Commentary

George Chamberlin

GEORGE CHAMBERLIN has been associated with The Daily Transcript at SDDT.com since 1998 and became Executive Editor in 2006. He is responsible for the development of editorial strategies for the newspaper and website. He has introduced video and audio into the editorial products and is the public face of the company at many community events. George regularly chairs industry roundtables and conducts video interviews of participants for use on the San Diego Source. He writes two daily columns, "Money in the Morning" and a daily stock market wrap-up.

George, a long time resident of North County, lives in Vista with his wife Terry.

From the Executive Editor

Good or bad, investors were prepared to start selling this morning after the release of the August employment report. To be sure, the headline -- payrolls rising by just 173,000 -- implied an economy that is still struggling for increased hiring at a pace representative of a robust recovery. As a result, the financial markets took the path of least resistance, selling off sharply. The move lower in early trading could reflect the desire of traders to get in their orders before heading out for the long Labor Day weekend, the last hurrah of summer.

Labor Day 2015 finds the United States employment picture significantly improved from the dark days of the Great Recession, but still addressing many unanswered questions.

Go 100 percent cash. That is the headline advice from MarketWatch.com, owned by the Wall Street Journal, yesterday and today. The dire warning came just in time for a 293-point rally in the Dow industrials on Wednesday and another 180-point move higher in early trading today. The suggestion to sell all of your stocks, bonds and mutual funds is based on a market timing model, always a dangerous strategy for most buy-and-hold investors. Of course, the recent volatility has many people scared and a warning to go to cash is the kind of thing that will sabotage their portfolio long-term. It is really easy to get out of the market, but very hard to know when to get back in.

It was another one of those days on Wall Street yesterday. It had the feel of another mini-flash crash with an early drop in the Dow industrials of around 500 points. It was just a week earlier we saw the index fall 1,000 points in the first five minutes, triggering a media frenzy, something that only happens when stocks are falling, not rising.
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To be sure, it was a tough day yesterday. Of the 500 stocks in the S&P 500 stock index, 497 were down on the day. Don't remember a day with such a negative bias.

Good news, bad news. The good news is August is over. It was not pretty as the Dow industrials lost 6.6 percent, the biggest one-month decline in three years. The bad news is today is the first day of September, historically the worst month of the year for investors. And, if today is any example, things could get really bad this month. Early trading has the Dow down 300 points and it could have been worse. Right before the opening bell the NYSE invoked something called Rule 48 to make the opening trades less volatile and avoid another mini-flash crash like last Monday.

It is getting very close to crunch time for the Federal Reserve and chair Janet Yellen. The Fed’s open market committee will issue a statement of the economy, inflation and interest rates on Sept. 16.

Wall Street braces for losses as futures tumble. Yep, it's a headline today from MarketWatch.com. I looked up the definition of "tumble" and came up with: "To fall into ruin." So, perhaps they once again were overstating the situation on Wall Street. To be sure, last Monday's stock prices indeed tumbled when the Dow industrials dropped more than 1,000 points in the first 15 minutes of trading. Today the decline was a bit less, about 150 points. No matter what, August will end today with a rather significant decline, around 6 percent.

If asked 50 years ago, when I was beginning my broadcasting career, if I would ever be the executive editor of a business news organization like The Daily Transcript and San Diego Source, I would have said absolutely not.

Pity the poor investor who panicked. The two-day selloff at the start of the week was enough to scare a lot of investors out of their stocks, thanks for the fanning of fears by CNBC and others. A report from Lipper, a mutual fund analytical service, found fund redemptions in the week ending this past Wednesday topped $17.8 billion with the bulk of the money flowing out of stock mutual funds. Of course, the markets reversed direction on Wednesday with a 619-point rise in the Dow industrials and continued yesterday, adding on another 370 points, bringing the two-day gain to 990 points and pushing the index into positive territory for the week.

Much to the disappointment of the permabears, the stock markets staged a strong rally yesterday. The Dow industrials rose 619 points, snapping a six-session losing streak. The gain was 4 percent, the biggest one-day increase in four years. The rally was led by tech stocks including Apple (up 6 percent), Google (up 8 percent), and even Qualcomm (up 5 percent). It looks like the rally will be extended today thanks to an overnight rally in the Asian markets after a massive infusion of funds into the economy by the Chinese government.

Four in a row. The attempt by the stock market yesterday to rally out of the recent sharp declines fizzled in the final hour of trading yesterday and led to a fourth consecutive day to the downside. But it was not just any four days of declines. The loss of 205 points on the Dow industrials marked the fourth session in a row the index has been down 200 points or more. That has never happened before.

The end of the financial world as we know it has been delayed. Yes, things looked very bleak on Wall Street yesterday as the day began with a massive 1,000-point drop in the Dow industrials. If you follow most media reports you would have thought it was a one-day wonder. Consider the front page headline today in the Union-Tribune: Market Carnage. The fact is the stock market has been struggling for several weeks, if not most of 2015. If anything, yesterday may have been the climactic event rational investors have been looking for.

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