I am finishing up my visit to the Detroit area. Amazingly, some abandon manufacturing facilities have been bought by Hollywood studios, and the new space is being used to make movies. The recent Clint Eastwood movie, "Gran Torino", was made here in Detroit, and now, the new "Red Dawn" movie is being filmed here.
Clearly the recent demise of the "Big Three-minus Ford" was a move to break the backs of the unions. There is good and bad to breaking up the UAW. The bad of course is workers get less pay and have less say. The good is any mob involvement in the unions goes away.
Longer term, the Detroit area and the state of Michigan will find away (with or without the big three) to win. Now the Detroit inter-city is a different story. The inter-city is infested by crime, drugs, murder, and extreme corruption. Things were really bad when I left Detroit in 1977, but today it is unrecognizable.
Money has been thrown at inter-cities all across America, and basically the money has been wasted since these areas, and the people who live there, have become less productive, and not more productive, over the years.
As far as the stock market is concerned, nothing as changed. Economically things have not gotten better. The improved economic numbers, and better earnings comparisons have come with a price. Telling us things are getting better economically is an insult to our intelligence.
When better than expected economic numbers show slight improvements, they are doing so because forecasts were at near depression levels.
When Y/O/Y earnings comparisons surprise to the upside, they are doing so because of cost cuts. Cost cuts mean job cuts, and less corporate spending. Job cuts mean less consumer spending, and less consumer spending means flat to down earnings until the job situation improves.
While we have enjoyed the rally, and glad that it occurred, I believe this rally should be looked as an opportunity to book some profits and raise cash.
Here are our Top 10 ETF's for the week of October 26th:
1) DBA: Powershares DB Agriculture Fund
2) IGF: iShares S&P Global Infrastructure Index Fund
3) DBE: PowerShares DB Energy
4) IYW: iShares DJ US Technology Sector Index Fund
5) IYF: iShares Dow Jones US Financial Sector
6) DDM: Ultra Dow 30 Proshares ETF
7) SDS: UltraShort S&P500 ProShares
8) CASH
9) CASH
10) CASH
Here are our Top 10 Fidelity Sector Funds for October 2009
1) FSPTX: Technology Portfolio
2) FSRBX: Banking
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSENX: Energy
6) FSCSX: Computers & Software
7) FNARX: Natural Resources
8) CASH
9) CASH
10) CASH
For the Week:
As of Friday's Close;
DJIA: 9,972.18, down 109.13
S&P 500: 1,079.60, down 13.31
Nasdaq Composite: 2,154.47, down 10.82
Economic News:
I am pressed for time, so I'll give you an update on the economy when I return to the office on Wednesday. I'll give you the official government statistics, and then I'll try to figure out the truth.
-The Commodities CRB Index
-Crude Oil
-The U.S. Dollar
-The 30 Year U.S. Treasury
Our current asset allocation is as follows;
50% Equities: (Was 85%/Normally 95%) Aggressive
40% Equities: (Was 72%/Normally 80%) Moderately Aggressive
30% Equities: (Was 56%/Normally 60%) Moderate
20% Equities: (Was 36%/Normally 40%) Moderately Conservative
10% Equities: (Was 18%/Normally 20%) Conservative
