Archive for February 2008
What do Fed rate cuts mean to your stock portfolio?
Posted by: Michael Zhuang on: February 27, 2008
Last month, the Fed took a drastic step to cut rate twice by a total of 125 basis points. And with a drop of 225 basis points since last fall, what does this say about likely stock returns? Let’s look at the historical data. Since 1950, the Fed cut more than 200 basis points 11 [...]
Small (cap) is beautiful in a recession
Posted by: Michael Zhuang on: February 21, 2008
We’re already in a recession. Or, that’s what the pundits say. They may well be right. But what will you do about it? Will you follow common wisdom and seek relative safety of large cap stocks? After all, large cap stocks are safer— right? That’s what I had thought too, until I studied the S&P [...]
After deep sell-offs, follow sharp rallies?
Posted by: Michael Zhuang on: February 4, 2008
In the three month period between Oct 19th, 2007 and Jan 18th, 2008, the S&P 500 index fell 14.1% and the Russell 2000 Value Index fell 19.5%. To understand what is likely to happen next, I studied the top 10 worst three-month-sell-offs since 1950. These sell-offs ranged between -13% to -30%. I found that in [...]
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