Wiandt the Prophet (or is that Profit?)

January 23, 2008

My early morning blog fingering the homebuilders and U.S. financials as potential opportunities made me look like a genius by the afternoon.

My prophetic blog from yesterday is already paying dividends. Homebuilders stocks and U.S. Financials enjoyed banner days yesterday, and I'm guessing it's not from people acting on my insights.

SPY (the S&P 500 SPDR) was up just over 1% yesterday, and the 4 Financials ETFs I checked were up from 2.16% (XLF, the mega Financial SPDRs) to 2.82—the PowerShares FTSE RAFI Financials (PRFF) with a Twist. Homebuilders was even more impressive, with the iShares version (ITB) up 6.31% and the SPDRs up 7.85%. Always the outliers, the PowerShares Dynamic Building & Construction (PKB) came in at 1.22%.

Like I said, day-trading fantasies aside, I'm not one to get trigger happy when the market is moving all over the place, and John Bogle (still going strong!) had it right on CNBC yesterday when he said his best advice for investors was to just not do anything. This is exactly the sort of time (acting on panic/emotions/greed) when investors make their worst decisions, too often buying high and selling low.

So trade on Bobo, but don't pile in on MY market thoughts. I know enough to know that I don't know much. And while I may tilt slightly here and there with an eye to the markets, this is done with a long-term perspective, and with careful discipline. I have not done a THING with my portfolio in the last week.

I saw a very interesting analysis of the current situation at SSgA. What I take away from this, besides the fact that big-time corporate politics is completely insane, is that IF all those quant strategies had done well in 2007, the assets were poised to have piled in. The gist of it is that if the big investment managers, consultants and the rest offer up enough, some of it is going to hit, and the big assets will flow in. That is how it works, at just about every level, and it's a bit of a bad joke.

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