{"id":11666,"date":"2012-02-14T09:04:21","date_gmt":"2012-02-14T14:04:21","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=11666"},"modified":"2012-02-14T09:10:08","modified_gmt":"2012-02-14T14:10:08","slug":"which-makes-sense-gold-bonds-equities-big-or-small-or-apple","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=11666","title":{"rendered":"Which makes sense — gold, bonds, equities (big or small) — or Apple?"},"content":{"rendered":"

Though today is long, there are big rewards at the bottom.<\/p>\n

Don’t touch gold. Don’t touch bonds. Stay with equities,<\/strong><\/span> says Warren Buffett. See yesterday’s column<\/strong><\/a>.<\/p>\n

Which did better in the past ten years? Gold or equities.? Answer gold.<\/p>\n

\"\"<\/a><\/p>\n

Which did better in the past ten years? Berkshire Hathaway or the S&P 500 index? Answer Berkshire Hathaway.<\/p>\n

\"\"<\/a><\/p>\n

Which did better Berkshire Hathaway or gold? You can figure that from the two charts above. Berkshire was up 119%. Gold was up 171%.<\/p>\n

Which did better in the past ten years? The S&P 500 or Vanguard’s useful VWALX Federal tax-free bond fund? Answer the S&P 500.<\/p>\n

\"\"<\/a><\/p>\n

The problem with these charts: They ignore dividends.<\/p>\n

One more. Which did better over the past ten years? Apple or the S&P 500? Answer…<\/p>\n

\"\"<\/a><\/p>\n

From today’s New York Times:<\/p>\n

Small-Cap Stocks Surge Ahead of the Big Names<\/strong><\/p>\n

\"\"<\/a><\/strong><\/p>\n

The article reads:<\/strong><\/p>\n

In a Wall Street universe populated by marquee name stocks, the lesser known entities are the stars of the rally so far this year.<\/p>\n

The Russell 2000 index, which tracks stocks with a small market capitalization, is nearing its record high with a rise of about 11 percent in the year to date. That outstrips the Russell 1000 index that measures Wall Street’s large capitalization stocks and the Standard & Poor’s 500-stock index that measures the broader market.<\/p>\n

The surge in the so-called small-cap stocks – companies whose total share value is $3 billion or less – indicates that investors’ appetite for risk is growing as signs of recovery persist in the United States and euro zone leaders make progress in containing the debt crisis, market participants say.<\/p>\n

After investors drained more than $15 billion out of small-cap stocks last year, the largest amount since 2007, they have sunk about $2.4 billion back into those equities so far this year, according to data provided by Lipper, a Thomson Reuters company.<\/p>\n

“It is a decent confidence barometer,” said Scott Wren, a senior equity strategist for Wells Fargo Advisors. “Investors are confident enough to buy some of these small companies, betting that the U.S. economy is going to continue to grow.”<\/p>\n

Most of that money poured into the small-cap stocks in the seven days that ended Feb. 8, the last tally by Lipper. During that time, the Labor Department reported a gain of 243,000 jobs in January and the lowest unemployment rate since early 2009, while another report, from the Institute for Supply Management, showed that economic activity in the nonmanufacturing sector grew in January for the 25th consecutive month.<\/p>\n

Tom Roseen, a senior analyst at Lipper, said there was a similar inflow into small caps in the beginning of 2011, but this year’s inflows were notable because they were a turnaround from a full year in which investors focused on dividend-paying and large-capitalization stocks.<\/p>\n

But analysts were also cautious in ascribing too much staying power in the risk trade. Volatility could return to equities because of the entrenched euro zone debt problems, the potential for a recession in Europe and concerns about economic growth in the United States.<\/p>\n

Steven G. DeSanctis, a small-cap strategist with Bank of America Merrill Lynch, noted that a lot of the inflows so far this year were by exchange-traded funds, which are highly liquid, and thus could just as easily flow out.<\/p>\n

Pharmaceuticals, materials and technologPharmaceuticals, materials and technology companies are showing particularly robust returns among small caps so far this year. Inhibitex, FriendFinder Networks and Georgia Gulf are among the best small-cap performers in terms of returns, according to data tracked by the Russell index.<\/p>\n

The stock price of Inhibitex, a biopharmaceutical company, is up more than 130 percent, mostly because it was acquired. Georgia Gulf, which makes chemical and plastic products, is up 74 percent, and FriendFinder, an Internet networking company, is up more than 200 percent.<\/p>\n

The rebound in small-cap stocks is a sign for some analysts of a broader recovery in the financial markets. In the second half of last year, the markets were buffeted by a period of volatility from the European crisis and the credit rating downgrade of long-term United States debt, contributing to a fall in the Russell 2000 for the year of about 4 percent.<\/p>\n

But so far this year, the broader market as measured by the Standard & Poor’s 500 has had its best start since 1987. As of Monday it was up 7.5 percent for the year to date. Small-cap companies are not traded as frequently, and therefore their stock prices can be choppy. And there are fewer analysts researching these companies for investors, unlike with big names like Apple. They also are more likely to be the object of takeovers, like Inhibitex, which Bristol-Myers Squibb said in January it would acquire for $2.5 billion.<\/p>\n

Mergers and acquisitions, which are expected to push ahead as companies come off a period of hoarding cash, usually involve small-cap companies.<\/p>\n

“This year we are expecting an acceleration of M.& A. activity,” said Christopher J. Colarik, small-cap portfolio manager for Glenmede Investment Management. “Larger companies look for growth, and there are a lot of clean balance sheets.”<\/p>\n

This was especially true in the pharmaceutical field, said Jon Eggins, portfolio manager at Russell Investments.<\/p>\n

Since 2008, drug companies have been cautious about large investments in new research, but they are also faced with the expirations of profitable drug patents and looking for ways to bridge the potential shortfall in earnings, he said in an e-mail reply to questions.<\/p>\n

And their revenue is mostly generated inside the United States, which means they are less influenced by turmoil in Europe.<\/p>\n

“They are more of a niche market, and they may have a lot of room to expand geographically and internationally,” Mr. Wren said. “Their earnings growth rates are far in excess of what a large company might be.”<\/p>\n

In the last 10 years, the Russell 2000 index has returned 5.6 percent, compared with 3.3 percent for the Russell 1000. “That added return premium hasn’t been for free, though, as there has been higher risk associated with this return,” Mr. Eggins said.<\/p>\n

Mr. DeSanctis, the strategist with Bank of America Merrill Lynch, said his firm’s forecasts included an 11 percent return for small-cap stocks in 2012, in line with the historical annualized average.<\/p>\n

\u201cWe have already achieved that in the first six weeks of the year,\u201d he said.<\/p>\n

From Tony Bennett with love:<\/span> <\/strong> And from the New York Times:
\n<\/strong><\/p>\n

Tony Bennett (who’s even older than I am ) made some waves Saturday night at Clive Davis’s annual pre-Grammys party, which became a memorial for Whitney Houston after the singer was found dead in her hotel room hours earlier. On stage, Bennett called for drug legalization, stirring up instant reaction in the press and online.<\/p>\n

\"\"<\/a>
\nTony Bennett, alive at 86. <\/em><\/p>\n

“It was mostly positive,” Bennett said last night of the reaction to his comments, noting the struggles Houston had later in life. Legalization would “get rid of all the gangsters that make people hide. One thing I’ve learned about young people, when you say ‘Don’t do this,’ that’s the one thing they’re going to try and do. Once it’s legal and everybody can do it, there is no longer the desire to do something that nobody else can do.<\/p>\n

“I witnessed that in Amsterdam,” added Bennett, 85, who survived his own cocaine habit in the late Seventies. “It’s legal, and as a result there’s no panic in the streets. There’s no deals, there’s no ‘Meet me at the corner and I’ll give you something.’ You’re always afraid you’re going to get arrested. You have to hide. Why do that?”<\/p>\n

Though he never knew Whitney Houston, he remembered his first reaction to hearing her voice in the mid-Eighties. “When I first heard her sing, I called Clive Davis up,” he said of the label chief, who discovered Houston and nurtured her career. “And I said, ‘Clive, that’s the best singer I ever heard in my life. You really got something on your hands.’ Sure enough, at the beginning she was singing everything so beautiful.<\/p>\n

\"\"<\/a>
\nWhitney Houston, dead at 48. No one knows why.<\/em><\/p>\n

Read more in Rolling Stone.<\/a><\/strong><\/p>\n

P.S. <\/strong>Tony Bennett was born <\/strong>Anthony Dominick Benedetto.<\/strong><\/p>\n

Super, wonderful play. <\/strong>It’s about the New York Times and the new pressures on reporters to lie, cheat and plagiarize. Fascinating stuff.<\/span><\/span><\/p>\n

\"\"<\/a><\/p>\n

For the Atlantic Theater Company, click here.<\/strong><\/a><\/p>\n

This is wonderful. <\/strong>A very funny video on how to wrap a Christmas present. Click<\/span> here.<\/a><\/strong><\/span><\/p>\n

Heard on the London Underground:<\/strong><\/span><\/p>\n

\"\"<\/a>
\n<\/strong><\/span><\/p>\n

+ Ladies and Gentlemen, I do apologize for the delay to your service. I know you’re all dying to get home, unless, of course, you happen to be married to my ex-wife, in which case you’ll want to cross over to the Westbound and go in the opposite direction.<\/p>\n

+ Your delay this evening is caused by the line controller suffering from E & B syndrome: not knowing his elbow from his backside. I’ll let you know any further information as soon as I’m given any.<\/p>\n

+ Do you want the good news first or the bad news? The good news is that last Friday was my birthday and I hit the town and had a great time. The bad news is that there is a points failure somewhere between Stratford and East Ham, which means we probably won’t reach our destination.’<\/p>\n

+ Ladies and gentlemen, we apologize for the delay, but there is a security alert at Victoria Station and we are therefore stuck here for the foreseeable future, so let’s take our minds off it and pass some time together. All together now…. Ten green bottles, hanging on a wall……<\/p>\n

+ We are now traveling through Baker Street … As you can see, Baker Street is closed. It would have been nice if they had actually told me, so I could tell you earlier, but no, they don’t think about things like that.<\/p>\n

+ Beggars are operating on this train. Please do NOT encourage them. If you have any spare change, please give it to a registered charity. Failing that, give it to me.<\/p>\n

+ During an extremely hot rush hour on the Central Line, the driver announced in a West Indian drawl: ‘Step right this way for the sauna, ladies and gentleman… Unfortunately, towels are not provided.<\/p>\n

\"\"<\/a><\/p>\n

+ Let the passengers off the train FIRST!’ (Pause ) ‘Oh go on then, stuff yourselves in like sardines. See if I care – I’m going home….<\/p>\n

+ Please allow the doors to close. Try not to confuse this with “Please hold the doors open.” The two are distinct and separate instructions.<\/p>\n

+ Please note that the beeping noise coming from the doors means that the doors are about to close. It does not mean throw yourself or your bags into the doors.<\/p>\n

+ To the gentleman wearing the long grey coat trying to get on the second carriage — what part of ‘stand clear of the closing doors’ don’t you understand?<\/p>\n

+ Please move all baggage away from the doors.’ (Pause..) ‘Please move ALL belongings away from the doors.’ (Pause…) This is a personal message to the man in the brown suit wearing glasses at the rear of the train: Put the pie down, four-eyes, and move your bloody golf clubs away from the door before I come down there and shove them up your ass sideways!<\/p>\n

+ May I remind all passengers that there is strictly no smoking allowed on any part of the Underground. However, if you are smoking a joint, it’s only fair that you pass it round the rest of the carriage.<\/p>\n

\"\"<\/a>
\n<\/strong><\/div>\n

Harry Newton whose favorite New York subway story is:<\/p>\n

She was screaming at him. Everyone craned to hear the conversation.\u00a0 It had to be a beaut. They heard him say:<\/p>\n

“Be reasonable Carmen, I made the date with Rose three weeks before you and I were married.”<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Though today is long, there are big rewards at the bottom. Don’t touch gold. Don’t touch bonds. Stay with equities, says Warren Buffett. See yesterday’s column. Which did better in the past ten years? Gold or equities.? Answer gold. Which did better in the past ten years? Berkshire Hathaway or the S&P 500 index? Answer […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-11666","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/11666","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11666"}],"version-history":[{"count":0,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/11666\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11666"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11666"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11666"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}