The Big Picture

« Why Prediction Markets Fail | Main | Are Bankers Incompetent Morons? »

8 Big Numbers

Friday, January 11, 2008 | 10:00 AM

in Data Analysis | Fixed Income/Interest Rates | Markets | Mathematics

Andrew Burkly of Brown Brothers Harriman & Co puts out a list of significant numbers each January. Its a clever way to think about various aspects of the market and the economy -- by the numbers.

These are his "8 Big Numbers" for 2008.

The S&P 500 Index needs to close above its March 2000 peak of 1552, as well as break its 2007 trading range of 1575 – 1370 to keep the structural bull market intact. An upside break of the range would indicate that the volatile trading of 2007 was merely a high-level consolidation. One indication that the bull market is back in gear would be the number ofcommon stocks hitting net new 52-week highs climbing back into the 500 range.

Domestic equity funds witnessed outflows in 2007 totaling $54 billion suggesting that investor sentiment is far from euphoric. Finally, the average gain during year 4 of the presidential election cycle has been 8.9% since 1928.

Meanwhile in 2008, 3.6% is a key level to watch for the 10-year Treasury yield, the commodity bull market moves into its 6th year, and the S&P 500 Energy Sector looks for its fourth sector performance crown in five years - a winning percentage of .800.

1. “1552” The March 2000 peak in the S&P 500 Index
2. “1575-1370” – The 2007 trading range in the S&P 500
3. “500” The number of stocks hitting net new 52-week highs in a healthy market
4. “-54” Outflows ($billions) from domestic funds in 2007 (through Nov.)
5. “4 2008 is year 4 of the presidential election cycle
6. “3.6%” A significant support level for the 10-year Treasury yield
7. “6” 2008 marks the 6th year of the commodity bull market
8. “.800” Energy going for its fourth sector performance crown in five years

Good stuff. Thanks, Andrew . . .

TrackBack

TrackBack URL for this entry:
https://www.typepad.com/services/trackback/6a00d8341c52a953ef00e54fc6b7318833

Listed below are links to weblogs that reference 8 Big Numbers:

Comments

Two things:

1. Domestic funds experienced outflows last year. Big deal. What were the total inflows for international funds. I bet ya a dollar it more than offset the domestic outflows. Dumb money flows to the highest performing asset; this is not news. It doesn't mean that domestic funds will go up in '08, only that they may outperform INTL funds on a relative basis.

2. Can we please, for the love of all that is good, stop talking about the stupid election year indicator. Please. Pretty pretty please with two cherries and real whipped cream? Since 1928, we can say with 73% confidence that election years are better performing years than other years. 73% is great if you're trying to get kids to stop smoking - it's total dog-shit taco if you're trying to argue that election year returns have anything to do with anything. Furthermore, the election year indicator is no better than a coin flip over the last twenty-five years (in terms of being better or worse than the average market return), so it looks like traders have caught on.

I know that the election year thing is not your research, Barry, but that whole canard needs to be taken out back and shot in the head and you could be the one to do it.

Posted by: Byno | Jan 11, 2008 10:52:51 AM

The comments to this entry are closed.