Tuesday, February 09, 1999
On Saturday morning, the day after the markets closed for the last time on the spectacular month of January 1999, the following quote was in the financial section of the morning paper: "If you take out technology and biotechnology, the market is doing nothing," said XYZ, senior market analyst at XYZ." I removed the actual names and substituted XYZ because my intent here is not to belittle this specific person or company (s)he works for. It is also possible that this person is actually quite knowledgeable and is quoted out of context.
Besides, the XYZ is appropriate for another reason: How many times and from how many different Wise people have you seen something like this in your newspaper? Thus, the exact identity of this person is not important.
Let's get out our Foolish microscopes and see what is behind this statement. After all, you cannot actually remove any sector from the market, particularly anything as important as bio and tech. So what are they really trying to say?
"D'Oh! Our pre-harmonic oscillators took us out of biotech and technology a few months ago and so we have underperformed the S&P 500 for another month/quarter/year/decade" (take your pick).
Incidentally, how did the S&P 500 actually do in January? This critical piece of information was nowhere to be found in the section near XYZ's quote. Well, my calculator says it went up 4.1%, not including reinvested dividends. (Since this calculation was performed on a device from a sector that doesn't exist, it is suspect of course.) Maybe I do not understand the new math that XYZ uses, but 4.1 sounds like more than nothing to me. In fact, I think we would all be quite pleased to see this much nothing every month.
How did other sectors do? This little detail was also missing. Let's see� Gap Inc. went up 14% and Wal-Mart went up 6% (retailing). Nike went up 12% (footwear). Nucor went up 13% (steel).
Sorry, XYZ, Fools do not believe you.
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