Thursday, March 23, 2006

Why You Liked the 90's

I was talking to a fellow a couple of weeks ago on the phone. He mentioned that he'd started investing in the market "somewhere in the mid 90's". He also said that it was a really "fun" time to hold stocks. The chart below shows that "fun" time by months. Note that the S&P 500 only experienced 14 months during that 5 1/2 year period where it went down in terms of price. The S&P 500 was up in excess of 240% during the time shown!
This next chart shows how the same index has done since 2000. Not so good! The S&P 500 is still down about 15% from the highs it made in March of 2000.

Monday, March 20, 2006

NBBT: New England Hurricane

Joe Bastardi @ Accuweather has a pretty good track record with forcasting longer term weather patterns. When he becomes alarmed about the possibly of a devastating New England hurricane it probably pays to listen. He is a link to what he is saying. http://wwwa.accuweather.com/promotion.asp?dir=aw&page=nehurr. We last wrote about the 1938 hurricane on February 11, 2006. It is ironic that even with the examples of what Katrina did to the gulf region and the current focus on the avian flu that there is almost no focus in the press or financial media on the impact of a 1938 type storm in New England.

Friday, March 17, 2006

Celtic Tiger

Just an addendum to my article on the Ireland Fund posted below. IRL has advanced over 200% since October of 2002. The S&P 500 excluding dividends has posted something just under 50% during the same time period. $100,000 invested in this fund would be worth approximately $208,000 American dollars. (Analysis excludes both effects of dividends or taxes).

Erin Go Bragh


Lá Fhéile Pádraig


Once again visiting all things Irish, we give you today the New Ireland Fund (IRL). Since I could not find any direct ETF that invests in the "Celtic Tiger" I looked for a proxy and chose the IRL as it is a non-diversified, closed-end fund that invests at least 65% of its total assets in equity securities of Irish companies. The balance of its assets are invested in fixed-income securities or equity securities of companies domiciled outside Ireland that are likely to be affected by Ireland's international economic relations.


IRL is up over 8% in 2006. Not a recommendation to buy! We do not own this &
we have not researched the investment merits of this fund.

Sláinte!

Tuesday, March 14, 2006

Thousands {As In Dollars} Are Sailing

You brave Irish heroes where'er you may be
I pray, stand a moment and listen to me
Your sons and fair daughters are all going away
And thousands are sailing to Americay
{Traditional Ballad, County Cork, Ireland Circa 1860's}



Like the Irish who left in the 1800's searching for a better opportunity abroad, Americans continue to vote with their pocketbooks placing money in emerging markets overseas. According to Emerging Portfolio Fund Research, this year's emerging market equity fund inflows of $20.9 billion already exceed the historic record for all of last year. Yet many of these markets quit advancing a month ago. Some of the most speculative exchanges in have recently posted double digit declines.
Any slow down overseas could result in an increase in inflows back to U.S. stocks. It is interesting to note that, notwithstanding the historic inflows into emerging market stocks, the I-Shares MSCI Emerging Markets Index (EEM) is 6% lower over the last two weeks while the I-shares S&P 100 Index (OEF) has quietly broken through resistance that reaches back to December of 2004. The OEF represents the 100 largest stocks in the S&P 500 index by market capitalization.
Note: Clients of Lumen Capital Management are currently long OEF. Please note that positions my change at any time and this by no means should be construed as a recommendation to buy or sell this security.

Friday, March 10, 2006

The Feast of St. Patrick


We are smack in the middle of that time of the year known as St. Patrick's Day. The only "day" that I know that somehow extends itself into a "fortnight".

In addition to the duties of Lumen Capital Management, I will be chasing my daughters around the Chicago area as they do the Irish Step Dance thing. Posting may be brief in the next two weeks because of this. You can look for us in the Chicago Official St. Patrick's Day Parade tomorrow. We will be with the Sheila Tully Irish Dancers, #31 in the parade.

To honor the date I thought I'd throw in 10 facts about the Irish, the parade or about Ireland which are not well known. Just trying to have some fun with the season and we will get back to more serious matters soon. Irregardless if you are 100% Irish, part Irish (like my family) or just Irish For The Day- Cead Mille Failte!

1) Ireland is slightly larger than West Virginia. If it were part of the U.S. it would rank approximately 19th in terms of population between Wisconsin and Maryland according to 2000 census figures.

2) The Gross Domestic Product of the U.S. is in excess of $11 Trillion dollars & is ranked 1st in the world. Ireland is ranked 30th at $183 billion dollars. Chicago's GDP has been estimated at around 380 Billion.

3) According to the Chicago Tribune, "Corned Beef and Cabbage" is an Irish-American staple and more Budweiser is consumed in Ireland than Guinness.

4) Musicians with Irish ancestral ties include Paul, McCartney, John Lennon & George Harrison of the Beatles; Bruce Springsteen & Keith Richards.

5) 16 American Presidents have Irish Ancestry. This list not only includes obvious Presidents such as
Kennedy and Reagan but also includes Andrew Jackson, Both Bush's & President Clinton. Every elected President since 1960 claims Irish ancestry.

6) New York City has the largest St. Patrick's Day parade in the world. Last year more than 150,000 marchers participated and it attracted roughly 2 million viewers. That is roughly 500,ooo more souls attended the parade than the combined populations of Dublin, Belfast, Limerick & Cork.

7) Michael Flately of Riverdance fame is credited with popularizing Irish Step Dancing around the world. It is widely assumed that Flately is a native of Ireland but in fact he was born and raised right here in the Chicago area. Perhaps because of this it is claimed that over 100,000 young women in Chicago and its surrounding environs actively participate in some form of Irish Dance.

8) George Clooney, Harrison Ford, Mel Gibson, Gregory Peck, Barbara Stanwyck, John Travolta, Spencer Tracy, Judy Garland & John Wayne all had Irish ancestors.

9) Guinness & St. Patrick's Day seem to go hand in hand. (At least they do in my neck of the woods). They also have a side business of that World Record Book. Almost 2 billion pints of Guinness are served each year. More Guinness is served on St. Patrick's Day than on any other day of the year.

10)
Finally the best for the last. It is claimed that Ireland has never had a population greater than about 8 million people. The Irish have emigrated all over the world. The majority of their descendents are found in Canada, the U.S., Australia, New Zealand and the United Kingdom. 45 million Americans claim Irish Ancestry. Their descendants can also be found in more unexpected places like Chile, South Africa, Mexico, Argentina and even China. Mexican President Vincente Fox is of Irish ancestry. Altogether it is estimated that perhaps as many as 80 million people can trace some part of their family tree back to Ireland. This is over fourteen times the population of the island of Ireland itself!

Dia dhuit.

Friday, March 03, 2006

Magazine Cover Curse?

"Sell when Business Week's cover says buy" is an old Wall Street maxim. Magazines are notorious for latching onto and publicizing trends, fads or investment concepts just before they end. The most famous example of this is a Business Week cover published in August of 1979 entitled "The Death of Equities". You can see a copy of it and the subsequent stock market chart here: http://paul.kedrosky.com/archives/001161.html. Here are some other examples of business covers getting it wrong:
http://weblog.blogads.com/comments/1030_0_1_0_C/

Add to this all those magazines that have run glowing articles on real estate in the last six months just as the boom in property seems to at least be slowing down.

With that in mind I give you the most recent cover of Newsweek:




Next let's take a look at the chart of the India Fund {IFN}* a closed end mutual fund that trades at the New York Stock Exchange which is up over 100% since April, 2005.


India is not exactly an undiscovered story at this point and it is likely that the easy money has been made by now although concepts like this can also have legs.

The mutual fund data showed inflows again this week with much of that money going overseas.

Makes you say hmmmmmmm.

Something to watch in the coming months.

*Certain clients of Lumen Capital Management, are currently long the India Fund. We consider this a very aggressive investment & therefore not suitable for all investment accounts. Please note that positions may change at any time and this by no means should be construed as a recommendation to buy or sell this security.