Click here for straight feed to the podcast (Android phones, etc.).

Click here for straight feed to the podcast (Android phones, etc.).

According to my calculations, the Dow Jones has crossed above or below 10,000 18 times in 2010.  That’s just in 2010.  When I talk to the average Joe on the street about the market, they constantly discuss the Dow Jones and is it above or below 10,000.  They also make comments about the fact that if the Dow Jones is above 10,000, it is a good market.  This is one of the least reliable indicators you can use.  It’s similar to buying or selling stocks based on one moving average.  The fact that the Dow has crossed the 10,000 mark so many times just this year reiterates the need for income and shows that despite the emotional swings, the market has really gone nowhere in 2010.  I think what we’ve experienced in 2010 is in microcosm what we’ll experience on a bigger scale for the next several years.  The bands may be bigger but I believe the results will show that it was a grind it out, essentially flat market, with a lot of bumps and a market that saw 10,000 come and go many times on the Dow Jones Industrial Average.

Use periods of excessive optimism to sell and excessive pessimism to buy and continue to generate income any way you can.  For the short-term, I think we’re very oversold and due for a bounce.  We may not be done correcting overall but I think the stock market will work its way higher into the mid-term elections.  For now, there is neither excessive optimism or pessimism but the pessimism is certainly winning out which makes me a net buyer of stocks, not a net seller.

Click here for straight feed to the podcast (Android phones, etc.).

Click here for straight feed to the podcast (Android phones, etc.).

Click here for straight feed to the podcast (Android phones, etc.).

This may be an end to the short-term uptrend, but I don’t believe this is the end of the rally.  In fact, I think ultimately this will be a buying opportunity.  I’ll have more on this in an upcoming podcast.  Stay tuned.

Since the spring, not only have rates not gone up, they’ve fallen even more.  Interest rates on 10-year treasuries have fallen from 4% to under 3% pushing bond prices up.    Is there another bubble about to pop?  Many of you think so.  I think so.  I just think there are a lot of people who may have the timing wrong.  Bubbles can get bigger and last longer than we originally think.  But, eventually, they do pop.  So, just how expensive are treasury bonds?

Below is a picture of the “P/E ratio” on 10-year treasuries.  Assuming the interest you receive on treasuries are your earnings, the P/E ratio on treasuries is currently 35.  In comparison, the P/E ratio on the S&P 500 currently is around 15.

The picture above I created shows the “P/E ratio” on bonds from 1962 to present.  In 1982, bonds were very cheap as were stocks at that time.  Now, bonds are very expensive while stocks I think are not.  This is one main reason why stocks can rally further.  It’s not that stocks are dirt cheap.  But, asset allocators and managers out there are comparing bonds versus stocks using the above metric to determine where there is value.

I’m not calling for an immediate rise in rates but you better have a plan for when they do start to rise whether it’s selling treasuries short or some other tool.  It will happen eventually.

The best year was 2003 when gold rallied 25% the last four months of the year.  The worst year was 2001 when gold went up less than 1%.  The average for the past 9 years for gold from September 1st through December 31st has been 12%.  Will this year be different?

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