James Earnest Investments - Latest Blog Entries

STOCK MARKET CORRECTION

Sun, 30 May 2010 06:42:00 -0500

A stock market correction is generally defined as short term price decline of 5% to 20%.The decline of May 2010 would qualify as "a market correction."

BAD MAY FOR THE MARKET

Fri, 28 May 2010 20:52:00 -0500

The S&P 500 fell from 1186.69 to 1089.41 during May 2010, a loss of 8.2%, and the biggest monthly loss since February 2009.

2009 FINAL STOCK MARKET PERFORMANCE

Mon, 18 Jan 2010 18:23:00 -0600

With dividends reinvested, 2009 returns for major stock market indices:

Dow Jones 22.68%

S & P 500 26.46%

Nasdaq 43.89%

Russell 2000 27.17%

2009 STOCK MARKET PERFORMANCE as of December 15

Wed, 16 Dec 2009 10:33:00 -0600

Dow Jones Industrial Average +16.0%

Standard and Poors 500 +18.5%

NASDAQ +28.4%

Russell 2000 +17.6%

2009 STOCK MARKET PERFORMANCE as of September 8

Wed, 09 Sep 2009 08:59:00 -0500

Dow Jones +7.6%

S&P 500 +11.9%

Nasdaq +22.6%

Russell 2000 +13.3%

2008 STOCK MARKET PERFORMANCE as of December 31

Wed, 14 Jan 2009 08:35:00 -0600

Dow Jones Industrials -33.8%

S & P 500 -38.5%

Nasdaq -40.5%

Russell 2000 -34.8%

Disinflation vs deflation

Tue, 02 Dec 2008 09:27:00 -0600

From Investopedia.com:

Disinflation - A slowing of the rate at which prices increase. Typically, this occurs during a recession, as sales drop and retailers are not able to pass on higher prices to customers.

Deflation - a period during which prices actually drop.

LIBOR

Fri, 10 Oct 2008 10:15:00 -0500

London Interbank Offered Rate (from Investopedia)

An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Banker's Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' deposit rates for larger loans with maturities between overnight and one full year.

This rate is quite high now, reflecting the reluctance of banks to lend to one another, and thus the "credit crisis" we are now experiencing.

West Texas Intermediate - WTI

Fri, 27 Jun 2008 13:05:00 -0500

From Investopedia:

Light sweet crude oil, commonly referred to as "oil" in the Western world. WTI is the underlying commodity of the New York Mercantile Exchange's oil futures contracts.

WTI is considered a "sweet" crude because it is about 0.24% sulfur, a higher concentration than North Sea Brent crude. WTI is high quality oil that is easily refined.

Commodity

Fri, 27 Jun 2008 12:44:00 -0500

A basic good used in commerce that is interchangeable with other commodities of the same type (grains, gold, beef, natural gas and oil are examples). Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as basis grade.

The basic idea is that there is little differentiation between a commodity coming from one producer and the same commodity from another producer - a barrel of oil is basically the same product, regardless of the producer. Compare this to, say, electronics where the quality and features of a given product will be completely different, depending on the producer......Investopedia

Oil

Fri, 27 Jun 2008 11:34:00 -0500

Oil prices have been dominating the headlines for months now. The stories generally talk about "sweet crude". So, what is sweet crude oil?

According to Investopedia, sweet crude is the name given to barrels of crude oil that meet certain content requirements, such as low levels of sulfur and hydrogen.

Sweet crude futures contracts are the most popular oil contracts traded on commodity markets. This type of oil is much easier to refine than sour crude.

Inflation

Tue, 20 May 2008 15:04:00 -0500

Investopedia says: Inflation is the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year.

Most countries' central banks will try to sustain an inflation rate of 2-3%.

Core Inflation

Tue, 20 May 2008 14:56:00 -0500

Investopedia defines "core inflation" as: "a measure of inflation that excludes certain items which face volatile price movements. Core inflation eliminates products that can have temporary price shocks because these shocks can diverge from the overall trend of inflation and give a false measure of inflation."

"Core inflation is most often calculated by taking the Consumer Price Index and excluding certain items from the index, usually energy and food products. Other methods of calculations include the outliers method, which removes the products that have had the largest price changes."

GDP (Gross Domestic Product)

Fri, 09 May 2008 09:59:00 -0500

According to Investopedia.com:

GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

Recession

Fri, 09 May 2008 09:51:00 -0500

Investopedia defines recession "as a significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income, and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's GDP" (gross domestic product).