June Fest!

Another week, another batch of mayhem. An ugly Tuesday, with Wednesday and Thursday making up most of the losses, followed by Friday’s strong start and reversal (not encouraging). All told, when this market is in the history books, you will at least have something to tell your grandkids about.

For those of you who are interesting in the technical details since the May top, the Dow dropped 5.48%, SPX lost 6.13% the Nazz gave up 10.20%, while the Russel 2000 lost 11.29% peak to trough (see more here). Since the lows, we have seen bounces for the Dow of 1.97%, the SPX regained 3.44%, the Nazz took back  3.91%, while the Russell 2000 recouped 5.95%.

Only the SPX has regained half its point losses so far. Fun with math: Remember, to recover half of the point losses takes gains of more than half of the percentage losses.  Think of a $100 stock that drops to $70. Thats a 30% loss; It needs a 21.43% gain to make up half the point loss; to get back to breakeven after a 30% drubbing requires a move of near 43%.

OK, enough numbahs! Let’s see what we found around the web this week:

• We have a new Treasury Secretary (whoopee), here is Henry Paulson, in His Own Words. (I wonder if he feels a bit like the cavalry arriving in time to find Custer’s body). Slate asks: "What’s so special about Goldman Sachs?" Alt. title: Bush drafts Hank to ba
third
. Not even Paulson can save the dollar

• Worst Case Scenarios: Why the Fed Tends to Overtighten explains their choices leads them to the lesser of two evils.   

• I may disagree with John Dorfman’s recent column, but I respect him enough to offer up this: he says U.S. Stock Decline Won’t Turn Into a Bear Market; Mark Hulbert observes perhaps there is a Silver lining in May clouds; Marshall Loeb offers advice on Protecting yourself against a big bear market;

10 Lessons Learned in the May 2006 Selloff (I must admit to being very pleased with how this came out);

• Eddy Elfenbein observes that the S&P 500’s P/E Ratio is at a 10-Year Low; Scott Frew asks Will Cheap Stocks Get Even Cheaper?

• For you Econ wonks: The St Louis Fed’s nontechnical survey on Learnability Criterion and Monetary Policy (analyzing models of learning, in which expectations are not initially rational but which may become so);

• As if we need any more: How to Set Up Your Own Hedge Fund   

• Cody Willard and I had a terrific debate this week on the stinky jobs numbers and what they mean (In the words of Dealbreaker: Kapow!) Here’s everyone’s favorite chart on How Jobs Recovery Stacks Up this cycle.

• Here are the Five Key Rules To Heed Before Hiring a Financial Adviser ($)

• The IMF takes a long look at Economist/NYT columnist Paul Krugman: Economist as Crusader    

Barron’s Eric Savitz has a tech blog;

• On Wednesday, I looked at a bunch-o-charts related to Real Estate. They show the  party is ending. And why not? Home loan demand has fallen as interest rates climb, Condo developers are getting sued for cancelling construction  due to increases in the price of materials;  The Real Estate Journal advises how to cope with the Condo Sales Slowdown; Barron’s subscription only cover story from last week —  Second-Home Housing Glut; Real-Estate Bubble Losing Air — is now available free; Check out the Open-House Blog via WSJ.

Here’s advice no one needs: How to Buy a $450K Home for $750K;

If money is no object, however, here is a list of castles from around the world for sale;

Lots of transportation related stuff this week:

– The Segway gets the equivalent of 450 miles/gallon of gas. With overseas sales now accounting for nearly 40% of revenue, they are set to go public.

– The Chevrolet Impala — still the best selling American branded automobile has become a Signpost to Detroit’s Decline;

I hate SUVs, but its good to see that they now offer more protection against rollovers;

Everything I ever needed to know about cars, I’ve known since I was five

• Some interesting energy news:

Climate Change is Responsible For Increased Hurricanes

– File this one under WTF? The new White House energy plan eliminates Conservation

There was a ton of Political stuff this week, but I’m going to keep it short:

-Was the 2004 election stolen?
    Rolling Stone says Yes.
    Salon (no fan of W.) says No.   

-One Cabinet Secretary down, one more to go: PENTAGON ORDERS MISSILE DEFENSE SHIELD TO PROTECT RUMSFELD

• Hey all you College Graduates! Better consolidate soon: Your Student Loan Rates to Rise July 1. While you do the paperwork, here are Five Tips for a Great Life After Graduation.

• I keep finding interesting stuff on Guy Kawasaki’s blog;

• Over the holiday weekend, I spent alot of time playing with the iPod on the beach; I am embarrased to admit I have all sorts of crap hidden on the white toy. It turns out I’m not the only one: iPod’s guilty little pleasures;

• The most interesting new disc I’ve been listening to is Songlines, by The Derek Trucks Band. Guitarist Trucks sound has been described as "snake-like and swampy," and the album runs through blues, jazz, Jamaican, gospel, and world music. Good stuff.

• My favorite HBO show, Entourage, returns next week; While we wait, here’s all the songs from last season via Rhapsody, the Entourage song list;

Trading Place’s Beeks (actor Paul Gleason) is dead at 67. He’s perhaps best known for The Breakfast Club; For the rainy weekend, I have Matchpoint and Being John Malkovich in the DVD queue;

• There’s still time to bid on the DEVIL’S COIN COLLECTION — Auction ends Tuesday — thats 6/6/06 (June-06-2006) at 6pm; shipping costs are 6.66;

• And finally, The Funniest Bell South Ad EVER! (alt source)

That’s all from NYC, where the Fed watch is getting increasingly tiresome. Oh, well – enjoy what’s left of your weekend!

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What's been said:

Discussions found on the web:
  1. Larry Nusbaum, Scottsdale commented on Jun 4

    Barry: I hope you mean “residential real estate”. Because, strategic real estate is still under accumulation and is in high demand (which includes commercial).

    “Marshall Loeb offers advice on Protecting yourself against a big bear market;” – this is no way to protect a stock account if we get into a bear market. What an awful and wasted article.

  2. Barry Ritholtz commented on Jun 5

    That wasn’t such a bad article — besides, if I dont throw the Bulls a bone every now and again, they whine like the dickens!

  3. Larry Nusbaum, Scottsdale commented on Jun 5

    ” they whine like the dickens!” – THEN, GIVE THEM CHEESE WITH THEIR WHINE. LOL

  4. Ned commented on Jun 5

    I agree with Larry but this only confirms my long held thesis that most journalists are unqualified to give investment advice and folks follow them at their own peril. Marshall Loeb has never run money or traded or mangaged a fund with a published track record that I know of. Nor have the folks he quotes in his column. Should we care what they think? I don’t. It is noise not wisdom.

  5. tjofpa commented on Jun 5

    Beaks is Dead – that is so weird. I was just thinking of him on Friday. Pictured him delivering the BLS Jobs data to Duke and Duke in time for THURS trading.
    Classic Trading Places – buy on Thurs, pump the futures
    and dump on Fri. I was all ready to hit the short button at around say 9:55 am. Couldn’t even get 20 mins to the upside.
    Too strange.

  6. Larry Nusbaum, Scottsdale commented on Jun 5

    Ned: Too many journalists get their assignment and then go out and write the story, gathering information that only supports the view that they have already aligned themselves with.
    There are no better examples of this over the past 6 years than all of the useless articles on the housing bubble, most overvalued or undervalued cities, how to protect in a declining housing market, etc.

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