In the darkest hours of the market, we need to be looking for the next bull. Louis Basenese says the lessons from history show that traditionally riskier small-cap stocks could actually be the smartest bet right now.

Yesterday we got confirmation that the U.S. economy contracted by 0.5% in the third quarter. And most economists expect the downturn to accelerate, with GDP checking in as low as negative 6% in the fourth quarter. Here’s why I’m not concerned…

A more important trend is emerging. Remember, on November 19 I told you to consider going big, by going small with small caps. Well, the markets didn’t leave much time for preparation.

In that short span, small caps jumped 6.38%, almost tripling the returns of large caps, based on the Russell 2000 and Russell 3000 indexes. Of course, it’s too early to declare a full-blown rally. But we shouldn’t be ignorant to the subtle

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Small-Cap Stocks: The Most Important Trend Headed into 2009

by Louis Basenese, Advisory Panelist, Investment U Associate Investment Director, The Oxford Club Wednesday, December 23, 2008: Issue #906

Yesterday we got confirmation that the U.S. economy contracted by 0.5% in the third quarter. And most economists expect the downturn to accelerate, with GDP checking in as low as negative 6% in the fourth quarter. Here’s why I’m not concerned…

A more important trend is emerging. Remember, on November 19 I told you to consider going big, by going small with small caps. Well, the markets didn’t leave much time for preparation.

In that short span, small caps jumped 6.38%, almost tripling the returns of large caps, based on the Russell 2000 and Russell 3000 indexes. Of course, it’s too early to declare a full-blown rally. But we shouldn’t be ignorant to the subtle shifts in market leadership.

Remember, the market’s a forward-looking beast. And

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Here are 3-year charts comparing weekly performance of the US Dollar index to:

(A) to the yield on 3-month and 2-year US Treasuries, (B) to the price of crude oil and gold bullion, (C) to the price for the MSCI World ex US stocks index and the Russell 3000 US stocks index.

Relevant proxy securities are UUP or UDN (for Dollar up and Dollar down), SHV (for short-term Treasuries), SHY (for 1-3 year Treasuries), USO (for crude oil), GLD (for gold bullion), VEU (for world ex US stocks) and IWV or VTI (for US stocks).

click image to enlarge

(A) USD to Treasuries

(B) USD to Oil & Gold

(C) USD to US & World ex US Stocks

Crazy Sept-Oct

Here is a 6-month daily chart

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a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_7ZckZ-8naz0/STsVezoq_wI/AAAAAAAACPA/zjNpt1S7-l0/s1600-h/Fix+it.JPG"img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 400px; height: 340px;" src="http://3.bp.blogspot.com/_7ZckZ-8naz0/STsVezoq_wI/AAAAAAAACPA/zjNpt1S7-l0/s400/Fix+it.JPG" alt="" id="BLOGGER_PHOTO_ID_5276835007395725058" border="0" //aThere are a handful of world class investors whom I will go out of my way to see, hear or read. One of these heavyweights is of course Oscar Rogers. I have not seen anything from him in a while, a style="color: rgb(0, 0, 153);" href="http://www.imdb.com/video/hulu/vi845873177/"this link/a is from late October and I believe is his latest public commentary.br /br /In that clip he gives an impassioned plea for them to span style="font-style: italic;"fix it/span.br /br /I think Oscar might be on the verge of throwing in the towel despite a style="color: rgb(0, 0, 153);" href="http://www.nytimes.com/2008/12/07/business/yourmoney/07fund.html?_r=1amp;ref=business"this article from the NY Times/a saying that diversification does still work and that investors should not give up on it.br /br /The idea was simply that in a short term, panicked ...

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Smart Balance’s

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Short sales are (maybe) back to the market tomorrow. Has doomsday arrived? A look at the market through ETFs.

First, conventional wisdom is that despite the meltdown (and yes, Matt I will stand up here and call it that with pride, because if THIS isn't a market meltdown, what would be?) I've seen markets plunge before and I've felt this same raw fear, but I never think I've quite felt this complete capital freeze feeling that is in the air.  I mean, where did all the money go?

First on the short sales thing, I think I'll put my odds with Matt that the financials short sales ban will not be allowed to expire, though conventional wisdom is that allowing it to do so would not cause a meltdown of markets as

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Short sales are (maybe) back to the market tomorrow. Has doomsday arrived? A look at the market through ETFs.

First, conventional wisdom is that despite the meltdown (and yes, Matt I will stand up here and call it that with pride, because if THIS isn't a market meltdown, what would be?). I've seen markets plunge before and I've felt this same raw fear, but I think I've never quite felt this complete capital-freeze feeling that is in the air. I mean, where did all the money go?

First, on the short sales thing, I think I'll put my odds with Matt that the Financials short sales ban will not be allowed to expire, though conventional wisdom is that allowing it to do so would not cause a meltdown of markets as you now actually have to have a locate on a borrowed share to sell it short. That will slow

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Whipsawed by increasing market volatility, third-quarter results for blue chip ETFs in similar style categories thrown all over the map.

 

As investors prepare for a final three-month push to raise dour 2008 returns, third-quarter trends point to lower markets at least in the near-term.

But much hinges on a $700 billion bailout package for some of the world's biggest banks and financial services firms. And even if that passes both chambers of Congress, economists aren't expecting the ongoing global credit crisis to end right away.

The performance of the most liquid blue chip stocks in the U.S. under such choppy waters is likely to undergo increased scrutiny. Perhaps the most transparent way to monitor the large-cap universe as a group is through exchange-traded funds.

Below is a Q3 review by IndexUniverse of that category by investment style using Morningstar Inc. data.

Large Value

Ticker

Q3 (%)

IVE

-4.86

IWD

-6.15

VTV

-6.31

PRF

-6.38

DLN

-2.50

After a rough

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ESSA Bancorp (ESSA) is a bank holding company that provides financial services to individuals, families, and businesses in Pennsylvania. The company offers traditional banking services such as checking and savings accounts, money market accounts, club accounts, certificates of deposit, individual retirement accounts, and other qualified plan accounts. ESSA is also a provider of first mortgages, home equity lines of credit and commercial loans. In addition, ESSA also offers asset management and trust services, as well as provides investment services through its relationship with PRIMEVEST Financial Services, Inc.

While larger financial institutions across the U.S. fall by the wayside due to cash constraints, ESSA Bancorp sits on a mound of cash that would make any company green with envy. The company has almost $23.5 million in cash on hand and assets of $985 million. The company has 13 branches in the Pocono Mountains area of Pennsylvania, giving it close proximity to

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ESSA Bancorp (ESSA) is a bank holding company that provides financial services to individuals, families, and businesses in Pennsylvania. The company offers traditional banking services such as checking and savings accounts, money market accounts, club accounts, certificates of deposit, individual retirement accounts, and other qualified plan accounts. ESSA is also a provider of first mortgages, home equity lines of credit and commercial loans. In addition, ESSA also offers asset management and trust services, as well as provides investment services through its relationship with PRIMEVEST Financial Services, Inc.

While larger financial institutions across the U.S. fall by the wayside due to cash constraints, ESSA Bancorp sits on a mound of cash that would make any company green with envy. The company has almost $23.5 million in cash on hand and assets of $985 million. The company has 13 branches in the Pocono Mountains area of Pennsylvania, giving it close proximity to

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