Week 48 of 2011.
Rollercoaster is an understatement – Last week the S&P had its worst week since 1932 and markets were in freefall. Up steps China to ease the pain with a 0.50 basis cut. The last time they did that was in early Feb 2009. Then comes the US. Seemingly playing ‘chicken’ with the Eurozone, they eventually came to the table to offer a joint liquidity effort which saw a string of major banks stand behind the Euro. The combination of efforts between China and US demonstrates just how pivotal the EuroZone is in terms of the broader recovery. There are some striking similarities between today’s events and those of Lehmans in 2008. However, the Eurozone (or Germany should we say!) are holding on to their baby which shows a strength and unity that might just see the Euro through this crisis. In contrast, the US were not so caring when it came to Lehmans and simply dropped the baby leaving everyone else to nurse the consequences – themselves included. 2011 has very much felt like a ‘pass the parcel’ game with ‘debt’ being the ultimate prize when the music stops.
The Eurozone has approached the sharp end of their discussions with news expected to follow throughout the week. It’s possible that by the time we reach Friday – most of the unknowns will be known. And with that a large wedge of uncertainty removed. But it’s all worthless without growth and attention turns to global economic recovery. If QE3 is unleashed (China’s actions already provide cheaper money) then Equities may find themselves back to a situation in early 2009 where stimulus assisted one of the largest stock market rallies in years.
The FTSE 100 added a very bullish 388 points this week, adding 7.47% on the week to close at 5552. Still 347pts down for the year but looking in much better shape compared to last week.
The Dow closed at 12,019, adding a massive 887pts on the week and is back in the blue for 2011. However, it is still 800pts down from the 12800 level seen earlier in the year.
A virtual portfolio has been set up using the 2010 Dec 31st close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. The B-list (alternative picks) and 2 newspaper top tens for 2011 have been included to help monitor/compare against.
The virtual portfolio’s use the ‘last trade’ system to calculate the days close.
Week 48 performance summary as follows:
The best performer for week 48 goes to The independent. Although the FTSE100 has bounced back strongly – equities have been slow to follow. The last time the FTSE100 was over 5550, the independent list was firmly in the blue. Today it is still in the red. There are many stocks out there that are trading near cash levels and some even below. The last time this was seen was in early 2009. The markets certainly seem to be setting themselves up for a repeat scenario. If the EuroZone creates a firm plan this week, and QE3 looks more likely – then Equities might begin a rally that restores some of the head scratching valuations out there to something that looks closer to basic fundamentals. The days of the casino market are not over, but it might be time for some sanity and sensible valuations to return.
1. The Independent -1.05% (gain of 5.80% from week 47)
2. Tempus Times -12.36% (gain of 5.09% from week 47)
3. The ‘B’ List -41.20% (gain of 4.85% from week 47)
4. The 2011 Hotlist -43.32% (gain of 4.37% from week 47)