Monday, February 14, 2005


Year to date the worst performing industry specific EFT funds were IGN and IGV. High tech stocks have been pounded. On Friday the second and third best funds were IGN and IGV. Networking tech and software tech did quite well. Semi-conductors did even better. IGW was the number one performing exchange traded fund on Friday.

Broad based funds made similar turns. QQQQ was the second worst group for the year at down 5.56%. It was the number one performer on Friday. IWO was the fifth worse for the year but number 2 on Friday.

AMR and CAL were down 17.5% and 22% for the year and up 2.5% and 1.5% on Friday.

The other worm: Homebuilders have been the top group for 5 years. Friday, they were all pounded. Comstock Homes was down 10.29% and Lennar was at the other end only down 1.7% all the others lost more than 1.7% but less than 10.29%. TLT (bond fund) went from one of the best to one of the worst.

The worms turned in the face of strength in the US economy. We had a strong employment report and strong export growth. Signs that GNP is growing faster here and over-seas. I suggested a few days ago that the bond rally was over when the rally worked its way down the curve. Indeed, this has been true. How far will this worm crawl in this direction?

Papa John always said it takes a lot of force to turn a battle ship around but once you get it turned and going at full steam it is hard to stop. This battle ship has been fighting a storm and it temporarily went the wrong way. Now it is back on course. So far, there has been little follow-through to Friday's big move. One day does not make a trend. However, the market turned with such strength that I believe we will spend at least a few months headed in this new direction.

TXN (Texas Instruments) has forecasted a doubling of 3G phone chips this year. Airlines are risky but, have traditionally done well in a strong business travel environment. Banks tend to under-perform in rising interest rate markets. This morning and yesterday I sold banking stocks (BBT and WB) and even a little bit of LOW's. I bought several economically sensitive issues including airlines, TXN, NOK and IGW.

I am sorry not to have answered some individual inquires. I will work through my email box as soon as I can.