HOME OF "PICTURES OF A STOCK MARKET MANIA" February 21,2008 Alan M. Newman's Stock Market CROSSCURRENTS Alan M. Newman, Editor Lucky Numbers It's difficult to imagine that 2008 will wind up as a total washout, if only for thereason that one of the biggest economic boosts in Earth's history will occur later thisyear as one of every five people on the face of the planet revel and celebrate the gloryof the 29th Olympic games.  It's as if the stars are properly aligned forsuccess.  Even the number "eight" is a factor, since many Chinese believeeight equates with good luck and prosperity.  The games will commence on August 8,2008 at 8 o'clock. For the first time ever, our exposure to U.S. stocks (outside ofprecious metals) has sunk to 5%.  Our Special Update on February 6th specified acloseout of the 10% stance in Archer-Daniels-Midland (ADM) and the initiation of a 5%stance in Paraxel International (PRXL).  China now represents one-quarter of ourInvestment Stance.   --------------------------- 
CHECK OUT THE RESULTS OF OUR 2007 INVESTMENT STANCE RECEIVE A COPY OF OUR YEAR AHEAD 2008 ISSUE
PZEd Off Felix Salmon has an amusing anecdote (see http://tinyurl.com/2hmzrl)to offer about the tendency of investors to act like "brainless lemmings," ashortcoming we have seen all too often in our 43 years of observation.  As well,there is the tendency of the media to simply get it wrong, as the rush to produce materialfor viewers/readers takes precedence over checking the facts.  Salmon says,"It's a fun game, this stock-market malarkey. You watch CNBC, see a talking headrecommend a stock ticker symbol, and then jump onto your computer to execute the trade.It's so easy!" and goes on to cite a recent interview with CGM Focus' Ken Heebner,who rated "Petrobras" (PBR) one of his top investment choices.  Trouble is,CNBC showed a chart of Petrobras Energia Participaciones S.A. (PZE).  The confusionstems from the similarity of the two monikers, as "Petrobras" (PBR) is actuallya contraction of PETROleo BRASileiro, while PZE is a subsidiary based in Argentina. Salmon admits CNBC acknowledged its error but then castigates Jim Cramer for also gettingit wrong, claiming "the madman said that [PZE] was an "underexposed LatinAmerican energy stock that could be poised for big gains."  And then on the sameday, Heebner was again interviewed and the PZE chart was once again shown, "exactlythe same mistake that they'd made less than two weeks previously."  Salmon also mentions Forbes making the same error in a recentarticle and we'll show you yet another; Fortune magazine's top picks for 2008, which alsoincorrectly chose to show PZE, rather than PBR. Fortune later corrected their error. As late as December 11th, PZE traded as low as $11.75.  Within a month, on thestrength of CNBC's double exposure and Cramer's "hype," PZE traded as high as$17 and then, as the news of the symbol errors became widespread (see WSJ news on January9th, http://tinyurl.com/2tjgoh), the shares tankedback to $11 in only nine sessions.  Amazingly, the WSJ states that "Jim Cramereven [recognized] the error but still recommended PZE for unclear reasons."  Ifyou're interested, Morningstar lists Heebner's CGM Focus top holdings at http://tinyurl.com/2aggeh.  Coincidentally, wehave four of them in our Investment Stance, including Petrobras (the correct one). --------------------------- Well Below Average!  Over the last few years, we have often featured our regression chart and theten-year annualized return chart below to make the point that stocks were way overdue fora return to historical norms.  Despite the buy-and-hold advice dispensed by WallStreet and the notion that the long term will always bring tremendous rewards, unless yourdefinition of long term extends well beyond 20 years, the promises do not hold up to closescrutiny.  In a recent Dow Jones article, Spencer Jakab pointed out that“Through the end of January, the 10-year total return for holding the Standard &Poor's 500 was just 5.14% annualized while a basket of investment grade bonds representedby the Lehman U.S. Aggregate Index returned 6.015%. In other words, $1,000 invested 10years ago would have grown to $1,651 owning just stocks and $1,793 owning virtuallyriskless bonds, while holding the average U.S. large growth stock fund would have returnedan even lower $1,512.“  In all fairness, our chart shows ten-year annualizedreturns for the Dow EX-dividends, but the total return stats are a shocker.  Despitethe buy-and-hold advice touted by Wall St. and the most incredible stock mania of alltime, one could have done better in the last decade by holding bonds!   INTERESTED IN PERSPECTIVES YOU'LL FIND NOWHERE ELSE? ENROLL IN OUR FREE TRIAL.  NO OBLIGATION. WATCH THIS SPACE FOR MORE COMMENTARY IN THREE WEEKS ON MARCH 12th.  REQUEST A FREE TRIAL NOW!
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ABOUT ALAN M. NEWMAN Alan M. Newman has been the Editor of CROSSCURRENTS since the firstissue was published in May of 1990. Mr. Newman is also a member of the Market Technician'sAssociation and has been widely quoted for years by the financialpress, media, and other newsletters and has written articles for BARRON'S. The newsletter is published roughly every three weeks and focuseson economic and stock market commentary, often covering controversial subjects. Severalproprietary technical indicators are usually featured in every issue accompanied bycurrent interpretation.  Broad samples of our work can be viewed at http://www.cross-currents.net/.  Subscription rates are now $189 for one year and $100 for sixmonths.  A FREE 3 issue trial subscription is available by emailing us (click the"free trial" link above). Please note: trialrequests must include name, address and phone number and must originate fromthe email address the trial is to be delivered.  Trials are onlyavailable by Email (.pdf files).  U.S. Mail subscriptions are available but include anominal surcharge for postage and handling.