy initiatives represent transfer payments that have a negative multiplier and create work disincentives.
Municipalities have historically provided economic stability -- no more.
Federal, state and local taxes will be rising as the deficit must eventually be funded, and high-tax health and energy bills also loom.
As I wrote last week, the most disturbing feature of the current business environment is the manner in which corporations are beating estimates. While it enhances the present profit configuration, it has the potential for a long and negative tail to the future. Cost-cutting, like another man's bread, will line the corporation with profits but, in the fullness of time, will not fill the belly of the consumer who is the victim of the realignment of expenses. Costs cuts have a finite life, and, as such, produce an inherently lower quality of earnings and a less positive lever to P/E multiples than does the classical cyclical improvement in top-line or sales growth.
Given the unusual nature and the severity of the downturn, it is hard for me to see anything typical about the domestic economy's rebound compared to previous recovery periods. I do not see the disproportionate role of housing and credit in the prior decade being replaced by anything similar as a growth lever in 2009-2011. Already job losses are unprecedented and cost-cutting's impact on unemployment will exacerbate pressures, acting as a greater drag in the years ahead. Meanwhile, other (nontraditional) headwinds -- such as the likely growth-inhibiting public tax policy, less available credit and an intrusive public sector's interference on the private sector (with attendant regulatory costs and burden) -- will weigh heavily on the economy. So will bloated budgets and poor planning, which have left municipalities in disarray, raise unfamiliar cyclical challenges.
My contacts with corporations are universally more downbeat than the optimism expressed by investors recently. Many in my hedge fund cabal say that this input from the industry is not unexpected, as company managements universally failed to see the coming downturn. This is a fair response, but I suppose they could be right for a change!
For now, the animal spirits are in force. Shorts are covering, and the longs are joining the ever more vocal and growing bullish chorus in the face of the enemy of the rational buyer -- namely, optimism.
In summary, my model portfolio's high cash position reflects a less optimistic view of the sustainability of corporate profit and economic growth as well as a renewal of excessive optimism in sentiment and a move toward more elevated valuation levels (which are not supported by the profit picture I foresee).
S&P Weighting Recommended Weighting Rationale for Weighting
Technology 18% 8% Business spending will remain subdued, and the sector is now overowned
Financials 13% 7% The risk of a double-dip augurs poorly for credit metrics
Energy 13% 5% Commodities, like energy products, are vulnerable to a slowdown
Health Care 13% 5% Government intervention threatens pricing
Consumer Staples 12% 5% Exposed to generic trade-down as consumer weakens
Industrials 10% 5% Shallow and uneven economic recovery remains a headwind
Consumer Discretionary 9% 4% Accumulated job losses and wage deflation weigh on consumer
Materials 4% 2% Shallow and uneven economic recovery remains a headwind
Utilities 4% 2% Exposed to a further spike in interest rates
Telecom 4% 4% Secular prospects remain strong
Total equities 100% 47%
Credit 0% 10% Opportunistic
Total exposure 100% 57%
Cash 0% 43%
Finally, I have included a shopping list of individual stock candidates (by sector) that could be considered in the aforementioned Kass Model Portfolio.
Technology: Previous selections Apple (AAPL Quote), Cisco (CSCO Quote), Research In Motion (RIMM Quote) and Oracle (ORCL Quote) are now fully priced and have been dropped from my buy list. Qualcomm (QCOM Quote) had a disappointing quarter and is also out. Remaining are Microsoft (MSFT Quote) and Dell (DELL Quote).
Financials: I'm dropping SunTrust (STI Quote), Regions Financial (RF Quote), Legg Mason (LM Quote), State Street (STT Quote), Berkshire Hathaway (BRK.A Quote) and Weingarten (WRI Quote) (convertibles). I added JPMorgan Chase (JPM Quote). Remaining are Bank of America (BAC Quote), Prudential (PRU Quote), MetLife (MET Quote), Hartford (HIG Quote), PNC (PNC Quote), Cohen & Steers (CNS Quote), SL Green (SLG Quote) (convertibles), Chubb (CB Quote), Loews (L Quote), National Financial Partners (NFP Quote) (convertibles) and SLM (SLM Quote).
Energy: I'm dropping extended integrated oils and several oil service companies and keepng Transocean (RIG Quote) and select master limited partnerships.
Health Care: I'm going with select depressed HMOs, a true contrarian play!
Consumer Staples: Remaining are Procter & Gamble (PG Quote), General Mills (GIS Quote) and Unilever (UN Quote).
Industrials: I'm keeping 3M (MMM Quote), PPG (PPG Quote) and Union Pacific (UNP Quote).
Consumer Discretionary: I have dropped Wal-Mart (WMT Quote), Nike (NKE Quote) and Starbucks (SBUX Quote). Remaining are Home Depot (HD Quote), Lowe's (LOW Quote), Disney (DIS Quote) and eBay (EBAY Quote).
Materials: I'm dropping BHP Billiton (BHP Quote), and only Freeport-McMoRan Copper & Gold (FCX Quote) remains.
Utilities: Duke Energy (DUK Quote), Dominion Resources (DRU Quote) and PG&E (PCG Quote) remain.
Telecom: The model portfolio continues to hold Verizon (VZ Quote) and AT&T (T Quote).
Credit: I added SLM debt to the other select bank loans/debt and high-yield debt.
Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.
At the time of publication, Kass and/or his funds were long MSFT, DELL, BAC, JPM, PNC, MET, PRU, HIG, CNS, CB, WRI (convertibles), SLG (convertibles), NFP (convertibles), SLM (straight debt), RIG, HD, LOW , DIS, EBAY and FCX, and short JPM calls, PNC calls, MET calls, PRU calls and HIG calls, although holdings can change at any time.
Doug Kass
07/27/09 - 12:01 PM EDT
This blog post originally appeared on RealMoney Silver on July 27 at 8:38 a.m. EDT.
In late April, I initiated the Kass Model Portfolio, intended to represent the general construction of a long-only model portfolio with a six- to 12-month investment horizon. My hypothetical portfolio depicts an overall equity weighting and positioning relative to S&P 500 industry benchmarks and weightings.
As I did in calling for a generational bottom in early March, I am again adopting a variant and unpopular view, but this time it is a more negative call. It is important to emphasize that in my March call, I expected a resurgence of economic and investment optimism during the summer to be followed by a multiyear period of weak investment returns. Specifically, I expected a mini production boom and an asset allocation away from bonds and into stocks to be embraced and heralded by investors, who would only be disappointed again in the fall as it becomes clear that a self-sustaining economic recovery is unlikely to develop.
Today's opening missive has another major change in our model portfolio, with a further increase in the cash component of the portfolio from 29% to 43%. I am further reducing both equity and credit exposure after a huge run in both asset classes.
As I see it, the bull market argument is that we are exiting the recession just like the many that preceded the current one. Consequently, corporate profits will exceed consensus forecasts in tandem with:
the resumption of revenue growth (seen in three months of improvement in the leading economic indicator, signs of stabilization in housing, etc.);
the record fiscal stimulation;
an export-led Asian recovery; and
the operating leverage associated with productivity gains achieved through draconian cost cuts and influenced by tame wage inflation.
Besides productivity being underestimated the bulls, further argue Say's Law of Production -- that it is business that drives consumer incomes and spending. Finally, the bullish cabal argues that the high-tax health and energy bills introduced by the President have been recently set back as the blue dog democrats and the liberal leadership are already battling.
The bear market argument (that I now endorse) is that we are seeing nothing more than a second derivative recovery and that owing to a temporary replenishment of inventories, the economy is only getting less worse (or getting better from a depressed level). From my perch, the ingredients for a durable and self-sustaining recovery are missing. An economic double-dip grows more likely in a climate of corporate cost cuts, which elevates jobless rates and leads to continued pressure on personal consumption expenditures. The bears reject Say's Law of Production and view consumer incomes and spending as driving business.
Importantly, the economic downturn of 2007-2009 has already been different this time in scope and duration. For example, unlike the other post-depressions/recessions of the last century, we have already witnessed two consecutive quarterly drops in nominal GDP. As well, the 20-month-old recession has resulted in a near 4% drop in real GDP vs. drops of between 2.5% and 3.0% in the mid 1970s and early 1980s recessions. The U.S. economy came out quickly from those prior downturns, with recoveries to new peaks in economic activity taking only three or four quarters.
My view, however, is that it is different this time: The typical self-sustaining economic recovery of the past will not be repeated in the immediate future for 10 important reasons that will come to the fore:
Cost cuts are a corporate lifeline and so is fiscal stimulus, but both have a defined and limited life.
Cost cuts (exacerbated by wage deflation) pose an enduring threat to the consumer, which is still the most significant contributor to domestic growth.
The consumer entered the current downcycle exposed and levered to the hilt, and net worths have been damaged and will need to be repaired through higher savings and lower consumption.
The credit aftershock will continue to haunt the economy.
The effect of the Fed's monetarist experiment and its impact on investing and spending still remain uncertain.
While the housing market has stabilized, its recovery will be muted, and there are few growth drivers to replace the important role taken by the real estate markets in the prior upturn.
Commercial real estate has only begun to enter a cyclical downturn.
While the public works component of public policy is a stimulant, the impact might be more muted than is generally recognized. There may be less than meets the eye as most of the current fiscal policy initiatives represent transfer payments that have a negative multiplier and create work disincentives.
Municipalities have historically provided economic stability -- no more.
Federal, state and local taxes will be rising as the deficit must eventually be funded, and high-tax health and energy bills also loom.
As I wrote last week, the most disturbing feature of the current business environment is the manner in which corporations are beating estimates. While it enhances the present profit configuration, it has the potential for a long and negative tail to the future. Cost-cutting, like another man's bread, will line the corporation with profits but, in the fullness of time, will not fill the belly of the consumer who is the victim of the realignment of expenses. Costs cuts have a finite life, and, as such, produce an inherently lower quality of earnings and a less positive lever to P/E multiples than does the classical cyclical improvement in top-line or sales growth.
Given the unusual nature and the severity of the downturn, it is hard for me to see anything typical about the domestic economy's rebound compared to previous recovery periods. I do not see the disproportionate role of housing and credit in the prior decade being replaced by anything similar as a growth lever in 2009-2011. Already job losses are unprecedented and cost-cutting's impact on unemployment will exacerbate pressures, acting as a greater drag in the years ahead. Meanwhile, other (nontraditional) headwinds -- such as the likely growth-inhibiting public tax policy, less available credit and an intrusive public sector's interference on the private sector (with attendant regulatory costs and burden) -- will weigh heavily on the economy. So will bloated budgets and poor planning, which have left municipalities in disarray, raise unfamiliar cyclical challenges.
My contacts with corporations are universally more downbeat than the optimism expressed by investors recently. Many in my hedge fund cabal say that this input from the industry is not unexpected, as company managements universally failed to see the coming downturn. This is a fair response, but I suppose they could be right for a change!
For now, the animal spirits are in force. Shorts are covering, and the longs are joining the ever more vocal and growing bullish chorus in the face of the enemy of the rational buyer -- namely, optimism.
In summary, my model portfolio's high cash position reflects a less optimistic view of the sustainability of corporate profit and economic growth as well as a renewal of excessive optimism in sentiment and a move toward more elevated valuation levels (which are not supported by the profit picture I foresee).
S&P Weighting Recommended Weighting Rationale for Weighting
Technology 18% 8% Business spending will remain subdued, and the sector is now overowned
Financials 13% 7% The risk of a double-dip augurs poorly for credit metrics
Energy 13% 5% Commodities, like energy products, are vulnerable to a slowdown
Health Care 13% 5% Government intervention threatens pricing
Consumer Staples 12% 5% Exposed to generic trade-down as consumer weakens
Industrials 10% 5% Shallow and uneven economic recovery remains a headwind
Consumer Discretionary 9% 4% Accumulated job losses and wage deflation weigh on consumer
Materials 4% 2% Shallow and uneven economic recovery remains a headwind
Utilities 4% 2% Exposed to a further spike in interest rates
Telecom 4% 4% Secular prospects remain strong
Total equities 100% 47%
Credit 0% 10% Opportunistic
Total exposure 100% 57%
Cash 0% 43%
Finally, I have included a shopping list of individual stock candidates (by sector) that could be considered in the aforementioned Kass Model Portfolio.
Technology: Previous selections Apple (AAPL Quote), Cisco (CSCO Quote), Research In Motion (RIMM Quote) and Oracle (ORCL Quote) are now fully priced and have been dropped from my buy list. Qualcomm (QCOM Quote) had a disappointing quarter and is also out. Remaining are Microsoft (MSFT Quote) and Dell (DELL Quote).
Financials: I'm dropping SunTrust (STI Quote), Regions Financial (RF Quote), Legg Mason (LM Quote), State Street (STT Quote), Berkshire Hathaway (BRK.A Quote) and Weingarten (WRI Quote) (convertibles). I added JPMorgan Chase (JPM Quote). Remaining are Bank of America (BAC Quote), Prudential (PRU Quote), MetLife (MET Quote), Hartford (HIG Quote), PNC (PNC Quote), Cohen & Steers (CNS Quote), SL Green (SLG Quote) (convertibles), Chubb (CB Quote), Loews (L Quote), National Financial Partners (NFP Quote) (convertibles) and SLM (SLM Quote).
Energy: I'm dropping extended integrated oils and several oil service companies and keepng Transocean (RIG Quote) and select master limited partnerships.
Health Care: I'm going with select depressed HMOs, a true contrarian play!
Consumer Staples: Remaining are Procter & Gamble (PG Quote), General Mills (GIS Quote) and Unilever (UN Quote).
Industrials: I'm keeping 3M (MMM Quote), PPG (PPG Quote) and Union Pacific (UNP Quote).
Consumer Discretionary: I have dropped Wal-Mart (WMT Quote), Nike (NKE Quote) and Starbucks (SBUX Quote). Remaining are Home Depot (HD Quote), Lowe's (LOW Quote), Disney (DIS Quote) and eBay (EBAY Quote).
Materials: I'm dropping BHP Billiton (BHP Quote), and only Freeport-McMoRan Copper & Gold (FCX Quote) remains.
Utilities: Duke Energy (DUK Quote), Dominion Resources (DRU Quote) and PG&E (PCG Quote) remain.
Telecom: The model portfolio continues to hold Verizon (VZ Quote) and AT&T (T Quote).
Credit: I added SLM debt to the other select bank loans/debt and high-yield debt.
Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.
At the time of publication, Kass and/or his funds were long MSFT, DELL, BAC, JPM, PNC, MET, PRU, HIG, CNS, CB, WRI (convertibles), SLG (convertibles), NFP (convertibles), SLM (straight debt), RIG, HD, LOW , DIS, EBAY and FCX, and short JPM calls, PNC calls, MET calls, PRU calls and HIG calls, although holdings can change at any time.
Bargains in Emerging Markets (from Smartmoney.com)
As the U.S. struggles to reverse the economic slide, some emerging markets are ahead of the game. The International Monetary Fund projects that while the world’s advanced economies will contract this year, emerging economies will expand by as much as 2.5 percent, and some countries will grow a lot faster. Even better news: Some pros are finding they don’t have to pay a lot to own profitable foreign stocks. The valuations on foreign stocks have become “very, very attractive,” says Uri Landesman, chief equity strategist for asset manager ING Investment Management Americas.
It was only two years ago that investors plowed more than $16 billion into emerging-market mutual funds, trying to find the next big Chinese Internet start-up or Russian coal mine. Unfortunately, like many investing trends, a lot of people piled into emerging-market stocks just as they peaked. Growth did slow around the world, and the stocks tanked. Even with this spring’s market rally, emerging-market stocks, as a group, have lost more than 40 percent since October 2007.
However, many of these nations are not mired in the housing market disasters that plague wealthier countries, and their banking systems are healthier as a consequence. Meanwhile, millions of people in these nations are moving into their middle class. The fortunes of these countries aren’t completely beholden to the health of the U.S. economy, either. China’s economy, for example, is expected to grow at least 5 percent in 2009.
For decades, stocks in China, Chile and other emerging nations traded at a significant discount to their American counterparts. By mid-2007, some were trading at a premium. The market wipeout brought emerging-market valuations closer to their normal discount. Of course, that return to normal cost some investors a lot of money, but the lower prices could give new investors a chance to buy into growing nations at a more reasonable price.
Here are five picks—all of which are listed on U.S. stock exchanges.
China Mobile
More than 160 million mobile phones were purchased in China in 2008, and analysts expect that number to grow another 5 percent this year. That bodes well for Hong Kong-based China Mobile, which has almost 75 percent market share of mobile-phone service in China. It has 470 million subscribers—a throng 50 percent larger than the entire U.S. population. Amazingly, analysts estimate there are still several hundred million Chinese who don’t yet have a mobile phone but eventually could. In the short term, if cash-strapped consumers are forced to choose between a landline and a mobile phone, they usually opt to go wireless, says Phil Kendall, director of the global wireless practice at market research firm Strategy Analytics.
The Chinese government restructured the country’s phone industry last year, allowing its biggest landline company, China Telecom, to join a wireless market formerly occupied by just China Mobile (CHL: 50.74*, +0.06, +0.11%) and China Unicom. But even with the competition, China Mobile’s dominant market position allows the company to negotiate favorable rates with vendors. In 2007 the company launched its own instant-messaging system for its phones, allowing it to keep more revenue than if it used a system made by Microsoft or another firm.
China Mobile’s stock trades at about 11 times 2010’s expected profits, well below its 10-year average price/earnings ratio of more than 24. China Mobile has said the sluggish economy and increased competition will temper its growth this year, but it will still grow. Many analysts remain confident the company will continue to increase revenue and profits steadily over the next several years, global recession or not. In the meantime, the stock has a 3.9 percent dividend yield, so investors are paid to wait for the economy to improve.
HDFC Bank
Many of the senior executives of Mumbai-based HDFC Bank (HDB: 101.20*, -0.83, -0.81%) are native Indians who worked for Citibank and other Western banks outside India. But when they opened their bank in 1995, when there were very few private banks in India, they came home to serve Indian customers. As banks worldwide loaded their balance sheets with exotic, risky mortgages, HDFC stuck with serving India’s burgeoning middle class. About 70 percent of HDFC’s revenue still comes from plain old retail banking, like issuing credit cards and loaning money to small businesses. That has kept it from having to take write-downs that burdened many other banks, says Ferrill Roll, portfolio manager for Harding Loevner, which owns HDFC shares.
HDFC’s toughest competition is from state-owned banks. While HDFC branches offer more efficient service, according to analysts, state-run banks reach much more of India’s 1.1 billion population. In India, government banks carry the perception of increased safety, and consumers worldwide find it annoying to switch banks.
Despite these challenges, HDFC is well positioned to attract new customers. Over the next two decades, the country’s middle class will grow from about 5 percent of the population to more than 40 percent, creating the world’s fifth-largest consumer market, according to McKinsey & Co. Assuming HDFC keeps up its superior customer service, it stands to capture a large share of this new market.
HDFC shares have rallied sharply in recent weeks, so investors might want to wait for a pullback before buying. With a P/E ratio of 21 times next year’s estimated earnings of $590 million, HDFC is not the cheapest bank stock. But analysts expect the bank to increase profits 25 percent in its fiscal 2010 (which started in April) and another 26 percent in fiscal 2011. “It’s one of the best-managed banks in the world,” says Cabot Money Management’s Lutts, who also owns the stock.
Vale
The booming economies of China, India and other emerging nations gave mining firm Vale (VALE: 19.24*, -0.13, -0.67%) years of spectacular profit and revenue growth, solidifying its position as one of Brazil’s largest companies and the world’s largest producer of iron ore. Vale’s main competitive advantage over rivals BHP Billiton of Australia and English firm Rio Tinto is its top-quality, plentiful iron ore deposits, says Tony Robson, cohead of mining research at BMO Capital Markets. China is the biggest market for Vale’s iron ore, accounting for more than 17 percent of the company’s revenue. China’s steel production (iron ore is a primary component of steel) is expected to decline only slightly this year, thanks to the nation’s quick implementation of an infrastructure-focused economic stimulus package, says Jorge Beristain, head of Americas metals and mining research for Deutsche Bank Securities. Vale has expanded its client base in China, adding small and medium-size steel mills to compensate for the reduced demand from the larger mills. Vale CEO Roger Agnelli has said he expects iron ore exports to China to hold steady for the rest of 2009.
Still, the global downturn has forced the Rio de Janeiro–based firm to scale back projects and cancel some others, and the company recently cut its capital spending plans for 200 to $9 billion from $14 billion. Investors have pounded down Vale’s shares over the past year as the price of iron ore has tumbled. Longer term, however, many analysts are confident that Vale will benefit from an economic recovery worldwide. In the meantime, the stock trades at 13 times this year’s expected profits of $8.5 billion.
SQM
It certainly helps any company to have a corner on the market. Half the customers who buy specialty fertilizer from Chile’s Sociedad QuÃmica y Minera de Chile (SQM: 36.26*, -0.59, -1.60%) can’t easily substitute anything else for the product, says Brian Chase, head of Southern Cone and Andean Equity Research and Strategy for J.P. Morgan. Crops such as tobacco, wine grapes and blueberries need special fertilizers that only SQM can provide in the region.
Much of SQM’s competitive advantage comes from its access to the Atacama Salt desert in Chile, land rich with nitrates, iodine, potash and lithium, all useful in fertilizer production. Besides having a monopoly on fertilizer in Chile, SQM also claims a 30 percent share of the world’s market for lithium (used in hybrid-car batteries) and 33 percent market share of iodine (used in X-ray dye and LCD televisions). Asia accounted for 15 percent of SQM’s $1.8 billion in revenue last year, and Chase expects that share to rise as China increases its fertilizer imports to help feed its people.
SQM is not immune to the global downturn, of course. Many fertilizer stocks, including SQM’s, fell dramatically in the second half of 2008 as fertilizer prices dropped. Yet demand for the company’s all-organic fertilizer should continue to grow. Farmers need to use organic fertilizer to have their fruits and vegetables certified as organic by the U.S. Department of Agriculture and similar government bodies in other countries. Demand for high-end fertilizer might actually increase in an economic slowdown, as people eat at home more and seek out high-quality ingredients, says Jim O’Leary, manager of the Touchstone International fund.
Analysts predict a modest bump in SQM’s earnings this year over last. In 2008, SQM posted earnings of $501 million, a 179 percent increase over 2007 earnings. Don’t expect such a monster gain this year, but analysts still predict a 14 percent gain in profits. The stock trades at about 22 times estimated earnings of $627 million, about its 10-year average P/E.
CNOOC
As the global economy slowed and the price of oil tanked over the past year, oil companies around the world pulled back on drilling for crude. But that’s not the case with China National Offshore Oil Corp., the giant firm that brings up oil from, you guessed it, the ocean waters off the coast of China. The firm, commonly known as CNOOC (pronounced see-nook) is increasing its capital spending by 19 percent in 2009, to $6.8 billion. The company can sell anything it brings up from the ocean floor. In fact, Hong Kong–based CNOOC (CEO: 141.35*, +0.28, +0.19%) sells oil to its major Chinese rivals because the other two can’t produce enough on their own.
CNOOC is majority-owned by the Chinese government. It teams up with major oil companies that have the expertise to build and operate offshore drilling platforms. When they find oil, CNOOC shares in the profits. When they don’t, the foreign companies bear all the costs.
Don’t expect its profits to be even close to the $6.4 billion in made in 2008, however, because the price of oil has fallen to around $60 from its $147 peak last July. CNOOC has no refining business, so its profits are tied almost exclusively to the price of crude. Still, it cost the company, on average, only about $20 to bring up a barrel of oil from the sea in 2008, Xiao Zongwei, CNOOC’s general manager of investor relations, told SmartMoney. So even if the price of oil resumes its descent, CNOOC should yield fatter profit margins relative to other oil companies, says Steve Cao, comanager of the AIM Developing Markets fund, which also owns the stock.
At nearly 16 times this year’s lower profits, CNOOC is not a steal. But some analysts feel that its growth prospects over the long term should command a premium. China’s fuel needs will only rise as the country’s growing middle class hits the road in its new cars, analysts say.
It was only two years ago that investors plowed more than $16 billion into emerging-market mutual funds, trying to find the next big Chinese Internet start-up or Russian coal mine. Unfortunately, like many investing trends, a lot of people piled into emerging-market stocks just as they peaked. Growth did slow around the world, and the stocks tanked. Even with this spring’s market rally, emerging-market stocks, as a group, have lost more than 40 percent since October 2007.
However, many of these nations are not mired in the housing market disasters that plague wealthier countries, and their banking systems are healthier as a consequence. Meanwhile, millions of people in these nations are moving into their middle class. The fortunes of these countries aren’t completely beholden to the health of the U.S. economy, either. China’s economy, for example, is expected to grow at least 5 percent in 2009.
For decades, stocks in China, Chile and other emerging nations traded at a significant discount to their American counterparts. By mid-2007, some were trading at a premium. The market wipeout brought emerging-market valuations closer to their normal discount. Of course, that return to normal cost some investors a lot of money, but the lower prices could give new investors a chance to buy into growing nations at a more reasonable price.
Here are five picks—all of which are listed on U.S. stock exchanges.
China Mobile
More than 160 million mobile phones were purchased in China in 2008, and analysts expect that number to grow another 5 percent this year. That bodes well for Hong Kong-based China Mobile, which has almost 75 percent market share of mobile-phone service in China. It has 470 million subscribers—a throng 50 percent larger than the entire U.S. population. Amazingly, analysts estimate there are still several hundred million Chinese who don’t yet have a mobile phone but eventually could. In the short term, if cash-strapped consumers are forced to choose between a landline and a mobile phone, they usually opt to go wireless, says Phil Kendall, director of the global wireless practice at market research firm Strategy Analytics.
The Chinese government restructured the country’s phone industry last year, allowing its biggest landline company, China Telecom, to join a wireless market formerly occupied by just China Mobile (CHL: 50.74*, +0.06, +0.11%) and China Unicom. But even with the competition, China Mobile’s dominant market position allows the company to negotiate favorable rates with vendors. In 2007 the company launched its own instant-messaging system for its phones, allowing it to keep more revenue than if it used a system made by Microsoft or another firm.
China Mobile’s stock trades at about 11 times 2010’s expected profits, well below its 10-year average price/earnings ratio of more than 24. China Mobile has said the sluggish economy and increased competition will temper its growth this year, but it will still grow. Many analysts remain confident the company will continue to increase revenue and profits steadily over the next several years, global recession or not. In the meantime, the stock has a 3.9 percent dividend yield, so investors are paid to wait for the economy to improve.
HDFC Bank
Many of the senior executives of Mumbai-based HDFC Bank (HDB: 101.20*, -0.83, -0.81%) are native Indians who worked for Citibank and other Western banks outside India. But when they opened their bank in 1995, when there were very few private banks in India, they came home to serve Indian customers. As banks worldwide loaded their balance sheets with exotic, risky mortgages, HDFC stuck with serving India’s burgeoning middle class. About 70 percent of HDFC’s revenue still comes from plain old retail banking, like issuing credit cards and loaning money to small businesses. That has kept it from having to take write-downs that burdened many other banks, says Ferrill Roll, portfolio manager for Harding Loevner, which owns HDFC shares.
HDFC’s toughest competition is from state-owned banks. While HDFC branches offer more efficient service, according to analysts, state-run banks reach much more of India’s 1.1 billion population. In India, government banks carry the perception of increased safety, and consumers worldwide find it annoying to switch banks.
Despite these challenges, HDFC is well positioned to attract new customers. Over the next two decades, the country’s middle class will grow from about 5 percent of the population to more than 40 percent, creating the world’s fifth-largest consumer market, according to McKinsey & Co. Assuming HDFC keeps up its superior customer service, it stands to capture a large share of this new market.
HDFC shares have rallied sharply in recent weeks, so investors might want to wait for a pullback before buying. With a P/E ratio of 21 times next year’s estimated earnings of $590 million, HDFC is not the cheapest bank stock. But analysts expect the bank to increase profits 25 percent in its fiscal 2010 (which started in April) and another 26 percent in fiscal 2011. “It’s one of the best-managed banks in the world,” says Cabot Money Management’s Lutts, who also owns the stock.
Vale
The booming economies of China, India and other emerging nations gave mining firm Vale (VALE: 19.24*, -0.13, -0.67%) years of spectacular profit and revenue growth, solidifying its position as one of Brazil’s largest companies and the world’s largest producer of iron ore. Vale’s main competitive advantage over rivals BHP Billiton of Australia and English firm Rio Tinto is its top-quality, plentiful iron ore deposits, says Tony Robson, cohead of mining research at BMO Capital Markets. China is the biggest market for Vale’s iron ore, accounting for more than 17 percent of the company’s revenue. China’s steel production (iron ore is a primary component of steel) is expected to decline only slightly this year, thanks to the nation’s quick implementation of an infrastructure-focused economic stimulus package, says Jorge Beristain, head of Americas metals and mining research for Deutsche Bank Securities. Vale has expanded its client base in China, adding small and medium-size steel mills to compensate for the reduced demand from the larger mills. Vale CEO Roger Agnelli has said he expects iron ore exports to China to hold steady for the rest of 2009.
Still, the global downturn has forced the Rio de Janeiro–based firm to scale back projects and cancel some others, and the company recently cut its capital spending plans for 200 to $9 billion from $14 billion. Investors have pounded down Vale’s shares over the past year as the price of iron ore has tumbled. Longer term, however, many analysts are confident that Vale will benefit from an economic recovery worldwide. In the meantime, the stock trades at 13 times this year’s expected profits of $8.5 billion.
SQM
It certainly helps any company to have a corner on the market. Half the customers who buy specialty fertilizer from Chile’s Sociedad QuÃmica y Minera de Chile (SQM: 36.26*, -0.59, -1.60%) can’t easily substitute anything else for the product, says Brian Chase, head of Southern Cone and Andean Equity Research and Strategy for J.P. Morgan. Crops such as tobacco, wine grapes and blueberries need special fertilizers that only SQM can provide in the region.
Much of SQM’s competitive advantage comes from its access to the Atacama Salt desert in Chile, land rich with nitrates, iodine, potash and lithium, all useful in fertilizer production. Besides having a monopoly on fertilizer in Chile, SQM also claims a 30 percent share of the world’s market for lithium (used in hybrid-car batteries) and 33 percent market share of iodine (used in X-ray dye and LCD televisions). Asia accounted for 15 percent of SQM’s $1.8 billion in revenue last year, and Chase expects that share to rise as China increases its fertilizer imports to help feed its people.
SQM is not immune to the global downturn, of course. Many fertilizer stocks, including SQM’s, fell dramatically in the second half of 2008 as fertilizer prices dropped. Yet demand for the company’s all-organic fertilizer should continue to grow. Farmers need to use organic fertilizer to have their fruits and vegetables certified as organic by the U.S. Department of Agriculture and similar government bodies in other countries. Demand for high-end fertilizer might actually increase in an economic slowdown, as people eat at home more and seek out high-quality ingredients, says Jim O’Leary, manager of the Touchstone International fund.
Analysts predict a modest bump in SQM’s earnings this year over last. In 2008, SQM posted earnings of $501 million, a 179 percent increase over 2007 earnings. Don’t expect such a monster gain this year, but analysts still predict a 14 percent gain in profits. The stock trades at about 22 times estimated earnings of $627 million, about its 10-year average P/E.
CNOOC
As the global economy slowed and the price of oil tanked over the past year, oil companies around the world pulled back on drilling for crude. But that’s not the case with China National Offshore Oil Corp., the giant firm that brings up oil from, you guessed it, the ocean waters off the coast of China. The firm, commonly known as CNOOC (pronounced see-nook) is increasing its capital spending by 19 percent in 2009, to $6.8 billion. The company can sell anything it brings up from the ocean floor. In fact, Hong Kong–based CNOOC (CEO: 141.35*, +0.28, +0.19%) sells oil to its major Chinese rivals because the other two can’t produce enough on their own.
CNOOC is majority-owned by the Chinese government. It teams up with major oil companies that have the expertise to build and operate offshore drilling platforms. When they find oil, CNOOC shares in the profits. When they don’t, the foreign companies bear all the costs.
Don’t expect its profits to be even close to the $6.4 billion in made in 2008, however, because the price of oil has fallen to around $60 from its $147 peak last July. CNOOC has no refining business, so its profits are tied almost exclusively to the price of crude. Still, it cost the company, on average, only about $20 to bring up a barrel of oil from the sea in 2008, Xiao Zongwei, CNOOC’s general manager of investor relations, told SmartMoney. So even if the price of oil resumes its descent, CNOOC should yield fatter profit margins relative to other oil companies, says Steve Cao, comanager of the AIM Developing Markets fund, which also owns the stock.
At nearly 16 times this year’s lower profits, CNOOC is not a steal. But some analysts feel that its growth prospects over the long term should command a premium. China’s fuel needs will only rise as the country’s growing middle class hits the road in its new cars, analysts say.
Investing in Trends - from Smartmoney.com
SmartMoney
Published March 25, 2009
Screens by Jack Hough
7 Stocks for 10-Year Holders
Stock screening software is handy for sorting cheap shares from pricey ones and determining which are recently rising. But it can’t tell which companies are neatly aligned with long-term societal trends. That means a search for stocks to hold for the next 10 years strays necessarily from the comfort of cold calculus to the gray of human judgment.
Still, I hope you’ll find the following points noncontroversial. For each, the computer has helped find some promising stocks—modestly priced ones attached to prosperous companies.
1. We’re getting old.
About 13% of Americans are 65 or older. By 2030, more than 20% will be, reckons the Census Bureau. The old spend less than the middle-aged on lots of things, but healthcare isn’t one of them. Four in five seniors have a chronic health condition like high blood pressure and diabetes, and half have two or more such conditions. Pills and prescription plans seem like good bets, but a greater role for government in coming years might crimp the profitability of either or both.
Companies that put paper medical records on computer networks, thereby saving money and improving results, seem more assured of growth. San Francisco-based McKesson (MCK1) is North America’s largest drug distributor and a leading provider of information technology to hospitals, insurers and government health-care agencies. Its sales are growing nicely through the current recession, and its shares fetch less than nine times forecast earnings for the company’s fiscal year ending March 31.
2. We’re still fat.
Beyond fat, really: The obese, at 34% of the population, now outnumber the merely overweight, at 33%, according to the National Center for Health Statistics. I suppose that favors purchases of plenty of ordinary things in larger sizes, like pants and airplane seats, but the companies mostly likely to gain from these — Wal-Mart (WMT2) and BE Aerospace (BEAV3) — are more affected by other trends. Kinetic Concepts (KCI4), based in San Antonio, makes vacuum-assisted systems for healing difficult wounds, like skin ulcers associated with diabetes, which is itself associated with obesity. It also makes specialty hospital beds, including ones that accommodate oversized patients.
Optimists might prefer to invest in diet plans and exercise. Companies that offer both are cheap right now; shares of gym chain Life Time Fitness (LTM5) and diet programs Weight Watchers (WTW6) and NutriSystem (NTRI7) trade at 8 to 9 times earnings. Weight Watchers is the best diet plan, according to ConsumerSearch.com, which amalgamated opinions from a variety of sources, including Consumer Reports and The Journal of the American Medical Association. With budgets tight, sales for Weight Watchers are seen declining 9% this year, and those for NutriSystem are seen falling 14%. Life Time is growing sales, mostly because it is opening new clubs, not expanding sales at longstanding ones. NutriSystem, unlike the others, is debt-free, and it offers the plumpest dividend yield: 5.3%.
3. A house bubble has popped, but has left plenty of houses.
Prices are down 27% from their mid-2006 peak, according to S&P’s Case/Shiller index, last reported in February for December. But houses built during the frothy years — from 2000 to 2007 the number of housing units swelled 10% while the population increased less than 7% — remain. Not all are cared for; a record one in nine are vacant. Assuming prices will eventually find a level where buyers will move in, our huge housing stock will need plenty of paint and lawn care in years to come. Sherwin-Williams (SHW8) leads the nation in paint sales, makes most of its money from touch-ups on existing houses, and has increased its dividend each year since 1979. Current yield: 3.2%. Shares are 14 times earnings. The Scotts Miracle-Gro Company (SMG9), true to its name, is increasing sales in what seems like an unlikely setting. Shares sell for just under 15 times earnings, but those earnings are expected to grow by double-digit percentages this year and next. The dividend yield seems in need of a spritz or two of growth spray, at just 1.5%.
Screen Survivors Company Ticker Price P/E Yield
McKesson MCK10 36.27 9 1.4
Kinetic Concepts KCI11 19.78 6 n/a
Lifetime Fitness LTM12 11.28 7 n/a
NutriSystem NTRI13 14.14 9 5.3
Weight Watchers WTW14 19.35 8 3.7
Sherwin-Williams SHW15 50.2 14 3.2
The Scotts Miracle-Gro Company SMG16 33.97 15 1.5
1http://www.smartmoney.com/quote/MCK/
2http://www.smartmoney.com/quote/WMT/
3http://www.smartmoney.com/quote/BEAV/
4http://www.smartmoney.com/quote/KCI/
5http://www.smartmoney.com/quote/LTM/
6http://www.smartmoney.com/quote/WTW/
7http://www.smartmoney.com/quote/NTRI/
8http://www.smartmoney.com/quote/SHW/
9http://www.smartmoney.com/quote/SMG/
10http://www.smartmoney.com/cfscripts/director.cfm?searchstring=MCK
11http://www.smartmoney.com/cfscripts/director.cfm?searchstring=KCI
12http://www.smartmoney.com/cfscripts/director.cfm?searchstring=LTM
13http://www.smartmoney.com/cfscripts/director.cfm?searchstring=NTRI
14http://www.smartmoney.com/cfscripts/director.cfm?searchstring=WTW
15http://www.smartmoney.com/cfscripts/director.cfm?searchstring=SHW
16http://www.smartmoney.com/cfscripts/director.cfm?searchstring=SMG
URL for this article:
http://www.smartmoney.com/Investing/Stocks/7-Stocks-for-10-Year-Holders/
Published March 25, 2009
Screens by Jack Hough
7 Stocks for 10-Year Holders
Stock screening software is handy for sorting cheap shares from pricey ones and determining which are recently rising. But it can’t tell which companies are neatly aligned with long-term societal trends. That means a search for stocks to hold for the next 10 years strays necessarily from the comfort of cold calculus to the gray of human judgment.
Still, I hope you’ll find the following points noncontroversial. For each, the computer has helped find some promising stocks—modestly priced ones attached to prosperous companies.
1. We’re getting old.
About 13% of Americans are 65 or older. By 2030, more than 20% will be, reckons the Census Bureau. The old spend less than the middle-aged on lots of things, but healthcare isn’t one of them. Four in five seniors have a chronic health condition like high blood pressure and diabetes, and half have two or more such conditions. Pills and prescription plans seem like good bets, but a greater role for government in coming years might crimp the profitability of either or both.
Companies that put paper medical records on computer networks, thereby saving money and improving results, seem more assured of growth. San Francisco-based McKesson (MCK1) is North America’s largest drug distributor and a leading provider of information technology to hospitals, insurers and government health-care agencies. Its sales are growing nicely through the current recession, and its shares fetch less than nine times forecast earnings for the company’s fiscal year ending March 31.
2. We’re still fat.
Beyond fat, really: The obese, at 34% of the population, now outnumber the merely overweight, at 33%, according to the National Center for Health Statistics. I suppose that favors purchases of plenty of ordinary things in larger sizes, like pants and airplane seats, but the companies mostly likely to gain from these — Wal-Mart (WMT2) and BE Aerospace (BEAV3) — are more affected by other trends. Kinetic Concepts (KCI4), based in San Antonio, makes vacuum-assisted systems for healing difficult wounds, like skin ulcers associated with diabetes, which is itself associated with obesity. It also makes specialty hospital beds, including ones that accommodate oversized patients.
Optimists might prefer to invest in diet plans and exercise. Companies that offer both are cheap right now; shares of gym chain Life Time Fitness (LTM5) and diet programs Weight Watchers (WTW6) and NutriSystem (NTRI7) trade at 8 to 9 times earnings. Weight Watchers is the best diet plan, according to ConsumerSearch.com, which amalgamated opinions from a variety of sources, including Consumer Reports and The Journal of the American Medical Association. With budgets tight, sales for Weight Watchers are seen declining 9% this year, and those for NutriSystem are seen falling 14%. Life Time is growing sales, mostly because it is opening new clubs, not expanding sales at longstanding ones. NutriSystem, unlike the others, is debt-free, and it offers the plumpest dividend yield: 5.3%.
3. A house bubble has popped, but has left plenty of houses.
Prices are down 27% from their mid-2006 peak, according to S&P’s Case/Shiller index, last reported in February for December. But houses built during the frothy years — from 2000 to 2007 the number of housing units swelled 10% while the population increased less than 7% — remain. Not all are cared for; a record one in nine are vacant. Assuming prices will eventually find a level where buyers will move in, our huge housing stock will need plenty of paint and lawn care in years to come. Sherwin-Williams (SHW8) leads the nation in paint sales, makes most of its money from touch-ups on existing houses, and has increased its dividend each year since 1979. Current yield: 3.2%. Shares are 14 times earnings. The Scotts Miracle-Gro Company (SMG9), true to its name, is increasing sales in what seems like an unlikely setting. Shares sell for just under 15 times earnings, but those earnings are expected to grow by double-digit percentages this year and next. The dividend yield seems in need of a spritz or two of growth spray, at just 1.5%.
Screen Survivors Company Ticker Price P/E Yield
McKesson MCK10 36.27 9 1.4
Kinetic Concepts KCI11 19.78 6 n/a
Lifetime Fitness LTM12 11.28 7 n/a
NutriSystem NTRI13 14.14 9 5.3
Weight Watchers WTW14 19.35 8 3.7
Sherwin-Williams SHW15 50.2 14 3.2
The Scotts Miracle-Gro Company SMG16 33.97 15 1.5
1http://www.smartmoney.com/quote/MCK/
2http://www.smartmoney.com/quote/WMT/
3http://www.smartmoney.com/quote/BEAV/
4http://www.smartmoney.com/quote/KCI/
5http://www.smartmoney.com/quote/LTM/
6http://www.smartmoney.com/quote/WTW/
7http://www.smartmoney.com/quote/NTRI/
8http://www.smartmoney.com/quote/SHW/
9http://www.smartmoney.com/quote/SMG/
10http://www.smartmoney.com/cfscripts/director.cfm?searchstring=MCK
11http://www.smartmoney.com/cfscripts/director.cfm?searchstring=KCI
12http://www.smartmoney.com/cfscripts/director.cfm?searchstring=LTM
13http://www.smartmoney.com/cfscripts/director.cfm?searchstring=NTRI
14http://www.smartmoney.com/cfscripts/director.cfm?searchstring=WTW
15http://www.smartmoney.com/cfscripts/director.cfm?searchstring=SHW
16http://www.smartmoney.com/cfscripts/director.cfm?searchstring=SMG
URL for this article:
http://www.smartmoney.com/Investing/Stocks/7-Stocks-for-10-Year-Holders/
from Sunday's NY Times - A Long Term Investment Perspective
January 11, 2009
The Way We Live Now
Go Long
By ROGER LOWENSTEIN
In October, Columbia University’s business school honored its most famous investing guru, Benjamin Graham, with a series of panel discussions loosely connected to the market crash, which was then accelerating. The panelists, of which I was one, had contributed to an updated version of Graham’s 1930s textbook, whose signature themes are caution, avoidance of speculation and — at all costs — the preservation of capital. The day we met, the Dow Jones industrial average fell 350 points en route to one of its worst months ever.
J. Ezra Merkin, a Wall Street sage, noted philanthropist and professional money manager, seemed to embody more than any of the other panelists the fear that was gripping traders. When it was suggested that the government should stop intervening in markets and bailing out banks, Merkin rejoined that the system had cracked and desperately needed help. As the world now knows, Merkin had entrusted close to $2 billion of his investors’ money to someone even less dependable than the Dow — that is, the accused Ponzi artist Bernard Madoff. I have no reason to think that Merkin, at the time, had any knowledge of the fraud that was soon to secure his 15 minutes of fame, but that afternoon at Columbia now seems pregnant with latent connections. Perhaps Madoff’s investors lost a greater percentage of their money, and lost it more suddenly, than the rest of us. But beyond these mere matters of degree, is there really any difference?
At least for investors of attenuated time horizons, there is not. Public-securities markets are a wondrous artifice precisely because they offer permanent capital to industry and short-term liquidity to investors. Think about it: a General Electric or a Google sells stock to the public and then retains the proceeds — the capital — indefinitely. Even if the companies earn a profit, by selling more light bulbs or Internet ads, they are under no obligation to pay out the gains in dividends. How, then, do the shareholders claim their reward? Why, by selling their stock to other investors, of course. This means that, in the short term at least, each investor is dependent on the willingness of other investors to hop on board. If other investors go away, prices (even of solvent companies) plummet, to devastating effect on those who sell.
In a Ponzi scheme, there is no G.E. or Google underneath the pyramid: only air. Outgoing investors are paid from the money put up by new ones. And the game for Madoff ended, as Ponzi schemes always do, when he ran out of suckers.
In theory, stocks and bonds are more valuable than air. But when investors get hooked on trading securities (as distinct from owning them), especially ones that are overvalued, they are courting disaster. In retrospect, this was true of the legions that invested in mortgage-backed securities and in the banks that owned them, not to mention the many other companies affected indirectly. Nobody was thinking about what these companies were worth, only about the next quotation on the screen.
This was doubly true for the banks that held those wearily complex and difficult-to-value mortgage bonds. Look at the post-mortem issued by UBS, one of the world’s largest banks, which has suffered mortgage-related losses of some $50 billion (enough to bail out the auto industry several times over). Discussing one particular write down, the bank admitted, “The super senior notes were always treated as trading book (i.e., the book for assets intended for resale in the short term), notwithstanding the fact that there does not appear to have been a liquid secondary market.” Legally, UBS was a bank; conceptually, it was investing with Bernie Madoff.
There is, of course, an alternative to this madness. Which is to invest for the long term, independent of the market action on any given day or year. This is what most small investors pretended, and maybe believed, they were actually doing.
Robert Barbera, the chief economist at ITG, an investment firm, says there are really three schools of investing. There are people who think they can identify superior stocks and bonds over the long term and selectively invest in those that they deem to be undervalued. Second, there are people who recognize that they don’t have this ability and resolve to salt away a fixed portion of their savings, month after month, in a generic and diversified portfolio. Though the first approach requires considerably more talent and is not recommended for novices, both should work.
What does not work is believing you are following either strategy No. 1 or 2 when you are actually engaging in the third approach — which is, essentially, following the crowd, day by day and hour by hour. At the top of the market, investors told themselves they were disciplined and in for the long haul. Now they are selling or refraining from investing. Some misjudged their liquidity needs and have come under pressure to raise cash; others have simply lost heart. Either way, they are dependent on new money to come in for them to get out.
Benjamin Graham’s premise (which he did not abandon, even in the depths of the Great Depression) was that, sooner or later, markets will reflect underlying corporate values. Thus, he wrote, long-term investors had a “basic advantage” over others, because they could ride out bubbles and crashes rather than be gulled during such highs and lows into, respectively, buying or selling. In other words, for those who invest with prudence and an eye toward long-term values, the market need not be a Ponzi scheme. While stocks periodically go for roller-coaster rides, the earning power of the U.S. economy, albeit with serious fluctuations, endures. The people who chased unrealistic returns at the top, like those who are selling now, have simply cashiered their “advantage” to play a game that more nearly resembles Bernie Madoff’s.
Roger Lowenstein, an outside director of the Sequoia Fund, is a contributing writer for the magazine. His most recent book is “While America Aged.”
The Way We Live Now
Go Long
By ROGER LOWENSTEIN
In October, Columbia University’s business school honored its most famous investing guru, Benjamin Graham, with a series of panel discussions loosely connected to the market crash, which was then accelerating. The panelists, of which I was one, had contributed to an updated version of Graham’s 1930s textbook, whose signature themes are caution, avoidance of speculation and — at all costs — the preservation of capital. The day we met, the Dow Jones industrial average fell 350 points en route to one of its worst months ever.
J. Ezra Merkin, a Wall Street sage, noted philanthropist and professional money manager, seemed to embody more than any of the other panelists the fear that was gripping traders. When it was suggested that the government should stop intervening in markets and bailing out banks, Merkin rejoined that the system had cracked and desperately needed help. As the world now knows, Merkin had entrusted close to $2 billion of his investors’ money to someone even less dependable than the Dow — that is, the accused Ponzi artist Bernard Madoff. I have no reason to think that Merkin, at the time, had any knowledge of the fraud that was soon to secure his 15 minutes of fame, but that afternoon at Columbia now seems pregnant with latent connections. Perhaps Madoff’s investors lost a greater percentage of their money, and lost it more suddenly, than the rest of us. But beyond these mere matters of degree, is there really any difference?
At least for investors of attenuated time horizons, there is not. Public-securities markets are a wondrous artifice precisely because they offer permanent capital to industry and short-term liquidity to investors. Think about it: a General Electric or a Google sells stock to the public and then retains the proceeds — the capital — indefinitely. Even if the companies earn a profit, by selling more light bulbs or Internet ads, they are under no obligation to pay out the gains in dividends. How, then, do the shareholders claim their reward? Why, by selling their stock to other investors, of course. This means that, in the short term at least, each investor is dependent on the willingness of other investors to hop on board. If other investors go away, prices (even of solvent companies) plummet, to devastating effect on those who sell.
In a Ponzi scheme, there is no G.E. or Google underneath the pyramid: only air. Outgoing investors are paid from the money put up by new ones. And the game for Madoff ended, as Ponzi schemes always do, when he ran out of suckers.
In theory, stocks and bonds are more valuable than air. But when investors get hooked on trading securities (as distinct from owning them), especially ones that are overvalued, they are courting disaster. In retrospect, this was true of the legions that invested in mortgage-backed securities and in the banks that owned them, not to mention the many other companies affected indirectly. Nobody was thinking about what these companies were worth, only about the next quotation on the screen.
This was doubly true for the banks that held those wearily complex and difficult-to-value mortgage bonds. Look at the post-mortem issued by UBS, one of the world’s largest banks, which has suffered mortgage-related losses of some $50 billion (enough to bail out the auto industry several times over). Discussing one particular write down, the bank admitted, “The super senior notes were always treated as trading book (i.e., the book for assets intended for resale in the short term), notwithstanding the fact that there does not appear to have been a liquid secondary market.” Legally, UBS was a bank; conceptually, it was investing with Bernie Madoff.
There is, of course, an alternative to this madness. Which is to invest for the long term, independent of the market action on any given day or year. This is what most small investors pretended, and maybe believed, they were actually doing.
Robert Barbera, the chief economist at ITG, an investment firm, says there are really three schools of investing. There are people who think they can identify superior stocks and bonds over the long term and selectively invest in those that they deem to be undervalued. Second, there are people who recognize that they don’t have this ability and resolve to salt away a fixed portion of their savings, month after month, in a generic and diversified portfolio. Though the first approach requires considerably more talent and is not recommended for novices, both should work.
What does not work is believing you are following either strategy No. 1 or 2 when you are actually engaging in the third approach — which is, essentially, following the crowd, day by day and hour by hour. At the top of the market, investors told themselves they were disciplined and in for the long haul. Now they are selling or refraining from investing. Some misjudged their liquidity needs and have come under pressure to raise cash; others have simply lost heart. Either way, they are dependent on new money to come in for them to get out.
Benjamin Graham’s premise (which he did not abandon, even in the depths of the Great Depression) was that, sooner or later, markets will reflect underlying corporate values. Thus, he wrote, long-term investors had a “basic advantage” over others, because they could ride out bubbles and crashes rather than be gulled during such highs and lows into, respectively, buying or selling. In other words, for those who invest with prudence and an eye toward long-term values, the market need not be a Ponzi scheme. While stocks periodically go for roller-coaster rides, the earning power of the U.S. economy, albeit with serious fluctuations, endures. The people who chased unrealistic returns at the top, like those who are selling now, have simply cashiered their “advantage” to play a game that more nearly resembles Bernie Madoff’s.
Roger Lowenstein, an outside director of the Sequoia Fund, is a contributing writer for the magazine. His most recent book is “While America Aged.”
Winners & (Mostly) Losers - Year To Date Performance of S&P 500 Stocks
November 19, 2008
Year-to-Date Performance Ranking of S&P 500 Stocks (11/19/2008)
Below is the Year-to-Date Performance Ranking of stocks in S&P 500 index.
Rank Company (Stock Symbol) Year-to-Date Change Current Price End of 2007
1 Family Dollar Stores, Inc. (NYSE:FDO) 37.7% 26.48 19.23
2 Rohm and Haas Company (NYSE:ROH) 35.1% 71.71 53.07
3 Anheuser-Busch Companies, Inc. (NYSE:BUD) 31.0% 68.58 52.34
4 UST Inc. (NYSE:UST) 24.9% 68.47 54.80
5 Barr Pharmaceuticals, Inc. (NYSE:BRL) 21.1% 64.29 53.10
6 Celgene Corporation (NASDAQ:CELG) 20.7% 55.76 46.21
7 Amgen, Inc. (NASDAQ:AMGN) 15.5% 53.64 46.44
8 General Mills, Inc. (NYSE:GIS) 9.3% 62.31 57.00
9 Southwestern Energy Company (NYSE:SWN) 9.0% 30.38 27.86
10 Hudson City Bancorp, Inc. (NASDAQ:HCBK) 7.6% 16.16 15.02
11 Wal-Mart Stores, Inc. (NYSE:WMT) 7.3% 51.00 47.53
12 Campbell Soup Company (NYSE:CPB) 3.4% 36.94 35.73
13 The Kroger Co. (NYSE:KR) -0.4% 26.60 26.71
14 Abbott Laboratories (NYSE:ABT) -2.9% 54.52 56.15
15 McDonald's Corporation (NYSE:MCD) -5.9% 55.44 58.91
16 Apollo Group, Inc. (NASDAQ:APOL) -6.0% 65.97 70.15
17 Gilead Sciences, Inc. (NASDAQ:GILD) -6.1% 43.20 46.01
18 Baxter International Inc. (NYSE:BAX) -8.1% 53.37 58.05
19 Genzyme Corporation (NASDAQ:GENZ) -8.6% 68.00 74.44
20 The Clorox Company (NYSE:CLX) -8.8% 59.42 65.17
21 Waste Management, Inc. (NYSE:WMI) -9.0% 29.73 32.67
22 Hasbro, Inc. (NYSE:HAS) -9.7% 23.10 25.58
23 Nicor Inc. (NYSE:GAS) -10.1% 38.08 42.35
24 Norfolk Southern Corp. (NYSE:NSC) -10.1% 45.33 50.44
25 Allied Waste Industries, Inc. (NYSE:AW) -10.2% 9.90 11.02
26 Aon Corporation (NYSE:AOC) -10.4% 42.74 47.69
27 H&R Block, Inc. (NYSE:HRB) -10.6% 16.61 18.57
28 Sherwin-Williams Company (NYSE:SHW) -11.0% 51.68 58.04
29 The Southern Company (NYSE:SO) -11.0% 34.47 38.75
30 Burlington Northern Santa Fe Corporation (NYSE:BNI) -11.4% 73.73 83.23
31 C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) -12.7% 47.25 54.12
32 Pactiv Corporation (NYSE:PTV) -12.8% 23.23 26.63
33 Johnson & Johnson (NYSE:JNJ) -12.9% 58.12 66.70
34 H.J. Heinz Company (NYSE:HNZ) -13.4% 40.43 46.68
35 EOG Resources, Inc. (NYSE:EOG) -13.4% 77.28 89.25
36 Big Lots, Inc. (NYSE:BIG) -13.6% 13.81 15.99
37 The Hershey Company (NYSE:HSY) -14.3% 33.78 39.40
38 King Pharmaceuticals, Inc. (NYSE:KG) -14.7% 8.73 10.24
39 PG&E Corporation (NYSE:PCG) -15.1% 36.59 43.09
40 The Procter & Gamble Company (NYSE:PG) -15.2% 62.27 73.42
41 Molson Coors Brewing Company (NYSE:TAP) -15.2% 43.76 51.62
42 Affiliated Computer Services, Inc. (NYSE:ACS) -15.6% 38.07 45.10
43 Marsh & McLennan Companies, Inc. (NYSE:MMC) -15.8% 22.30 26.47
44 Applied Biosystems Inc. (NYSE:ABI) -15.8% 28.55 33.92
45 Kellogg Company (NYSE:K) -15.8% 44.12 52.43
46 DaVita Inc. (NYSE:DVA) -16.5% 47.03 56.35
47 C.R. Bard, Inc. (NYSE:BCR) -16.6% 79.08 94.80
48 Quest Diagnostics Incorporated (NYSE:DGX) -16.9% 43.94 52.90
49 Integrys Energy Group, Inc. (NYSE:TEG) -17.9% 42.42 51.69
50 The DIRECTV Group, Inc. (NASDAQ:DTV) -17.9% 18.97 23.12
51 Bemis Company, Inc. (NYSE:BMS) -18.3% 22.36 27.38
52 Pulte Homes, Inc. (NYSE:PHM) -18.4% 8.60 10.54
53 Watson Pharmaceuticals, Inc. (NYSE:WPI) -18.4% 22.14 27.14
54 Union Pacific Corporation (NYSE:UNP) -18.9% 50.97 62.81
55 Kimberly-Clark Corporation (NYSE:KMB) -19.1% 56.08 69.34
56 Wells Fargo & Company (NYSE:WFC) -19.2% 24.40 30.19
57 Colgate-Palmolive Company (NYSE:CL) -19.2% 62.99 77.96
58 The Chubb Corporation (NYSE:CB) -19.9% 43.74 54.58
59 DTE Energy Company (NYSE:DTE) -19.9% 35.20 43.96
60 Laboratory Corp. of America Holdings (NYSE:LH) -20.1% 60.36 75.53
61 Lowe's Companies, Inc. (NYSE:LOW) -20.2% 18.04 22.62
62 Kraft Foods Inc. (NYSE:KFT) -20.3% 25.99 32.63
63 Covidien Ltd. (NYSE:COV) -20.4% 35.27 44.29
64 Consolidated Edison, Inc. (NYSE:ED) -21.1% 38.52 48.85
65 McCormick & Company, Incorporated (NYSE:MKC) -21.2% 29.87 37.91
66 AutoZone, Inc. (NYSE:AZO) -21.4% 94.25 119.91
67 Exxon Mobil Corporation (NYSE:XOM) -21.6% 73.42 93.69
68 Genuine Parts Company (NYSE:GPC) -21.7% 36.25 46.30
69 Public Storage (NYSE:PSA) -21.7% 57.47 73.41
70 Progress Energy, Inc. (NYSE:PGN) -22.0% 37.79 48.43
71 Xcel Energy Inc. (NYSE:XEL) -22.3% 17.53 22.57
72 Leggett & Platt, Inc. (NYSE:LEG) -22.7% 13.48 17.44
73 Devon Energy Corporation (NYSE:DVN) -22.9% 68.57 88.91
74 BB&T Corporation (NYSE:BBT) -23.1% 23.57 30.67
75 Automatic Data Processing (NYSE:ADP) -23.4% 34.11 44.53
76 Bristol Myers Squibb Co. (NYSE:BMY) -23.6% 20.27 26.52
77 QUALCOMM, Inc. (NASDAQ:QCOM) -23.7% 30.01 39.35
78 PNC Financial Services (NYSE:PNC) -24.1% 49.83 65.65
79 Chevron Corporation (NYSE:CVX) -24.3% 70.61 93.33
80 Raytheon Company (NYSE:RTN) -24.5% 45.85 60.70
81 Wyeth (NYSE:WYE) -24.6% 33.34 44.19
82 Comcast Corporation (NASDAQ:CMCSA) -24.6% 13.77 18.26
83 Range Resources Corp. (NYSE:RRC) -25.0% 38.53 51.36
84 Medco Health Solutions Inc. (NYSE:MHS) -25.2% 37.91 50.70
85 CSX Corporation (NYSE:CSX) -25.5% 32.76 43.98
86 U.S. Bancorp (NYSE:USB) -25.6% 23.62 31.74
87 Becton, Dickinson and Co. (NYSE:BDX) -25.9% 61.92 83.58
88 Duke Energy Corporation (NYSE:DUK) -26.1% 14.91 20.17
89 Dominion Resources, Inc. (NYSE:D) -26.3% 34.95 47.45
90 FirstEnergy Corp. (NYSE:FE) -26.6% 53.12 72.34
91 The Home Depot, Inc. (NYSE:HD) -26.7% 19.76 26.94
92 Express Scripts, Inc. (NASDAQ:ESRX) -27.3% 53.06 73.00
93 United Parcel Service, Inc. (NYSE:UPS) -27.4% 51.36 70.72
94 SYSCO Corporation (NYSE:SYY) -27.8% 22.52 31.21
95 Biogen Idec Inc. (NASDAQ:BIIB) -27.9% 41.06 56.92
96 Southwest Airlines Co. (NYSE:LUV) -28.9% 8.67 12.20
97 Oracle Corporation (NASDAQ:ORCL) -29.1% 16.00 22.58
98 Altria Group, Inc. (NYSE:MO) -29.2% 16.50 23.31
99 Altera Corporation (NASDAQ:ALTR) -29.7% 13.59 19.32
100 International Business Machines Corp. (NYSE:IBM) -29.7% 75.97 108.10
101 CVS Caremark Corporation (NYSE:CVS) -30.0% 27.84 39.75
102 Sigma-Aldrich Corporation (NASDAQ:SIAL) -30.1% 38.17 54.60
103 3M Company (NYSE:MMM) -30.3% 58.77 84.32
104 Symantec Corporation (NASDAQ:SYMC) -30.4% 11.24 16.14
105 Varian Medical Systems, Inc. (NYSE:VAR) -30.5% 36.27 52.16
106 QLogic Corporation (NASDAQ:QLGC) -30.5% 9.87 14.20
107 The Travelers Companies, Inc. (NYSE:TRV) -30.7% 37.29 53.80
108 The Coca-Cola Company (NYSE:KO) -31.1% 42.27 61.37
109 M&T Bank Corporation (NYSE:MTB) -31.2% 56.14 81.57
110 PepsiCo, Inc. (NYSE:PEP) -31.4% 52.10 75.90
111 The Progressive Corporation (NYSE:PGR) -31.4% 13.15 19.16
112 Plum Creek Timber Co. Inc. (NYSE:PCL) -31.4% 31.58 46.04
113 W.W. Grainger, Inc. (NYSE:GWW) -31.5% 59.92 87.52
114 Pfizer Inc. (NYSE:PFE) -31.5% 15.56 22.73
115 St. Jude Medical, Inc. (NYSE:STJ) -31.6% 27.80 40.64
116 Lexmark International, Inc. (NYSE:LXK) -31.8% 23.79 34.86
117 NIKE, Inc. (NYSE:NKE) -31.8% 43.84 64.24
118 Ball Corporation (NYSE:BLL) -32.0% 30.60 45.00
119 Paychex, Inc. (NASDAQ:PAYX) -32.0% 24.62 36.22
120 FedEx Corporation (NYSE:FDX) -32.1% 60.58 89.17
121 CenterPoint Energy, Inc. (NYSE:CNP) -32.7% 11.52 17.13
122 Apache Corporation (NYSE:APA) -32.9% 72.19 107.54
123 Xilinx, Inc. (NASDAQ:XLNX) -32.9% 14.67 21.87
124 Pinnacle West Capital Corporation (NYSE:PNW) -32.9% 28.44 42.41
125 Reynolds American, Inc. (NYSE:RAI) -33.0% 44.19 65.96
126 BMC Software, Inc. (NYSE:BMC) -33.2% 23.82 35.64
127 Staples, Inc. (NASDAQ:SPLS) -33.9% 15.26 23.07
128 AmerisourceBergen Corp. (NYSE:ABC) -34.0% 29.61 44.87
129 FPL Group, Inc. (NYSE:FPL) -34.1% 44.67 67.78
130 Lockheed Martin Corporation (NYSE:LMT) -34.1% 69.33 105.26
131 Millipore Corporation (NYSE:MIL) -34.5% 47.94 73.18
132 Entergy Corporation (NYSE:ETR) -34.5% 78.26 119.52
133 Hewlett-Packard Company (NYSE:HPQ) -34.6% 33.03 50.48
134 JPMorgan Chase & Co. (NYSE:JPM) -34.8% 28.47 43.65
135 Intuit Inc. (NASDAQ:INTU) -35.0% 20.55 31.61
136 Snap-on Incorporated (NYSE:SNA) -35.1% 31.32 48.24
137 Costco Wholesale Corporation (NASDAQ:COST) -35.1% 45.27 69.76
138 Robert Half International Inc. (NYSE:RHI) -35.1% 17.54 27.04
139 Sempra Energy (NYSE:SRE) -35.3% 40.03 61.88
140 TECO Energy, Inc. (NYSE:TE) -35.5% 11.10 17.21
141 Ryder System, Inc. (NYSE:R) -35.5% 30.31 47.01
142 The TJX Companies, Inc. (NYSE:TJX) -35.9% 18.42 28.73
143 The Estee Lauder Companies Inc. (NYSE:EL) -36.0% 27.92 43.61
144 XTO Energy Inc. (NYSE:XTO) -36.0% 32.86 51.36
145 Cincinnati Financial Corporation (NASDAQ:CINF) -36.1% 25.28 39.54
146 Yum! Brands, Inc. (NYSE:YUM) -36.1% 24.46 38.27
147 Hospira, Inc. (NYSE:HSP) -36.2% 27.19 42.64
148 Equity Residential (NYSE:EQR) -36.4% 23.21 36.47
149 Cabot Oil & Gas Corporation (NYSE:COG) -36.5% 25.64 40.37
150 American Electric Power Company, Inc. (NYSE:AEP) -36.9% 29.37 46.56
151 Brown-Forman Corporation (NYSE:BF.B) -37.0% 46.67 74.11
152 ConAgra Foods, Inc. (NYSE:CAG) -37.0% 14.98 23.79
153 Expeditors International of Washington (NASDAQ:EXPD) -37.1% 28.11 44.68
154 PerkinElmer, Inc. (NYSE:PKI) -37.2% 16.35 26.02
155 Monsanto Company (NYSE:MON) -37.3% 70.07 111.69
156 Ecolab Inc. (NYSE:ECL) -37.5% 32.01 51.21
157 Fidelity National Information Services (NYSE:FIS) -37.7% 14.44 23.17
158 Medtronic, Inc. (NYSE:MDT) -37.9% 31.20 50.27
159 Verizon Communications Inc. (NYSE:VZ) -38.1% 26.94 43.49
160 The Walt Disney Company (NYSE:DIS) -38.2% 19.94 32.28
161 L-3 Communications Holdings, Inc. (NYSE:LLL) -38.5% 65.16 105.94
162 Bed Bath & Beyond Inc. (NASDAQ:BBBY) -38.5% 18.07 29.39
163 CA, Inc. (NASDAQ:CA) -38.7% 15.30 24.95
164 Linear Technology Corporation (NASDAQ:LLTC) -39.0% 19.43 31.83
165 Sealed Air Corp. (NYSE:SEE) -39.3% 14.05 23.14
166 AT&T Inc. (NYSE:T) -39.3% 25.23 41.56
167 Compuware Corporation (NASDAQ:CPWR) -39.3% 5.39 8.88
168 Praxair, Inc. (NYSE:PX) -39.3% 53.84 88.71
169 Cintas Corporation (NASDAQ:CTAS) -39.4% 20.36 33.62
170 PPL Corporation (NYSE:PPL) -39.4% 31.54 52.09
171 Mattel, Inc. (NYSE:MAT) -39.5% 11.51 19.04
172 Walgreen Company (NYSE:WAG) -39.6% 23.01 38.08
173 Exelon Corporation (NYSE:EXC) -39.7% 49.23 81.64
174 Equifax Inc. (NYSE:EFX) -39.8% 21.89 36.36
175 MasterCard Incorporated (NYSE:MA) -39.8% 129.54 215.19
176 Frontier Communications Corp (NYSE:FTR) -39.8% 7.66 12.73
177 United Technologies Corporation (NYSE:UTX) -39.9% 45.99 76.54
178 Occidental Petroleum Corporation (NYSE:OXY) -40.1% 46.12 76.99
179 Pitney Bowes Inc. (NYSE:PBI) -40.3% 22.72 38.04
180 Ameren Corporation (NYSE:AEE) -40.3% 32.35 54.21
181 Windstream Corporation (NYSE:WIN) -40.4% 7.76 13.02
182 Zions Bancorporation (NASDAQ:ZION) -40.9% 27.57 46.69
183 Edison International (NYSE:EIX) -41.0% 31.49 53.37
184 Forest Laboratories, Inc. (NYSE:FRX) -41.0% 21.49 36.45
185 Eli Lilly & Co. (NYSE:LLY) -41.2% 31.41 53.39
186 NiSource Inc. (NYSE:NI) -41.3% 11.08 18.89
187 PPG Industries, Inc. (NYSE:PPG) -41.4% 41.19 70.23
188 Danaher Corporation (NYSE:DHR) -41.4% 51.45 87.74
189 Safeway Inc. (NYSE:SWY) -41.5% 20.01 34.21
190 V.F. Corporation (NYSE:VFC) -41.9% 39.88 68.66
191 Noble Energy, Inc. (NYSE:NBL) -42.0% 46.10 79.52
192 Patterson Companies, Inc. (NASDAQ:PDCO) -42.1% 19.67 33.95
193 Illinois Tool Works Inc. (NYSE:ITW) -42.1% 31.01 53.54
194 Spectra Energy Corp. (NYSE:SE) -42.1% 14.95 25.82
195 Schering-Plough Corporation (NYSE:SGP) -42.4% 15.35 26.64
196 Kohl's Corporation (NYSE:KSS) -42.4% 26.39 45.80
197 ITT Corporation (NYSE:ITT) -42.4% 38.04 66.04
198 CenturyTel, Inc. (NYSE:CTL) -42.4% 23.86 41.46
199 Dover Corporation (NYSE:DOV) -42.5% 26.51 46.09
200 Pall Corporation (NYSE:PLL) -42.6% 23.15 40.32
201 The Charles Schwab Corporation (NASDAQ:SCHW) -42.7% 14.65 25.55
202 AFLAC Incorporated (NYSE:AFL) -42.7% 35.91 62.63
203 Citrix Systems, Inc. (NASDAQ:CTXS) -42.7% 21.79 38.01
204 Pepco Holdings, Inc. (NYSE:POM) -42.8% 16.77 29.33
205 Vulcan Materials Company (NYSE:VMC) -42.9% 45.18 79.09
206 Public Service Enterprise Group Inc. (NYSE:PEG) -43.3% 27.84 49.12
207 Zimmer Holdings, Inc. (NYSE:ZMH) -43.4% 37.47 66.15
208 The Stanley Works (NYSE:SWK) -43.4% 27.43 48.48
209 Embarq Corporation (NYSE:EQ) -43.5% 27.99 49.53
210 Mylan Inc. (NYSE:MYL) -43.6% 7.93 14.06
211 CMS Energy Corporation (NYSE:CMS) -43.6% 9.80 17.38
212 Boston Scientific Corporation (NYSE:BSX) -43.7% 6.55 11.63
213 Capital One Financial Corp. (NYSE:COF) -43.9% 26.50 47.26
214 Emerson Electric Co. (NYSE:EMR) -44.2% 31.63 56.66
215 Microchip Technology Inc. (NASDAQ:MCHP) -44.3% 17.51 31.42
216 Cisco Systems, Inc. (NASDAQ:CSCO) -44.3% 15.08 27.07
217 Novell, Inc. (NASDAQ:NOVL) -44.4% 3.82 6.87
218 General Dynamics Corporation (NYSE:GD) -44.7% 49.25 88.99
219 Analog Devices, Inc. (NYSE:ADI) -44.7% 17.53 31.70
220 Cardinal Health, Inc. (NYSE:CAH) -44.7% 31.92 57.75
221 Thermo Fisher Scientific Inc. (NYSE:TMO) -45.0% 31.75 57.68
222 E.I. du Pont de Nemours & Company (NYSE:DD) -45.0% 24.26 44.09
223 Sara Lee Corp. (NYSE:SLE) -45.1% 8.82 16.06
224 Fiserv, Inc. (NASDAQ:FISV) -45.2% 30.42 55.49
225 Anadarko Petroleum Corporation (NYSE:APC) -45.3% 35.96 65.69
226 International Flavors & Fragrances Inc. (NYSE:IFF) -45.6% 26.17 48.13
227 Target Corporation (NYSE:TGT) -46.1% 26.96 50.00
228 Darden Restaurants, Inc. (NYSE:DRI) -46.1% 14.94 27.71
229 Vornado Realty Trust (NYSE:VNO) -46.4% 47.17 87.95
230 Tellabs, Inc. (NASDAQ:TLAB) -46.5% 3.50 6.54
231 Allergan, Inc. (NYSE:AGN) -46.9% 34.11 64.24
232 Polo Ralph Lauren Corporation (NYSE:RL) -46.9% 32.80 61.79
233 Computer Sciences Corporation (NYSE:CSC) -47.0% 26.21 49.47
234 EMC Corporation (NYSE:EMC) -47.1% 9.80 18.53
235 Avon Products, Inc. (NYSE:AVP) -47.2% 20.88 39.53
236 The Black & Decker Corporation (NYSE:BDK) -47.2% 36.78 69.65
237 Broadcom Corporation (NASDAQ:BRCM) -47.4% 13.76 26.14
238 Unum Group (NYSE:UNM) -47.5% 12.50 23.79
239 ConocoPhillips (NYSE:COP) -47.5% 46.34 88.30
240 Avery Dennison Corporation (NYSE:AVY) -47.8% 27.72 53.14
241 The Bank of New York Mellon Corporation (NYSE:BK) -47.9% 25.39 48.76
242 Stryker Corporation (NYSE:SYK) -48.0% 38.83 74.72
243 First Horizon National Corporation (NYSE:FHN) -48.2% 9.41 18.15
244 Dean Foods Company (NYSE:DF) -48.4% 13.34 25.86
245 Microsoft Corporation (NASDAQ:MSFT) -48.6% 18.29 35.60
246 Murphy Oil Corporation (NYSE:MUR) -48.6% 43.58 84.84
247 Eastman Chemical Company (NYSE:EMN) -49.3% 31.00 61.09
248 American Tower Corporation (NYSE:AMT) -49.3% 21.58 42.60
249 Adobe Systems Incorporated (NASDAQ:ADBE) -49.4% 21.63 42.73
250 HCP, Inc. (NYSE:HCP) -49.4% 17.60 34.78
251 Northern Trust Corporation (NASDAQ:NTRS) -49.5% 38.65 76.58
252 Torchmark Corporation (NYSE:TMK) -49.6% 30.49 60.53
253 Constellation Brands, Inc. (NYSE:STZ) -49.7% 11.88 23.64
254 RadioShack Corporation (NYSE:RSH) -49.8% 8.46 16.86
255 ENSCO International Incorporated (NYSE:ESV) -49.9% 29.85 59.62
256 Marshall & Ilsley Corporation (NYSE:MI) -50.2% 13.19 26.48
257 Questar Corporation (NYSE:STR) -50.4% 26.84 54.10
258 Time Warner Inc. (NYSE:TWX) -50.7% 8.14 16.51
259 Chesapeake Energy Corporation (NYSE:CHK) -50.8% 19.30 39.20
260 Discover Financial Services (NYSE:DFS) -50.9% 7.41 15.08
261 McKesson Corporation (NYSE:MCK) -51.2% 31.99 65.51
262 The Dow Chemical Company (NYSE:DOW) -51.4% 19.16 39.42
263 AvalonBay Communities, Inc. (NYSE:AVB) -51.4% 45.75 94.14
264 Verisign, Inc. (NASDAQ:VRSN) -51.5% 18.24 37.61
265 Cooper Industries, Ltd. (NYSE:CBE) -51.6% 25.59 52.88
266 Moody's Corporation (NYSE:MCO) -51.7% 17.25 35.70
267 Schlumberger Limited (NYSE:SLB) -51.9% 47.30 98.37
268 LSI Corporation (NYSE:LSI) -52.0% 2.55 5.31
269 Agilent Technologies Inc. (NYSE:A) -52.0% 17.64 36.74
270 Nucor Corporation (NYSE:NUE) -52.1% 28.34 59.22
271 Omnicom Group Inc. (NYSE:OMC) -52.3% 22.68 47.53
272 Fortune Brands, Inc. (NYSE:FO) -52.3% 34.52 72.36
273 Archer Daniels Midland Company (NYSE:ADM) -52.3% 22.14 46.43
274 Air Products & Chemicals, Inc. (NYSE:APD) -52.3% 47.01 98.63
275 Boston Properties, Inc. (NYSE:BXP) -52.5% 43.60 91.81
276 The Gap Inc. (NYSE:GPS) -52.6% 10.09 21.28
277 Applied Materials, Inc. (NASDAQ:AMAT) -52.6% 8.42 17.76
278 Simon Property Group, Inc (NYSE:SPG) -52.7% 41.07 86.86
279 Loews Corporation (NYSE:L) -52.9% 23.70 50.34
280 Nabors Industries Ltd. (NYSE:NBR) -52.9% 12.89 27.39
281 The Western Union Company (NYSE:WU) -53.0% 11.42 24.28
282 NetApp Inc. (NASDAQ:NTAP) -53.0% 11.72 24.96
283 Intel Corporation (NASDAQ:INTC) -53.2% 12.49 26.66
284 The Washington Post Company (NYSE:WPO) -53.2% 370.50 791.40
285 Northrop Grumman Corporation (NYSE:NOC) -53.2% 36.80 78.64
286 Transocean Inc. (NYSE:RIG) -53.2% 66.97 143.15
287 Caterpillar Inc. (NYSE:CAT) -53.3% 33.87 72.56
288 IMS Health, Inc. (NYSE:RX) -53.4% 10.73 23.04
289 Cognizant Technology Solutions Corp. (NASDAQ:CTSH) -53.8% 15.68 33.94
290 Hess Corp. (NYSE:HES) -53.9% 46.47 100.86
291 Newmont Mining Corporation (NYSE:NEM) -54.1% 22.40 48.83
292 Sunoco, Inc. (NYSE:SUN) -54.2% 33.20 72.44
293 The Pepsi Bottling Group, Inc. (NYSE:PBG) -54.2% 18.07 39.46
294 Waters Corporation (NYSE:WAT) -54.2% 36.18 79.07
295 Huntington Bancshares Incorporated (NASDAQ:HBAN) -54.3% 6.75 14.76
296 Coach, Inc. (NYSE:COH) -54.5% 13.91 30.58
297 KB Home (NYSE:KBH) -54.7% 9.78 21.60
298 SunTrust Banks, Inc. (NYSE:STI) -54.7% 28.29 62.49
299 Comerica Incorporated (NYSE:CMA) -55.0% 19.58 43.53
300 Parker-Hannifin Corporation (NYSE:PH) -55.1% 33.80 75.31
301 Allegheny Energy, Inc. (NYSE:AYE) -55.4% 28.40 63.61
302 Franklin Resources, Inc. (NYSE:BEN) -55.4% 50.98 114.43
303 The McGraw-Hill Companies, Inc. (NYSE:MHP) -55.6% 19.45 43.81
304 National Semiconductor Corporation (NYSE:NSM) -55.7% 10.04 22.64
305 Noble Corporation (NYSE:NE) -55.8% 24.95 56.51
306 Texas Instruments Incorporated (NYSE:TXN) -56.2% 14.63 33.40
307 Fluor Corporation (NEW) (NYSE:FLR) -56.2% 31.91 72.86
308 PACCAR Inc (NASDAQ:PCAR) -56.4% 23.76 54.48
309 Apple Inc. (NASDAQ:AAPL) -56.4% 86.29 198.08
310 Merck & Co., Inc. (NYSE:MRK) -56.4% 25.31 58.11
311 T. Rowe Price Group, Inc. (NASDAQ:TROW) -56.6% 26.40 60.88
312 Federated Investors, Inc. (NYSE:FII) -56.7% 17.82 41.16
313 BJ Services Company (NYSE:BJS) -56.8% 10.49 24.26
314 Molex Incorporated (NASDAQ:MOLX) -56.9% 11.78 27.30
315 Teradata Corporation (NYSE:TDC) -57.1% 11.77 27.41
316 The Boeing Company (NYSE:BA) -57.1% 37.48 87.46
317 Tyco International Ltd. (NYSE:TYC) -57.2% 16.95 39.65
318 Halliburton Company (NYSE:HAL) -57.3% 16.18 37.91
319 Juniper Networks, Inc. (NASDAQ:JNPR) -57.7% 14.04 33.20
320 Dell Inc. (NASDAQ:DELL) -57.8% 10.35 24.51
321 Newell Rubbermaid Inc. (NYSE:NWL) -58.2% 10.81 25.88
322 Whirlpool Corporation (NYSE:WHR) -58.3% 34.01 81.63
323 Total System Services, Inc. (NYSE:TSS) -58.6% 11.60 28.00
324 Eaton Corporation (NYSE:ETN) -58.9% 39.88 96.95
325 Weyerhaeuser Company (NYSE:WY) -59.0% 30.25 73.74
326 Rockwell Collins, Inc. (NYSE:COL) -59.3% 29.32 71.97
327 Williams Companies, Inc. (NYSE:WMB) -59.4% 14.53 35.78
328 Google Inc. (NASDAQ:GOOG) -59.5% 280.18 691.46
329 Cameron International Corporation (NYSE:CAM) -59.7% 19.41 48.13
330 Limited Brands, Inc. (NYSE:LTD) -60.0% 7.58 18.93
331 Marathon Oil Corporation (NYSE:MRO) -60.4% 24.11 60.86
332 Honeywell International Inc. (NYSE:HON) -60.4% 24.38 61.57
333 Goodrich Corporation (NYSE:GR) -60.6% 27.84 70.61
334 AutoNation, Inc. (NYSE:AN) -60.6% 6.17 15.66
335 Yahoo! Inc. (NASDAQ:YHOO) -60.7% 9.14 23.26
336 Johnson Controls, Inc. (NYSE:JCI) -61.0% 14.07 36.04
337 General Electric Company (NYSE:GE) -61.0% 14.45 37.07
338 Starbucks Corporation (NASDAQ:SBUX) -61.1% 7.97 20.47
339 Amazon.com, Inc. (NASDAQ:AMZN) -61.3% 35.84 92.64
340 Tiffany & Co. (NYSE:TIF) -61.5% 17.71 46.03
341 Marriott International, Inc. (NYSE:MAR) -61.6% 13.13 34.18
342 The Allstate Corporation (NYSE:ALL) -61.9% 19.90 52.23
343 Baker Hughes Incorporated (NYSE:BHI) -61.9% 30.89 81.10
344 Novellus Systems, Inc. (NASDAQ:NVLS) -62.1% 10.46 27.57
345 Tyco Electronics Ltd. (NYSE:TEL) -62.2% 14.02 37.13
346 Precision Castparts Corp. (NYSE:PCP) -62.3% 52.34 138.70
347 El Paso Corporation (NYSE:EP) -62.4% 6.49 17.24
348 Intuitive Surgical, Inc. (NASDAQ:ISRG) -62.5% 121.09 322.99
349 State Street Corporation (NYSE:STT) -62.6% 30.33 81.20
350 Qwest Communications International Inc. (NYSE:Q) -62.8% 2.61 7.01
351 Rowan Companies, Inc. (NYSE:RDC) -62.9% 14.62 39.46
352 Humana Inc. (NYSE:HUM) -63.0% 27.89 75.31
353 Carnival Corporation (NYSE:CCL) -63.0% 16.47 44.49
354 Regions Financial Corporation (NYSE:RF) -63.1% 8.72 23.65
355 Aetna Inc. (NYSE:AET) -63.2% 21.24 57.73
356 WellPoint, Inc. (NYSE:WLP) -63.4% 32.11 87.73
357 Rockwell Automation (NYSE:ROK) -63.5% 25.18 68.96
358 D.R. Horton, Inc. (NYSE:DHI) -63.7% 4.78 13.17
359 The New York Times Company (NYSE:NYT) -63.8% 6.35 17.53
360 American Express Company (NYSE:AXP) -64.0% 18.74 52.02
361 Autodesk, Inc. (NASDAQ:ADSK) -64.1% 17.86 49.76
362 Masco Corporation (NYSE:MAS) -64.2% 7.73 21.61
363 The AES Corporation (NYSE:AES) -64.7% 7.55 21.39
364 Best Buy Co., Inc. (NYSE:BBY) -64.7% 18.58 52.65
365 eBay Inc. (NASDAQ:EBAY) -64.8% 11.69 33.19
366 Corning Incorporated (NYSE:GLW) -64.9% 8.43 23.99
367 Kimco Realty Corporation (NYSE:KIM) -64.9% 12.77 36.40
368 International Paper Company (NYSE:IP) -65.4% 11.20 32.38
369 J.C. Penney Company, Inc. (NYSE:JCP) -65.4% 15.21 43.99
370 Jabil Circuit, Inc. (NYSE:JBL) -65.5% 5.27 15.27
371 Xerox Corporation (NYSE:XRX) -65.5% 5.58 16.19
372 Smith International, Inc. (NYSE:SII) -65.7% 25.34 73.85
373 MeadWestvaco Corp. (NYSE:MWV) -65.8% 10.70 31.30
374 Weatherford International Ltd. (NYSE:WFT) -66.1% 11.63 34.30
375 Peabody Energy Corporation (NYSE:BTU) -66.5% 20.64 61.64
376 Fifth Third Bancorp (NASDAQ:FITB) -66.5% 8.41 25.13
377 Deere & Company (NYSE:DE) -66.6% 31.08 93.12
378 GameStop Corp. (NYSE:GME) -66.9% 20.56 62.11
379 Massey Energy Company (NYSE:MEE) -67.0% 11.81 35.75
380 Tyson Foods, Inc. (NYSE:TSN) -67.1% 5.04 15.33
381 KeyCorp (NYSE:KEY) -67.2% 7.70 23.45
382 Coca-Cola Enterprises Inc. (NYSE:CCE) -67.4% 8.49 26.03
383 Host Hotels & Resorts, Inc. (NYSE:HST) -67.8% 5.49 17.04
384 Interpublic Group of Companies, Inc. (NYSE:IPG) -67.8% 2.61 8.11
385 Eastman Kodak Company (NYSE:EK) -67.9% 7.03 21.87
386 Bank of America Corporation (NYSE:BAC) -68.3% 13.06 41.26
387 KLA-Tencor Corporation (NASDAQ:KLAC) -68.4% 15.24 48.16
388 Teradyne, Inc. (NYSE:TER) -68.4% 3.27 10.34
389 Invesco Ltd. (NYSE:IVZ) -68.5% 9.89 31.38
390 National-Oilwell Varco, Inc. (NYSE:NOV) -69.1% 22.72 73.46
391 Cummins Inc. (NYSE:CMI) -69.1% 19.65 63.69
392 MetLife, Inc. (NYSE:MET) -69.2% 19.00 61.62
393 Viacom, Inc. (NYSE:VIA.B) -69.2% 13.51 43.92
394 Akamai Technologies, Inc. (NASDAQ:AKAM) -69.3% 10.63 34.60
395 UnitedHealth Group Inc. (NYSE:UNH) -69.5% 17.73 58.20
396 Leucadia National Corp. (NYSE:LUK) -69.6% 14.31 47.10
397 CONSOL Energy Inc. (NYSE:CNX) -69.7% 21.69 71.52
398 R.R. Donnelley & Sons Company (NYSE:RRD) -69.7% 11.44 37.74
399 IntercontinentalExchange, Inc. (NYSE:ICE) -69.7% 58.29 192.48
400 Jones Apparel Group, Inc. (NYSE:JNY) -69.8% 4.83 15.99
401 Ashland Inc. (NYSE:ASH) -69.8% 14.32 47.43
402 News Corporation (NYSE:NWS.A) -69.8% 6.18 20.49
403 Jacobs Engineering Group Inc. (NYSE:JEC) -69.9% 28.80 95.61
404 Ingersoll-Rand Company Limited (NYSE:IR) -70.4% 13.77 46.47
405 Electronic Arts Inc. (NASDAQ:ERTS) -70.7% 17.11 58.41
406 SUPERVALU INC. (NYSE:SVU) -71.0% 10.88 37.52
407 Harley-Davidson, Inc. (NYSE:HOG) -71.1% 13.49 46.71
408 SLM Corporation (NYSE:SLM) -71.2% 5.81 20.14
409 Tenet Healthcare Corporation (NYSE:THC) -71.3% 1.46 5.08
410 Micron Technology, Inc. (NYSE:MU) -71.4% 2.07 7.25
411 Monster Worldwide, Inc. (NASDAQ:MNST) -71.5% 9.23 32.40
412 Advanced Micro Devices, Inc. (NYSE:AMD) -71.7% 2.12 7.50
413 Centex Corporation (NYSE:CTX) -71.9% 7.09 25.26
414 Sears Holdings Corporation (NASDAQ:SHLD) -72.1% 28.50 102.05
415 Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT) -72.4% 12.17 44.03
416 E TRADE Financial Corporation (NASDAQ:ETFC) -72.4% 0.98 3.55
417 Convergys Corporation (NYSE:CVG) -72.5% 4.52 16.46
418 Lennar Corporation (NYSE:LEN) -73.3% 4.78 17.89
419 Meredith Corporation (NYSE:MDP) -74.0% 14.32 54.97
420 Dynegy Inc. (NYSE:DYN) -74.1% 1.85 7.14
421 Goldman Sachs Group, Inc. (NYSE:GS) -74.3% 55.18 215.06
422 Apartment Investment and Management Co. (NYSE:AIV) -74.4% 8.90 34.73
423 Ameriprise Financial, Inc. (NYSE:AMP) -74.7% 13.96 55.11
424 CME Group Inc. (NASDAQ:CME) -75.1% 170.88 685.96
425 Nordstrom, Inc. (NYSE:JWN) -75.6% 8.98 36.73
426 Assurant, Inc. (NYSE:AIZ) -76.2% 15.91 66.90
427 Titanium Metals Corporation (NYSE:TIE) -76.5% 6.22 26.45
428 Valero Energy Corporation (NYSE:VLO) -76.5% 16.45 70.02
429 Constellation Energy Group, Inc. (NYSE:CEG) -76.7% 23.91 102.53
430 NYSE Euronext (NYSE:NYX) -77.5% 19.72 87.77
431 Alcoa Inc. (NYSE:AA) -77.7% 8.16 36.55
432 Macy's, Inc. (NYSE:M) -78.0% 5.68 25.87
433 Citigroup Inc. (NYSE:C) -78.3% 6.40 29.44
434 Whole Foods Market, Inc. (NASDAQ:WFMI) -78.4% 8.82 40.80
435 Motorola, Inc. (NYSE:MOT) -78.6% 3.44 16.04
436 Expedia, Inc. (NASDAQ:EXPE) -78.7% 6.72 31.62
437 United States Steel Corporation (NYSE:X) -79.1% 25.21 120.91
438 MBIA Inc. (NYSE:MBI) -79.7% 3.79 18.63
439 CIGNA Corporation (NYSE:CI) -79.8% 10.88 53.73
440 International Game Technology (NYSE:IGT) -80.2% 8.69 43.93
441 CBS Corporation (NYSE:CBS) -80.2% 5.39 27.25
442 Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) -80.2% 20.24 102.44
443 JDS Uniphase Corporation (NASDAQ:JDSU) -80.6% 2.58 13.30
444 Allegheny Technologies Incorporated (NYSE:ATI) -80.7% 16.69 86.40
445 Morgan Stanley (NYSE:MS) -80.7% 10.25 53.11
446 Legg Mason, Inc. (NYSE:LM) -80.9% 14.00 73.15
447 Coventry Health Care, Inc. (NYSE:CVH) -80.9% 11.32 59.25
448 SanDisk Corporation (NASDAQ:SNDK) -81.0% 6.30 33.17
449 Ford Motor Company (NYSE:F) -81.3% 1.26 6.73
450 CB Richard Ellis Group, Inc. (NYSE:CBG) -81.3% 4.03 21.55
451 NVIDIA Corporation (NASDAQ:NVDA) -81.7% 6.23 34.02
452 Prudential Financial, Inc. (NYSE:PRU) -81.7% 17.01 93.04
453 Wyndham Worldwide Corporation (NYSE:WYN) -81.8% 4.29 23.56
454 Abercrombie & Fitch Co. (NYSE:ANF) -81.8% 14.55 79.97
455 Sun Microsystems, Inc. (NASDAQ:JAVA) -82.0% 3.27 18.13
456 Merrill Lynch & Co., Inc. (NYSE:MER) -82.1% 9.60 53.68
457 Tesoro Corporation (NYSE:TSO) -82.2% 8.49 47.70
458 Gannett Co., Inc. (NYSE:GCI) -82.5% 6.81 39.00
459 The Goodyear Tire & Rubber Company (NYSE:GT) -82.9% 4.83 28.22
460 Textron Inc. (NYSE:TXT) -82.9% 12.20 71.30
461 Principal Financial Group, Inc. (NYSE:PFG) -83.0% 11.67 68.84
462 Sovereign Bancorp, Inc. (NYSE:SOV) -83.2% 1.92 11.40
463 Dillard's, Inc. (NYSE:DDS) -83.3% 3.14 18.78
464 Ciena Corporation (NASDAQ:CIEN) -83.7% 5.55 34.11
465 American Capital Ltd. (NASDAQ:ACAS) -83.8% 5.35 32.96
466 Janus Capital Group Inc. (NYSE:JNS) -83.9% 5.28 32.85
467 Terex Corporation (NYSE:TEX) -84.4% 10.21 65.57
468 Harman International Industries Inc./DE/ (NYSE:HAR) -85.6% 10.65 73.72
469 Sprint Nextel Corporation (NYSE:S) -85.7% 1.88 13.13
470 AK Steel Holding Corporation (NYSE:AKS) -85.9% 6.51 46.24
471 MEMC Electronic Materials, Inc. (NYSE:WFR) -86.2% 12.20 88.50
472 Lincoln National Corporation (NYSE:LNC) -87.4% 7.31 58.22
473 Developers Diversified Realty Corp. (NYSE:DDR) -87.8% 4.69 38.29
474 Wachovia Corporation (NYSE:WB) -88.0% 4.57 38.03
475 Office Depot, Inc. (NYSE:ODP) -88.5% 1.60 13.91
476 General Motors Corporation (NYSE:GM) -88.8% 2.79 24.89
477 Manitowoc Company, Inc. (NYSE:MTW) -88.8% 5.47 48.83
478 National City Corporation (NYSE:NCC) -89.2% 1.78 16.46
479 Liz Claiborne, Inc. (NYSE:LIZ) -89.5% 2.13 20.35
480 XL Capital Ltd. (NYSE:XL) -89.8% 5.11 50.31
481 CIT Group Inc. (NYSE:CIT) -90.6% 2.25 24.03
482 MGIC Investment Corp. (NYSE:MTG) -90.9% 2.05 22.43
483 Unisys Corporation (NYSE:UIS) -91.5% 0.40 4.73
484 Hartford Financial Services (NYSE:HIG) -92.1% 6.88 87.19
485 ProLogis (NYSE:PLD) -94.5% 3.46 63.38
486 Genworth Financial, Inc. (NYSE:GNW) -96.0% 1.02 25.45
487 American International Group, Inc. (NYSE:AIG) -97.3% 1.56 58.30
488 Freddie Mac (NYSE:FRE) -98.4% 0.56 34.06
489 General Growth Properties, Inc (NYSE:GGP) -99.0% 0.40 41.18
490 Fannie Mae (NYSE:FNM) -99.0% 0.38 39.97
491 Washington Mutual, Inc. (NYSE:WM) -99.7% 0.04 13.61
492 Lehman Brothers Holdings Inc. (NYSE:LEH) -99.9% 0.04 65.44
493 Hercules Incorporated (NYSE:HPC) N/A N/A 19.35
494 Electronic Data Systems Corporation (NYSE:EDS) N/A N/A 20.73
495 Lorillard Inc. (NYSE:LO) N/A 60.69 N/A
496 Philip Morris International Inc. (NYSE:PM) N/A 36.64 N/A
497 SAFECO Corporation (NYSE:SAF) N/A N/A 55.68
498 Scripps Networks Interactive, Inc. (NYSE:SNI) N/A 24.40 N/A
499 Wendy's International (NYSE:WEN) N/A N/A 25.84
500 Wm. Wrigley Jr. Company (NYSE:WWY) N/A N/A 58.55
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Year-to-Date Performance Ranking of S&P 500 Stocks (11/19/2008)
Below is the Year-to-Date Performance Ranking of stocks in S&P 500 index.
Rank Company (Stock Symbol) Year-to-Date Change Current Price End of 2007
1 Family Dollar Stores, Inc. (NYSE:FDO) 37.7% 26.48 19.23
2 Rohm and Haas Company (NYSE:ROH) 35.1% 71.71 53.07
3 Anheuser-Busch Companies, Inc. (NYSE:BUD) 31.0% 68.58 52.34
4 UST Inc. (NYSE:UST) 24.9% 68.47 54.80
5 Barr Pharmaceuticals, Inc. (NYSE:BRL) 21.1% 64.29 53.10
6 Celgene Corporation (NASDAQ:CELG) 20.7% 55.76 46.21
7 Amgen, Inc. (NASDAQ:AMGN) 15.5% 53.64 46.44
8 General Mills, Inc. (NYSE:GIS) 9.3% 62.31 57.00
9 Southwestern Energy Company (NYSE:SWN) 9.0% 30.38 27.86
10 Hudson City Bancorp, Inc. (NASDAQ:HCBK) 7.6% 16.16 15.02
11 Wal-Mart Stores, Inc. (NYSE:WMT) 7.3% 51.00 47.53
12 Campbell Soup Company (NYSE:CPB) 3.4% 36.94 35.73
13 The Kroger Co. (NYSE:KR) -0.4% 26.60 26.71
14 Abbott Laboratories (NYSE:ABT) -2.9% 54.52 56.15
15 McDonald's Corporation (NYSE:MCD) -5.9% 55.44 58.91
16 Apollo Group, Inc. (NASDAQ:APOL) -6.0% 65.97 70.15
17 Gilead Sciences, Inc. (NASDAQ:GILD) -6.1% 43.20 46.01
18 Baxter International Inc. (NYSE:BAX) -8.1% 53.37 58.05
19 Genzyme Corporation (NASDAQ:GENZ) -8.6% 68.00 74.44
20 The Clorox Company (NYSE:CLX) -8.8% 59.42 65.17
21 Waste Management, Inc. (NYSE:WMI) -9.0% 29.73 32.67
22 Hasbro, Inc. (NYSE:HAS) -9.7% 23.10 25.58
23 Nicor Inc. (NYSE:GAS) -10.1% 38.08 42.35
24 Norfolk Southern Corp. (NYSE:NSC) -10.1% 45.33 50.44
25 Allied Waste Industries, Inc. (NYSE:AW) -10.2% 9.90 11.02
26 Aon Corporation (NYSE:AOC) -10.4% 42.74 47.69
27 H&R Block, Inc. (NYSE:HRB) -10.6% 16.61 18.57
28 Sherwin-Williams Company (NYSE:SHW) -11.0% 51.68 58.04
29 The Southern Company (NYSE:SO) -11.0% 34.47 38.75
30 Burlington Northern Santa Fe Corporation (NYSE:BNI) -11.4% 73.73 83.23
31 C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) -12.7% 47.25 54.12
32 Pactiv Corporation (NYSE:PTV) -12.8% 23.23 26.63
33 Johnson & Johnson (NYSE:JNJ) -12.9% 58.12 66.70
34 H.J. Heinz Company (NYSE:HNZ) -13.4% 40.43 46.68
35 EOG Resources, Inc. (NYSE:EOG) -13.4% 77.28 89.25
36 Big Lots, Inc. (NYSE:BIG) -13.6% 13.81 15.99
37 The Hershey Company (NYSE:HSY) -14.3% 33.78 39.40
38 King Pharmaceuticals, Inc. (NYSE:KG) -14.7% 8.73 10.24
39 PG&E Corporation (NYSE:PCG) -15.1% 36.59 43.09
40 The Procter & Gamble Company (NYSE:PG) -15.2% 62.27 73.42
41 Molson Coors Brewing Company (NYSE:TAP) -15.2% 43.76 51.62
42 Affiliated Computer Services, Inc. (NYSE:ACS) -15.6% 38.07 45.10
43 Marsh & McLennan Companies, Inc. (NYSE:MMC) -15.8% 22.30 26.47
44 Applied Biosystems Inc. (NYSE:ABI) -15.8% 28.55 33.92
45 Kellogg Company (NYSE:K) -15.8% 44.12 52.43
46 DaVita Inc. (NYSE:DVA) -16.5% 47.03 56.35
47 C.R. Bard, Inc. (NYSE:BCR) -16.6% 79.08 94.80
48 Quest Diagnostics Incorporated (NYSE:DGX) -16.9% 43.94 52.90
49 Integrys Energy Group, Inc. (NYSE:TEG) -17.9% 42.42 51.69
50 The DIRECTV Group, Inc. (NASDAQ:DTV) -17.9% 18.97 23.12
51 Bemis Company, Inc. (NYSE:BMS) -18.3% 22.36 27.38
52 Pulte Homes, Inc. (NYSE:PHM) -18.4% 8.60 10.54
53 Watson Pharmaceuticals, Inc. (NYSE:WPI) -18.4% 22.14 27.14
54 Union Pacific Corporation (NYSE:UNP) -18.9% 50.97 62.81
55 Kimberly-Clark Corporation (NYSE:KMB) -19.1% 56.08 69.34
56 Wells Fargo & Company (NYSE:WFC) -19.2% 24.40 30.19
57 Colgate-Palmolive Company (NYSE:CL) -19.2% 62.99 77.96
58 The Chubb Corporation (NYSE:CB) -19.9% 43.74 54.58
59 DTE Energy Company (NYSE:DTE) -19.9% 35.20 43.96
60 Laboratory Corp. of America Holdings (NYSE:LH) -20.1% 60.36 75.53
61 Lowe's Companies, Inc. (NYSE:LOW) -20.2% 18.04 22.62
62 Kraft Foods Inc. (NYSE:KFT) -20.3% 25.99 32.63
63 Covidien Ltd. (NYSE:COV) -20.4% 35.27 44.29
64 Consolidated Edison, Inc. (NYSE:ED) -21.1% 38.52 48.85
65 McCormick & Company, Incorporated (NYSE:MKC) -21.2% 29.87 37.91
66 AutoZone, Inc. (NYSE:AZO) -21.4% 94.25 119.91
67 Exxon Mobil Corporation (NYSE:XOM) -21.6% 73.42 93.69
68 Genuine Parts Company (NYSE:GPC) -21.7% 36.25 46.30
69 Public Storage (NYSE:PSA) -21.7% 57.47 73.41
70 Progress Energy, Inc. (NYSE:PGN) -22.0% 37.79 48.43
71 Xcel Energy Inc. (NYSE:XEL) -22.3% 17.53 22.57
72 Leggett & Platt, Inc. (NYSE:LEG) -22.7% 13.48 17.44
73 Devon Energy Corporation (NYSE:DVN) -22.9% 68.57 88.91
74 BB&T Corporation (NYSE:BBT) -23.1% 23.57 30.67
75 Automatic Data Processing (NYSE:ADP) -23.4% 34.11 44.53
76 Bristol Myers Squibb Co. (NYSE:BMY) -23.6% 20.27 26.52
77 QUALCOMM, Inc. (NASDAQ:QCOM) -23.7% 30.01 39.35
78 PNC Financial Services (NYSE:PNC) -24.1% 49.83 65.65
79 Chevron Corporation (NYSE:CVX) -24.3% 70.61 93.33
80 Raytheon Company (NYSE:RTN) -24.5% 45.85 60.70
81 Wyeth (NYSE:WYE) -24.6% 33.34 44.19
82 Comcast Corporation (NASDAQ:CMCSA) -24.6% 13.77 18.26
83 Range Resources Corp. (NYSE:RRC) -25.0% 38.53 51.36
84 Medco Health Solutions Inc. (NYSE:MHS) -25.2% 37.91 50.70
85 CSX Corporation (NYSE:CSX) -25.5% 32.76 43.98
86 U.S. Bancorp (NYSE:USB) -25.6% 23.62 31.74
87 Becton, Dickinson and Co. (NYSE:BDX) -25.9% 61.92 83.58
88 Duke Energy Corporation (NYSE:DUK) -26.1% 14.91 20.17
89 Dominion Resources, Inc. (NYSE:D) -26.3% 34.95 47.45
90 FirstEnergy Corp. (NYSE:FE) -26.6% 53.12 72.34
91 The Home Depot, Inc. (NYSE:HD) -26.7% 19.76 26.94
92 Express Scripts, Inc. (NASDAQ:ESRX) -27.3% 53.06 73.00
93 United Parcel Service, Inc. (NYSE:UPS) -27.4% 51.36 70.72
94 SYSCO Corporation (NYSE:SYY) -27.8% 22.52 31.21
95 Biogen Idec Inc. (NASDAQ:BIIB) -27.9% 41.06 56.92
96 Southwest Airlines Co. (NYSE:LUV) -28.9% 8.67 12.20
97 Oracle Corporation (NASDAQ:ORCL) -29.1% 16.00 22.58
98 Altria Group, Inc. (NYSE:MO) -29.2% 16.50 23.31
99 Altera Corporation (NASDAQ:ALTR) -29.7% 13.59 19.32
100 International Business Machines Corp. (NYSE:IBM) -29.7% 75.97 108.10
101 CVS Caremark Corporation (NYSE:CVS) -30.0% 27.84 39.75
102 Sigma-Aldrich Corporation (NASDAQ:SIAL) -30.1% 38.17 54.60
103 3M Company (NYSE:MMM) -30.3% 58.77 84.32
104 Symantec Corporation (NASDAQ:SYMC) -30.4% 11.24 16.14
105 Varian Medical Systems, Inc. (NYSE:VAR) -30.5% 36.27 52.16
106 QLogic Corporation (NASDAQ:QLGC) -30.5% 9.87 14.20
107 The Travelers Companies, Inc. (NYSE:TRV) -30.7% 37.29 53.80
108 The Coca-Cola Company (NYSE:KO) -31.1% 42.27 61.37
109 M&T Bank Corporation (NYSE:MTB) -31.2% 56.14 81.57
110 PepsiCo, Inc. (NYSE:PEP) -31.4% 52.10 75.90
111 The Progressive Corporation (NYSE:PGR) -31.4% 13.15 19.16
112 Plum Creek Timber Co. Inc. (NYSE:PCL) -31.4% 31.58 46.04
113 W.W. Grainger, Inc. (NYSE:GWW) -31.5% 59.92 87.52
114 Pfizer Inc. (NYSE:PFE) -31.5% 15.56 22.73
115 St. Jude Medical, Inc. (NYSE:STJ) -31.6% 27.80 40.64
116 Lexmark International, Inc. (NYSE:LXK) -31.8% 23.79 34.86
117 NIKE, Inc. (NYSE:NKE) -31.8% 43.84 64.24
118 Ball Corporation (NYSE:BLL) -32.0% 30.60 45.00
119 Paychex, Inc. (NASDAQ:PAYX) -32.0% 24.62 36.22
120 FedEx Corporation (NYSE:FDX) -32.1% 60.58 89.17
121 CenterPoint Energy, Inc. (NYSE:CNP) -32.7% 11.52 17.13
122 Apache Corporation (NYSE:APA) -32.9% 72.19 107.54
123 Xilinx, Inc. (NASDAQ:XLNX) -32.9% 14.67 21.87
124 Pinnacle West Capital Corporation (NYSE:PNW) -32.9% 28.44 42.41
125 Reynolds American, Inc. (NYSE:RAI) -33.0% 44.19 65.96
126 BMC Software, Inc. (NYSE:BMC) -33.2% 23.82 35.64
127 Staples, Inc. (NASDAQ:SPLS) -33.9% 15.26 23.07
128 AmerisourceBergen Corp. (NYSE:ABC) -34.0% 29.61 44.87
129 FPL Group, Inc. (NYSE:FPL) -34.1% 44.67 67.78
130 Lockheed Martin Corporation (NYSE:LMT) -34.1% 69.33 105.26
131 Millipore Corporation (NYSE:MIL) -34.5% 47.94 73.18
132 Entergy Corporation (NYSE:ETR) -34.5% 78.26 119.52
133 Hewlett-Packard Company (NYSE:HPQ) -34.6% 33.03 50.48
134 JPMorgan Chase & Co. (NYSE:JPM) -34.8% 28.47 43.65
135 Intuit Inc. (NASDAQ:INTU) -35.0% 20.55 31.61
136 Snap-on Incorporated (NYSE:SNA) -35.1% 31.32 48.24
137 Costco Wholesale Corporation (NASDAQ:COST) -35.1% 45.27 69.76
138 Robert Half International Inc. (NYSE:RHI) -35.1% 17.54 27.04
139 Sempra Energy (NYSE:SRE) -35.3% 40.03 61.88
140 TECO Energy, Inc. (NYSE:TE) -35.5% 11.10 17.21
141 Ryder System, Inc. (NYSE:R) -35.5% 30.31 47.01
142 The TJX Companies, Inc. (NYSE:TJX) -35.9% 18.42 28.73
143 The Estee Lauder Companies Inc. (NYSE:EL) -36.0% 27.92 43.61
144 XTO Energy Inc. (NYSE:XTO) -36.0% 32.86 51.36
145 Cincinnati Financial Corporation (NASDAQ:CINF) -36.1% 25.28 39.54
146 Yum! Brands, Inc. (NYSE:YUM) -36.1% 24.46 38.27
147 Hospira, Inc. (NYSE:HSP) -36.2% 27.19 42.64
148 Equity Residential (NYSE:EQR) -36.4% 23.21 36.47
149 Cabot Oil & Gas Corporation (NYSE:COG) -36.5% 25.64 40.37
150 American Electric Power Company, Inc. (NYSE:AEP) -36.9% 29.37 46.56
151 Brown-Forman Corporation (NYSE:BF.B) -37.0% 46.67 74.11
152 ConAgra Foods, Inc. (NYSE:CAG) -37.0% 14.98 23.79
153 Expeditors International of Washington (NASDAQ:EXPD) -37.1% 28.11 44.68
154 PerkinElmer, Inc. (NYSE:PKI) -37.2% 16.35 26.02
155 Monsanto Company (NYSE:MON) -37.3% 70.07 111.69
156 Ecolab Inc. (NYSE:ECL) -37.5% 32.01 51.21
157 Fidelity National Information Services (NYSE:FIS) -37.7% 14.44 23.17
158 Medtronic, Inc. (NYSE:MDT) -37.9% 31.20 50.27
159 Verizon Communications Inc. (NYSE:VZ) -38.1% 26.94 43.49
160 The Walt Disney Company (NYSE:DIS) -38.2% 19.94 32.28
161 L-3 Communications Holdings, Inc. (NYSE:LLL) -38.5% 65.16 105.94
162 Bed Bath & Beyond Inc. (NASDAQ:BBBY) -38.5% 18.07 29.39
163 CA, Inc. (NASDAQ:CA) -38.7% 15.30 24.95
164 Linear Technology Corporation (NASDAQ:LLTC) -39.0% 19.43 31.83
165 Sealed Air Corp. (NYSE:SEE) -39.3% 14.05 23.14
166 AT&T Inc. (NYSE:T) -39.3% 25.23 41.56
167 Compuware Corporation (NASDAQ:CPWR) -39.3% 5.39 8.88
168 Praxair, Inc. (NYSE:PX) -39.3% 53.84 88.71
169 Cintas Corporation (NASDAQ:CTAS) -39.4% 20.36 33.62
170 PPL Corporation (NYSE:PPL) -39.4% 31.54 52.09
171 Mattel, Inc. (NYSE:MAT) -39.5% 11.51 19.04
172 Walgreen Company (NYSE:WAG) -39.6% 23.01 38.08
173 Exelon Corporation (NYSE:EXC) -39.7% 49.23 81.64
174 Equifax Inc. (NYSE:EFX) -39.8% 21.89 36.36
175 MasterCard Incorporated (NYSE:MA) -39.8% 129.54 215.19
176 Frontier Communications Corp (NYSE:FTR) -39.8% 7.66 12.73
177 United Technologies Corporation (NYSE:UTX) -39.9% 45.99 76.54
178 Occidental Petroleum Corporation (NYSE:OXY) -40.1% 46.12 76.99
179 Pitney Bowes Inc. (NYSE:PBI) -40.3% 22.72 38.04
180 Ameren Corporation (NYSE:AEE) -40.3% 32.35 54.21
181 Windstream Corporation (NYSE:WIN) -40.4% 7.76 13.02
182 Zions Bancorporation (NASDAQ:ZION) -40.9% 27.57 46.69
183 Edison International (NYSE:EIX) -41.0% 31.49 53.37
184 Forest Laboratories, Inc. (NYSE:FRX) -41.0% 21.49 36.45
185 Eli Lilly & Co. (NYSE:LLY) -41.2% 31.41 53.39
186 NiSource Inc. (NYSE:NI) -41.3% 11.08 18.89
187 PPG Industries, Inc. (NYSE:PPG) -41.4% 41.19 70.23
188 Danaher Corporation (NYSE:DHR) -41.4% 51.45 87.74
189 Safeway Inc. (NYSE:SWY) -41.5% 20.01 34.21
190 V.F. Corporation (NYSE:VFC) -41.9% 39.88 68.66
191 Noble Energy, Inc. (NYSE:NBL) -42.0% 46.10 79.52
192 Patterson Companies, Inc. (NASDAQ:PDCO) -42.1% 19.67 33.95
193 Illinois Tool Works Inc. (NYSE:ITW) -42.1% 31.01 53.54
194 Spectra Energy Corp. (NYSE:SE) -42.1% 14.95 25.82
195 Schering-Plough Corporation (NYSE:SGP) -42.4% 15.35 26.64
196 Kohl's Corporation (NYSE:KSS) -42.4% 26.39 45.80
197 ITT Corporation (NYSE:ITT) -42.4% 38.04 66.04
198 CenturyTel, Inc. (NYSE:CTL) -42.4% 23.86 41.46
199 Dover Corporation (NYSE:DOV) -42.5% 26.51 46.09
200 Pall Corporation (NYSE:PLL) -42.6% 23.15 40.32
201 The Charles Schwab Corporation (NASDAQ:SCHW) -42.7% 14.65 25.55
202 AFLAC Incorporated (NYSE:AFL) -42.7% 35.91 62.63
203 Citrix Systems, Inc. (NASDAQ:CTXS) -42.7% 21.79 38.01
204 Pepco Holdings, Inc. (NYSE:POM) -42.8% 16.77 29.33
205 Vulcan Materials Company (NYSE:VMC) -42.9% 45.18 79.09
206 Public Service Enterprise Group Inc. (NYSE:PEG) -43.3% 27.84 49.12
207 Zimmer Holdings, Inc. (NYSE:ZMH) -43.4% 37.47 66.15
208 The Stanley Works (NYSE:SWK) -43.4% 27.43 48.48
209 Embarq Corporation (NYSE:EQ) -43.5% 27.99 49.53
210 Mylan Inc. (NYSE:MYL) -43.6% 7.93 14.06
211 CMS Energy Corporation (NYSE:CMS) -43.6% 9.80 17.38
212 Boston Scientific Corporation (NYSE:BSX) -43.7% 6.55 11.63
213 Capital One Financial Corp. (NYSE:COF) -43.9% 26.50 47.26
214 Emerson Electric Co. (NYSE:EMR) -44.2% 31.63 56.66
215 Microchip Technology Inc. (NASDAQ:MCHP) -44.3% 17.51 31.42
216 Cisco Systems, Inc. (NASDAQ:CSCO) -44.3% 15.08 27.07
217 Novell, Inc. (NASDAQ:NOVL) -44.4% 3.82 6.87
218 General Dynamics Corporation (NYSE:GD) -44.7% 49.25 88.99
219 Analog Devices, Inc. (NYSE:ADI) -44.7% 17.53 31.70
220 Cardinal Health, Inc. (NYSE:CAH) -44.7% 31.92 57.75
221 Thermo Fisher Scientific Inc. (NYSE:TMO) -45.0% 31.75 57.68
222 E.I. du Pont de Nemours & Company (NYSE:DD) -45.0% 24.26 44.09
223 Sara Lee Corp. (NYSE:SLE) -45.1% 8.82 16.06
224 Fiserv, Inc. (NASDAQ:FISV) -45.2% 30.42 55.49
225 Anadarko Petroleum Corporation (NYSE:APC) -45.3% 35.96 65.69
226 International Flavors & Fragrances Inc. (NYSE:IFF) -45.6% 26.17 48.13
227 Target Corporation (NYSE:TGT) -46.1% 26.96 50.00
228 Darden Restaurants, Inc. (NYSE:DRI) -46.1% 14.94 27.71
229 Vornado Realty Trust (NYSE:VNO) -46.4% 47.17 87.95
230 Tellabs, Inc. (NASDAQ:TLAB) -46.5% 3.50 6.54
231 Allergan, Inc. (NYSE:AGN) -46.9% 34.11 64.24
232 Polo Ralph Lauren Corporation (NYSE:RL) -46.9% 32.80 61.79
233 Computer Sciences Corporation (NYSE:CSC) -47.0% 26.21 49.47
234 EMC Corporation (NYSE:EMC) -47.1% 9.80 18.53
235 Avon Products, Inc. (NYSE:AVP) -47.2% 20.88 39.53
236 The Black & Decker Corporation (NYSE:BDK) -47.2% 36.78 69.65
237 Broadcom Corporation (NASDAQ:BRCM) -47.4% 13.76 26.14
238 Unum Group (NYSE:UNM) -47.5% 12.50 23.79
239 ConocoPhillips (NYSE:COP) -47.5% 46.34 88.30
240 Avery Dennison Corporation (NYSE:AVY) -47.8% 27.72 53.14
241 The Bank of New York Mellon Corporation (NYSE:BK) -47.9% 25.39 48.76
242 Stryker Corporation (NYSE:SYK) -48.0% 38.83 74.72
243 First Horizon National Corporation (NYSE:FHN) -48.2% 9.41 18.15
244 Dean Foods Company (NYSE:DF) -48.4% 13.34 25.86
245 Microsoft Corporation (NASDAQ:MSFT) -48.6% 18.29 35.60
246 Murphy Oil Corporation (NYSE:MUR) -48.6% 43.58 84.84
247 Eastman Chemical Company (NYSE:EMN) -49.3% 31.00 61.09
248 American Tower Corporation (NYSE:AMT) -49.3% 21.58 42.60
249 Adobe Systems Incorporated (NASDAQ:ADBE) -49.4% 21.63 42.73
250 HCP, Inc. (NYSE:HCP) -49.4% 17.60 34.78
251 Northern Trust Corporation (NASDAQ:NTRS) -49.5% 38.65 76.58
252 Torchmark Corporation (NYSE:TMK) -49.6% 30.49 60.53
253 Constellation Brands, Inc. (NYSE:STZ) -49.7% 11.88 23.64
254 RadioShack Corporation (NYSE:RSH) -49.8% 8.46 16.86
255 ENSCO International Incorporated (NYSE:ESV) -49.9% 29.85 59.62
256 Marshall & Ilsley Corporation (NYSE:MI) -50.2% 13.19 26.48
257 Questar Corporation (NYSE:STR) -50.4% 26.84 54.10
258 Time Warner Inc. (NYSE:TWX) -50.7% 8.14 16.51
259 Chesapeake Energy Corporation (NYSE:CHK) -50.8% 19.30 39.20
260 Discover Financial Services (NYSE:DFS) -50.9% 7.41 15.08
261 McKesson Corporation (NYSE:MCK) -51.2% 31.99 65.51
262 The Dow Chemical Company (NYSE:DOW) -51.4% 19.16 39.42
263 AvalonBay Communities, Inc. (NYSE:AVB) -51.4% 45.75 94.14
264 Verisign, Inc. (NASDAQ:VRSN) -51.5% 18.24 37.61
265 Cooper Industries, Ltd. (NYSE:CBE) -51.6% 25.59 52.88
266 Moody's Corporation (NYSE:MCO) -51.7% 17.25 35.70
267 Schlumberger Limited (NYSE:SLB) -51.9% 47.30 98.37
268 LSI Corporation (NYSE:LSI) -52.0% 2.55 5.31
269 Agilent Technologies Inc. (NYSE:A) -52.0% 17.64 36.74
270 Nucor Corporation (NYSE:NUE) -52.1% 28.34 59.22
271 Omnicom Group Inc. (NYSE:OMC) -52.3% 22.68 47.53
272 Fortune Brands, Inc. (NYSE:FO) -52.3% 34.52 72.36
273 Archer Daniels Midland Company (NYSE:ADM) -52.3% 22.14 46.43
274 Air Products & Chemicals, Inc. (NYSE:APD) -52.3% 47.01 98.63
275 Boston Properties, Inc. (NYSE:BXP) -52.5% 43.60 91.81
276 The Gap Inc. (NYSE:GPS) -52.6% 10.09 21.28
277 Applied Materials, Inc. (NASDAQ:AMAT) -52.6% 8.42 17.76
278 Simon Property Group, Inc (NYSE:SPG) -52.7% 41.07 86.86
279 Loews Corporation (NYSE:L) -52.9% 23.70 50.34
280 Nabors Industries Ltd. (NYSE:NBR) -52.9% 12.89 27.39
281 The Western Union Company (NYSE:WU) -53.0% 11.42 24.28
282 NetApp Inc. (NASDAQ:NTAP) -53.0% 11.72 24.96
283 Intel Corporation (NASDAQ:INTC) -53.2% 12.49 26.66
284 The Washington Post Company (NYSE:WPO) -53.2% 370.50 791.40
285 Northrop Grumman Corporation (NYSE:NOC) -53.2% 36.80 78.64
286 Transocean Inc. (NYSE:RIG) -53.2% 66.97 143.15
287 Caterpillar Inc. (NYSE:CAT) -53.3% 33.87 72.56
288 IMS Health, Inc. (NYSE:RX) -53.4% 10.73 23.04
289 Cognizant Technology Solutions Corp. (NASDAQ:CTSH) -53.8% 15.68 33.94
290 Hess Corp. (NYSE:HES) -53.9% 46.47 100.86
291 Newmont Mining Corporation (NYSE:NEM) -54.1% 22.40 48.83
292 Sunoco, Inc. (NYSE:SUN) -54.2% 33.20 72.44
293 The Pepsi Bottling Group, Inc. (NYSE:PBG) -54.2% 18.07 39.46
294 Waters Corporation (NYSE:WAT) -54.2% 36.18 79.07
295 Huntington Bancshares Incorporated (NASDAQ:HBAN) -54.3% 6.75 14.76
296 Coach, Inc. (NYSE:COH) -54.5% 13.91 30.58
297 KB Home (NYSE:KBH) -54.7% 9.78 21.60
298 SunTrust Banks, Inc. (NYSE:STI) -54.7% 28.29 62.49
299 Comerica Incorporated (NYSE:CMA) -55.0% 19.58 43.53
300 Parker-Hannifin Corporation (NYSE:PH) -55.1% 33.80 75.31
301 Allegheny Energy, Inc. (NYSE:AYE) -55.4% 28.40 63.61
302 Franklin Resources, Inc. (NYSE:BEN) -55.4% 50.98 114.43
303 The McGraw-Hill Companies, Inc. (NYSE:MHP) -55.6% 19.45 43.81
304 National Semiconductor Corporation (NYSE:NSM) -55.7% 10.04 22.64
305 Noble Corporation (NYSE:NE) -55.8% 24.95 56.51
306 Texas Instruments Incorporated (NYSE:TXN) -56.2% 14.63 33.40
307 Fluor Corporation (NEW) (NYSE:FLR) -56.2% 31.91 72.86
308 PACCAR Inc (NASDAQ:PCAR) -56.4% 23.76 54.48
309 Apple Inc. (NASDAQ:AAPL) -56.4% 86.29 198.08
310 Merck & Co., Inc. (NYSE:MRK) -56.4% 25.31 58.11
311 T. Rowe Price Group, Inc. (NASDAQ:TROW) -56.6% 26.40 60.88
312 Federated Investors, Inc. (NYSE:FII) -56.7% 17.82 41.16
313 BJ Services Company (NYSE:BJS) -56.8% 10.49 24.26
314 Molex Incorporated (NASDAQ:MOLX) -56.9% 11.78 27.30
315 Teradata Corporation (NYSE:TDC) -57.1% 11.77 27.41
316 The Boeing Company (NYSE:BA) -57.1% 37.48 87.46
317 Tyco International Ltd. (NYSE:TYC) -57.2% 16.95 39.65
318 Halliburton Company (NYSE:HAL) -57.3% 16.18 37.91
319 Juniper Networks, Inc. (NASDAQ:JNPR) -57.7% 14.04 33.20
320 Dell Inc. (NASDAQ:DELL) -57.8% 10.35 24.51
321 Newell Rubbermaid Inc. (NYSE:NWL) -58.2% 10.81 25.88
322 Whirlpool Corporation (NYSE:WHR) -58.3% 34.01 81.63
323 Total System Services, Inc. (NYSE:TSS) -58.6% 11.60 28.00
324 Eaton Corporation (NYSE:ETN) -58.9% 39.88 96.95
325 Weyerhaeuser Company (NYSE:WY) -59.0% 30.25 73.74
326 Rockwell Collins, Inc. (NYSE:COL) -59.3% 29.32 71.97
327 Williams Companies, Inc. (NYSE:WMB) -59.4% 14.53 35.78
328 Google Inc. (NASDAQ:GOOG) -59.5% 280.18 691.46
329 Cameron International Corporation (NYSE:CAM) -59.7% 19.41 48.13
330 Limited Brands, Inc. (NYSE:LTD) -60.0% 7.58 18.93
331 Marathon Oil Corporation (NYSE:MRO) -60.4% 24.11 60.86
332 Honeywell International Inc. (NYSE:HON) -60.4% 24.38 61.57
333 Goodrich Corporation (NYSE:GR) -60.6% 27.84 70.61
334 AutoNation, Inc. (NYSE:AN) -60.6% 6.17 15.66
335 Yahoo! Inc. (NASDAQ:YHOO) -60.7% 9.14 23.26
336 Johnson Controls, Inc. (NYSE:JCI) -61.0% 14.07 36.04
337 General Electric Company (NYSE:GE) -61.0% 14.45 37.07
338 Starbucks Corporation (NASDAQ:SBUX) -61.1% 7.97 20.47
339 Amazon.com, Inc. (NASDAQ:AMZN) -61.3% 35.84 92.64
340 Tiffany & Co. (NYSE:TIF) -61.5% 17.71 46.03
341 Marriott International, Inc. (NYSE:MAR) -61.6% 13.13 34.18
342 The Allstate Corporation (NYSE:ALL) -61.9% 19.90 52.23
343 Baker Hughes Incorporated (NYSE:BHI) -61.9% 30.89 81.10
344 Novellus Systems, Inc. (NASDAQ:NVLS) -62.1% 10.46 27.57
345 Tyco Electronics Ltd. (NYSE:TEL) -62.2% 14.02 37.13
346 Precision Castparts Corp. (NYSE:PCP) -62.3% 52.34 138.70
347 El Paso Corporation (NYSE:EP) -62.4% 6.49 17.24
348 Intuitive Surgical, Inc. (NASDAQ:ISRG) -62.5% 121.09 322.99
349 State Street Corporation (NYSE:STT) -62.6% 30.33 81.20
350 Qwest Communications International Inc. (NYSE:Q) -62.8% 2.61 7.01
351 Rowan Companies, Inc. (NYSE:RDC) -62.9% 14.62 39.46
352 Humana Inc. (NYSE:HUM) -63.0% 27.89 75.31
353 Carnival Corporation (NYSE:CCL) -63.0% 16.47 44.49
354 Regions Financial Corporation (NYSE:RF) -63.1% 8.72 23.65
355 Aetna Inc. (NYSE:AET) -63.2% 21.24 57.73
356 WellPoint, Inc. (NYSE:WLP) -63.4% 32.11 87.73
357 Rockwell Automation (NYSE:ROK) -63.5% 25.18 68.96
358 D.R. Horton, Inc. (NYSE:DHI) -63.7% 4.78 13.17
359 The New York Times Company (NYSE:NYT) -63.8% 6.35 17.53
360 American Express Company (NYSE:AXP) -64.0% 18.74 52.02
361 Autodesk, Inc. (NASDAQ:ADSK) -64.1% 17.86 49.76
362 Masco Corporation (NYSE:MAS) -64.2% 7.73 21.61
363 The AES Corporation (NYSE:AES) -64.7% 7.55 21.39
364 Best Buy Co., Inc. (NYSE:BBY) -64.7% 18.58 52.65
365 eBay Inc. (NASDAQ:EBAY) -64.8% 11.69 33.19
366 Corning Incorporated (NYSE:GLW) -64.9% 8.43 23.99
367 Kimco Realty Corporation (NYSE:KIM) -64.9% 12.77 36.40
368 International Paper Company (NYSE:IP) -65.4% 11.20 32.38
369 J.C. Penney Company, Inc. (NYSE:JCP) -65.4% 15.21 43.99
370 Jabil Circuit, Inc. (NYSE:JBL) -65.5% 5.27 15.27
371 Xerox Corporation (NYSE:XRX) -65.5% 5.58 16.19
372 Smith International, Inc. (NYSE:SII) -65.7% 25.34 73.85
373 MeadWestvaco Corp. (NYSE:MWV) -65.8% 10.70 31.30
374 Weatherford International Ltd. (NYSE:WFT) -66.1% 11.63 34.30
375 Peabody Energy Corporation (NYSE:BTU) -66.5% 20.64 61.64
376 Fifth Third Bancorp (NASDAQ:FITB) -66.5% 8.41 25.13
377 Deere & Company (NYSE:DE) -66.6% 31.08 93.12
378 GameStop Corp. (NYSE:GME) -66.9% 20.56 62.11
379 Massey Energy Company (NYSE:MEE) -67.0% 11.81 35.75
380 Tyson Foods, Inc. (NYSE:TSN) -67.1% 5.04 15.33
381 KeyCorp (NYSE:KEY) -67.2% 7.70 23.45
382 Coca-Cola Enterprises Inc. (NYSE:CCE) -67.4% 8.49 26.03
383 Host Hotels & Resorts, Inc. (NYSE:HST) -67.8% 5.49 17.04
384 Interpublic Group of Companies, Inc. (NYSE:IPG) -67.8% 2.61 8.11
385 Eastman Kodak Company (NYSE:EK) -67.9% 7.03 21.87
386 Bank of America Corporation (NYSE:BAC) -68.3% 13.06 41.26
387 KLA-Tencor Corporation (NASDAQ:KLAC) -68.4% 15.24 48.16
388 Teradyne, Inc. (NYSE:TER) -68.4% 3.27 10.34
389 Invesco Ltd. (NYSE:IVZ) -68.5% 9.89 31.38
390 National-Oilwell Varco, Inc. (NYSE:NOV) -69.1% 22.72 73.46
391 Cummins Inc. (NYSE:CMI) -69.1% 19.65 63.69
392 MetLife, Inc. (NYSE:MET) -69.2% 19.00 61.62
393 Viacom, Inc. (NYSE:VIA.B) -69.2% 13.51 43.92
394 Akamai Technologies, Inc. (NASDAQ:AKAM) -69.3% 10.63 34.60
395 UnitedHealth Group Inc. (NYSE:UNH) -69.5% 17.73 58.20
396 Leucadia National Corp. (NYSE:LUK) -69.6% 14.31 47.10
397 CONSOL Energy Inc. (NYSE:CNX) -69.7% 21.69 71.52
398 R.R. Donnelley & Sons Company (NYSE:RRD) -69.7% 11.44 37.74
399 IntercontinentalExchange, Inc. (NYSE:ICE) -69.7% 58.29 192.48
400 Jones Apparel Group, Inc. (NYSE:JNY) -69.8% 4.83 15.99
401 Ashland Inc. (NYSE:ASH) -69.8% 14.32 47.43
402 News Corporation (NYSE:NWS.A) -69.8% 6.18 20.49
403 Jacobs Engineering Group Inc. (NYSE:JEC) -69.9% 28.80 95.61
404 Ingersoll-Rand Company Limited (NYSE:IR) -70.4% 13.77 46.47
405 Electronic Arts Inc. (NASDAQ:ERTS) -70.7% 17.11 58.41
406 SUPERVALU INC. (NYSE:SVU) -71.0% 10.88 37.52
407 Harley-Davidson, Inc. (NYSE:HOG) -71.1% 13.49 46.71
408 SLM Corporation (NYSE:SLM) -71.2% 5.81 20.14
409 Tenet Healthcare Corporation (NYSE:THC) -71.3% 1.46 5.08
410 Micron Technology, Inc. (NYSE:MU) -71.4% 2.07 7.25
411 Monster Worldwide, Inc. (NASDAQ:MNST) -71.5% 9.23 32.40
412 Advanced Micro Devices, Inc. (NYSE:AMD) -71.7% 2.12 7.50
413 Centex Corporation (NYSE:CTX) -71.9% 7.09 25.26
414 Sears Holdings Corporation (NASDAQ:SHLD) -72.1% 28.50 102.05
415 Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT) -72.4% 12.17 44.03
416 E TRADE Financial Corporation (NASDAQ:ETFC) -72.4% 0.98 3.55
417 Convergys Corporation (NYSE:CVG) -72.5% 4.52 16.46
418 Lennar Corporation (NYSE:LEN) -73.3% 4.78 17.89
419 Meredith Corporation (NYSE:MDP) -74.0% 14.32 54.97
420 Dynegy Inc. (NYSE:DYN) -74.1% 1.85 7.14
421 Goldman Sachs Group, Inc. (NYSE:GS) -74.3% 55.18 215.06
422 Apartment Investment and Management Co. (NYSE:AIV) -74.4% 8.90 34.73
423 Ameriprise Financial, Inc. (NYSE:AMP) -74.7% 13.96 55.11
424 CME Group Inc. (NASDAQ:CME) -75.1% 170.88 685.96
425 Nordstrom, Inc. (NYSE:JWN) -75.6% 8.98 36.73
426 Assurant, Inc. (NYSE:AIZ) -76.2% 15.91 66.90
427 Titanium Metals Corporation (NYSE:TIE) -76.5% 6.22 26.45
428 Valero Energy Corporation (NYSE:VLO) -76.5% 16.45 70.02
429 Constellation Energy Group, Inc. (NYSE:CEG) -76.7% 23.91 102.53
430 NYSE Euronext (NYSE:NYX) -77.5% 19.72 87.77
431 Alcoa Inc. (NYSE:AA) -77.7% 8.16 36.55
432 Macy's, Inc. (NYSE:M) -78.0% 5.68 25.87
433 Citigroup Inc. (NYSE:C) -78.3% 6.40 29.44
434 Whole Foods Market, Inc. (NASDAQ:WFMI) -78.4% 8.82 40.80
435 Motorola, Inc. (NYSE:MOT) -78.6% 3.44 16.04
436 Expedia, Inc. (NASDAQ:EXPE) -78.7% 6.72 31.62
437 United States Steel Corporation (NYSE:X) -79.1% 25.21 120.91
438 MBIA Inc. (NYSE:MBI) -79.7% 3.79 18.63
439 CIGNA Corporation (NYSE:CI) -79.8% 10.88 53.73
440 International Game Technology (NYSE:IGT) -80.2% 8.69 43.93
441 CBS Corporation (NYSE:CBS) -80.2% 5.39 27.25
442 Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) -80.2% 20.24 102.44
443 JDS Uniphase Corporation (NASDAQ:JDSU) -80.6% 2.58 13.30
444 Allegheny Technologies Incorporated (NYSE:ATI) -80.7% 16.69 86.40
445 Morgan Stanley (NYSE:MS) -80.7% 10.25 53.11
446 Legg Mason, Inc. (NYSE:LM) -80.9% 14.00 73.15
447 Coventry Health Care, Inc. (NYSE:CVH) -80.9% 11.32 59.25
448 SanDisk Corporation (NASDAQ:SNDK) -81.0% 6.30 33.17
449 Ford Motor Company (NYSE:F) -81.3% 1.26 6.73
450 CB Richard Ellis Group, Inc. (NYSE:CBG) -81.3% 4.03 21.55
451 NVIDIA Corporation (NASDAQ:NVDA) -81.7% 6.23 34.02
452 Prudential Financial, Inc. (NYSE:PRU) -81.7% 17.01 93.04
453 Wyndham Worldwide Corporation (NYSE:WYN) -81.8% 4.29 23.56
454 Abercrombie & Fitch Co. (NYSE:ANF) -81.8% 14.55 79.97
455 Sun Microsystems, Inc. (NASDAQ:JAVA) -82.0% 3.27 18.13
456 Merrill Lynch & Co., Inc. (NYSE:MER) -82.1% 9.60 53.68
457 Tesoro Corporation (NYSE:TSO) -82.2% 8.49 47.70
458 Gannett Co., Inc. (NYSE:GCI) -82.5% 6.81 39.00
459 The Goodyear Tire & Rubber Company (NYSE:GT) -82.9% 4.83 28.22
460 Textron Inc. (NYSE:TXT) -82.9% 12.20 71.30
461 Principal Financial Group, Inc. (NYSE:PFG) -83.0% 11.67 68.84
462 Sovereign Bancorp, Inc. (NYSE:SOV) -83.2% 1.92 11.40
463 Dillard's, Inc. (NYSE:DDS) -83.3% 3.14 18.78
464 Ciena Corporation (NASDAQ:CIEN) -83.7% 5.55 34.11
465 American Capital Ltd. (NASDAQ:ACAS) -83.8% 5.35 32.96
466 Janus Capital Group Inc. (NYSE:JNS) -83.9% 5.28 32.85
467 Terex Corporation (NYSE:TEX) -84.4% 10.21 65.57
468 Harman International Industries Inc./DE/ (NYSE:HAR) -85.6% 10.65 73.72
469 Sprint Nextel Corporation (NYSE:S) -85.7% 1.88 13.13
470 AK Steel Holding Corporation (NYSE:AKS) -85.9% 6.51 46.24
471 MEMC Electronic Materials, Inc. (NYSE:WFR) -86.2% 12.20 88.50
472 Lincoln National Corporation (NYSE:LNC) -87.4% 7.31 58.22
473 Developers Diversified Realty Corp. (NYSE:DDR) -87.8% 4.69 38.29
474 Wachovia Corporation (NYSE:WB) -88.0% 4.57 38.03
475 Office Depot, Inc. (NYSE:ODP) -88.5% 1.60 13.91
476 General Motors Corporation (NYSE:GM) -88.8% 2.79 24.89
477 Manitowoc Company, Inc. (NYSE:MTW) -88.8% 5.47 48.83
478 National City Corporation (NYSE:NCC) -89.2% 1.78 16.46
479 Liz Claiborne, Inc. (NYSE:LIZ) -89.5% 2.13 20.35
480 XL Capital Ltd. (NYSE:XL) -89.8% 5.11 50.31
481 CIT Group Inc. (NYSE:CIT) -90.6% 2.25 24.03
482 MGIC Investment Corp. (NYSE:MTG) -90.9% 2.05 22.43
483 Unisys Corporation (NYSE:UIS) -91.5% 0.40 4.73
484 Hartford Financial Services (NYSE:HIG) -92.1% 6.88 87.19
485 ProLogis (NYSE:PLD) -94.5% 3.46 63.38
486 Genworth Financial, Inc. (NYSE:GNW) -96.0% 1.02 25.45
487 American International Group, Inc. (NYSE:AIG) -97.3% 1.56 58.30
488 Freddie Mac (NYSE:FRE) -98.4% 0.56 34.06
489 General Growth Properties, Inc (NYSE:GGP) -99.0% 0.40 41.18
490 Fannie Mae (NYSE:FNM) -99.0% 0.38 39.97
491 Washington Mutual, Inc. (NYSE:WM) -99.7% 0.04 13.61
492 Lehman Brothers Holdings Inc. (NYSE:LEH) -99.9% 0.04 65.44
493 Hercules Incorporated (NYSE:HPC) N/A N/A 19.35
494 Electronic Data Systems Corporation (NYSE:EDS) N/A N/A 20.73
495 Lorillard Inc. (NYSE:LO) N/A 60.69 N/A
496 Philip Morris International Inc. (NYSE:PM) N/A 36.64 N/A
497 SAFECO Corporation (NYSE:SAF) N/A N/A 55.68
498 Scripps Networks Interactive, Inc. (NYSE:SNI) N/A 24.40 N/A
499 Wendy's International (NYSE:WEN) N/A N/A 25.84
500 Wm. Wrigley Jr. Company (NYSE:WWY) N/A N/A 58.55
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