3rd Quarter 2008
Rutherford Investment Management, LLC
Newsletter: 3rd Quarter 2008
Nightmare on Wall Street
The fear and trepidation of the financial markets came to realization in the month of September. The broad market fell 8.9% in the month, with the average U.S. equity mutual fund down 10.5%. This brings the market down 25.6% from it October 9, 2007 high through September 30, 2008…. Download Newsletter
Bill Rutherford In BusinessWeek
Marcial: How Four Pros Played the Stock Meltdown
One waded into fallen bank stocks and shorted credit-card shares, another eyed health-care issues, a third bought countercyclicals—and a fourth sat tight
by Gene Marcial
What did investors do when the Dow Jones industrial average plunged 777.68 points, or 7%, on Sept. 29, to 10,365.45? Head for the nearest bar for a double? Or rush to double up, or down, on their stocks?
Either way, the Dow’s sharp response to the unexpected rejection by the House of Representatives of the Treasury’s buyout plan reminded investors yet again of how unpredictable and volatile the market can be.
“You’ve got to have a steel stomach to confront these types of markets—to survive or win,” says William Harnisch, president of hedge fund Peconic Partners, which manages some $1.5 billion in assets. And a winner he’s been at a time when most other hedge funds are struggling to avoid sinking. In 2007, Peconic posted a 64% gain, and this year is up 8% though Sept. 29, vs. a decline of more than 20% for the Standard & Poor’s 500-stock index. So Harnisch wasn’t one of those who scurried to the nearest tavern: […]
Bill Rutherford Quoted In Barron’s
Earnings Estimates Still Too Lofty
By JOHANNA BENNETT
WHILE WALL STREET’S OUTLOOK for corporate earnings has grown more bearish by the day, the estimates are still not grisly enough.
Analysts have sharply cut their third-quarter and full-year financial profit estimates for companies in the Standard & Poor’s 500 since the summer, finally giving up on the notion that profits will climb much in 2008.
A poll by Thomson Reuters shows that the Street expects earnings to fall 2.3% in the quarter ending Tuesday from a year earlier. For the entire year, profits are expected to remain flat, a big change from the 6.7% gain analysts had forecast in July.
But some are skeptical about even those modest expectations and expect earnings to be down this year by as much as 8%. And there’s little confidence that the 22% gains predicted in 2009 will materialize given the uncertain economy, falling oil prices and the turmoil plaguing financial markets. […]
Bill Rutherford Quoted By MarketWatch.com
Beyond the pail: Where to invest in a post-bailout world
by Jonathan Burton, MarketWatch
SAN FRANCISCO (MarketWatch) — Wall Street is bound to get its bailout, in one form or another. The government’s rescue package will be costly to taxpayers, politically controversial — and quite possibly not the last. It will also dramatically change the landscape for U.S. stock investors.
The bailout has a singular task: to grease the locked wheels of the financial system and get credit moving again. What investors need to remember is that even if this plan works, the deep problems plaguing homeowners, consumers and the broader economy won’t magically disappear. The Troubled Asset Relief Plan isn’t called TARP for no reason. It is intended to avert a flood of Depression-era size, but the ground around us will still be soaked. […]
Bill Rutherford Quoted At WSJ.com
http://blogs.wsj.com/marketbeat/2008/09/25/four-at-four-please-resume-your-normal-worrying/
Four at Four: Please Resume Your Normal Worrying
by David Gaffen
With the photo-ops, the handshakes, the forced smiles from leaders of opposition parties ready, Wall Street can go back to doing what it does best: Worrying about some other unknown problem somewhere out on the horizon. Thursday’s rally — sort of a “buy the rumor, buy the news” approach to the $700 billion bailout (a figure that was basically plucked out of a hat, as Forbes.com reported), and gives Wall Street enough cover to move ahead from here. That has already translated to a loosening in the Treasury market, where short-term debt yields shot up after days of pressure — the three-month note yield was lately at 0.75%, up from earlier in the day. “The alternatives seem pretty obvious and pretty bad — and there’s some comfort in that some progress is being made and it appeared to take some of the risk out of financials,” says William Rutherford, president of Rutherford Investment Management in Portland, Ore. There are, of course, massive logistical hurdles to implementing the U.S. Treasury Garbage Barge Trust, […]
Post-Market Comments From Bill
Stocks plummet as U.S. Government takes hard line
In its biggest drop since 9/11 stocks plummeted today in the wake of a Bankruptcy filing by Lehman Brothers, the venerable 158 year old investment Bank. The Dow was down 505 points.
Television cameras in New York City filmed thousands of Lehman employees streaming out of their building carrying personal effects and family photos.
The Lehman filing continues the wave of problems that have hit the financial sector as the housing market has crumbled after years of low interest rates and substandard lending practices inflated home prices. Next on the list of troubled companies is AIG, Washington Mutual, Wachovia and others in the financial sector. A bright note: Bank of America bought Merrill Lynch, taking them off the troubled list in a stock for stock deal, at a 40% premium to Friday’s close. At this writing shares of Bank of America tumbled 21% in the wake of the deal, and Merrill shares have risen only a penny from Friday’s close suggesting that the market does not believe in the deal.
Several mutual funds held shares of Lehman all the way down. Value funds were particularly involved. Also required to own shares were Index […]