Weekly Risk Report 09/08/2008
This week we see a slight risk rise in three of the four components of the IW. This still leaves three of the four in the low end of their Average Risk range while the Relative Valuation component remains bullish.
Only our Zeal component fell slightly. I guess it would be no surprise that there aren't a lot of IPOs coming to the market right now. The best time to do so is when P/Es are very high. Why take your company public when you only get paid about 15X a dollar's worth of earnings? Wouldn't it be better to wait until the market was feeling more generous - say 18X earnings?
It would appear that with FNM and FRE being supported by the full faith and hard work of the American Taxpayers it should help to stabilize at least a part of the Real Estate market at various levels and geographic locations. That should bode well for the Financial Index ETFs along with the builders. I note this AM that our IYF and PFI components (Financials) are both up (about 1.3% and 2.1% respectively). We have added significantly to both of those positions in 2008 during the weakness in that sector.
Technology is weak again this AM while we are seeing some relief in the Telecomm area. Telecomm has had a rough year and is still trading much closer to its year low than high. Utilities are also seeing some relief this AM. The market seems to be starting to look for a reason to rally. Maybe some of the strain of the election year has been replaced with a bit of optimism about the economy.
