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Quote of the Day

Thursday, March 29, 2012

March 29, 2012 -- "A loss never bothers me after I take it." Jesse Livermore.

 

Wise words from Jesse Livermore except for one thing. Losses to me are experiential lessons. I always look at my losses and then ask, "What have I learned?" If I've learned something valuable, I don't consider it a loss. I take it as a lesson or an insight into my character -- laziness, greed, stupidity, impatience. I've often said that the stock market is a great teacher, that is, if you are humble enough to learn from your mistakes or losses.

 

I was looking over the quarterly report of Tri-Continental Corp. I think this was the first closed-end fund, founded in the 1920s prior to the '29 crash. I don't know what TY sold for in July 1932, but in 1940 with the Dow at a price of 98 you could have bought TY at around 2. Buyers at that time merely had to load up on the fund and hold it, and they would be rich today. The fund's assets are now near two billion. I looked up their holdings of Apple; they hold 80,800 shares. That shows you how huge some of these funds are, and the great buying power they possess.

 

What I want to illustrate is that great fortunes are made at super-bear market lows. But you must have the money at the lows. Which is why gold is so singular and valuable. If you have gold at the bottom of the next bear market, you can exchange it for a collection of great common stocks or funds, and then sit back and relax. You are then betting on the lasting power of the US. If the US "comes back," you will be rich beyond your wildest dreams. But you have to have the guts to hang on to your gold. And you need patience -- the patience of ten men.

 

And I wonder -- is there a super bear market waiting for us somewhere in the future? The great ride from the end of WWII to today has never been fully corrected. Some day it will be. And impossible bargains in stocks will be lying around -- with very few willing or solvent buyers. Such is the fascination of the stock market. In this business the "impossible" never seems to be possible. But the impossible definitely is possible in the strange and exotic world of Wall Street.

 

TODAY'S MARKET ACTION:

 

My PTI was down 2 at 6389. The moving average at 6363, so my PTI is bullish by 26.

 

The Dow was up 19.61 to 13145.82.

 

Transports were down 1.92 to 5256.21.

 

Utilities were up 1.86 to 456.04.

 

NASDAQ was down 9.60 to 3095.36.

 

S&P 500 was down 2.26 to 1403.28.

 

There were 1197 advances and 1822 declines on the NYSE.

 

There were 43 new highs and 26 new lows.

May light crude was down 2.63 to 102.78.

 

Total Volume on the NYSE and associated exchanges was 3.77 billion.

 

Bonds: Yield on the 10 year T-note was 2.163. Yield on the long T-bond was 3.275. Yield of the 91 day T-bill was 0.066%.

 

Dollar Index was down 0.02 at 79.10. Euro was down 0.36 at 132.92. Yen was up 0.56 at 121.45. Currency Prices as of 1 PM Pacific Time.

April gold was down 5.70 to 1652.20. May silver was up 0.16 to 31.92.

 

My Most Active Stocks Index was down 7 at 310.

 

The Big Money Breadth Index was down 4 at 1036.

 

GDX was up 0.13 at 49.06.

 

HUI was up 1.08 to 467.77.

 

CRB Commodity Index was down 5.53 at 305.94.

 

The VIX up 0.01 to 15.48.

 

Permanent Portfolio Fund (PRPFX) was down 0.39 to 48.53 (previous day closing). YTD Return: 5.29%.

 

 

Late Notes-- As I write, at the close today, I'm looking at the internals of the market. They're not good. 1,201 stocks on the NYSE advancing, 1,795 declining, advancing volume 1,453,787,494, declining volume 2,260,812,119, new highs 43, new lows 32, all this with the Dow up 19.61. The Dow opened down over 40 and spent all day trying to get plus. This is burning a lot of ammo for a final plus 19 points. Not my favorite kind of action, and I'm happy to be on the sidelines, watching the show. My opinion -- the retail public is buying the earnings while the big money is giving them all the stocks they want. Gold gave a little, but not enough to worry about.