Fidelity Select Fundranker

Fundranker Blog—September 2008 Archive

Bailout Defeated

The U.S. House of Representatives rejected the bailout bill in a close vote 228 to 205. Even before the news of the bill’s failure reached Wall Street, the Dow Jones Industrial Average started falling. After the vote, it plunged even faster, falling 777 points for the day, its largest one-day point loss ever. Democrats supported the bill in greater numbers than Republicans, but significant percentages of both parties’ legislators voted against it.

What’s next? Conventional wisdom is that Congress must do something, and do it soon, but there is much concern that this particular bailout package is not necessarily the best plan. The stock market has given its snap opinion on doing nothing. Will Congress regroup and work this through to develop and pass a plan with strong bipartisan support before they adjourn for the year? Perhaps if Congress slows down a little, commits to working on the plan for a week or two weeks, it can give both Wall Street and Main Street more confidence that a viable solution to our financial system problems can be found and implemented.

Posted 9/29/08 7:02pm ET in Economy | Permalink | Comments (0)

Bailout Angst

Congressional leaders thought they had reached an agreement Thursday on the $700 billion bailout. McCain and Obama dropped their debate preparation long enough to attend a meeting Thursday to put in their two cents. McCain even promised to put off Friday’s debate, if necessary.

Then the wheels came off. Did McCain and Obama get in the way? They aren’t even on the committees that are putting the plan together. Did House Republicans throw a wrench in the works with their insurance-instead-of-bailout plan? They claimed that the so-called agreement congressional leaders thought they had was never the case.

So the Senate and House committees went back to work Friday. Obama had already said that Friday’s debate should go on regardless of the bailout crisis, and McCain finally decided he could attend the debate despite no agreement. By midday Saturday, Congress had made significant progress on a bailout agreement. They want to announce a deal by Sunday evening, before Asian stock markets open. The market could be in for a wild ride this week.

Posted 9/27/08 1:27pm ET in Economy | Permalink | Comments (0)

Wallstreet Bailout

The Bush administration, the Treasury Department (Henry Paulson), and the Federal Reserve (Paul Bernanke) have been working nonstop since late last week with Congressional leaders to come up with a plan to bailout the U.S. financial industry. So far they have come up with a $700 billion price tag and just a few details. Democrats are asking for additions to the administration plan to build in strong oversight, to require the government to adopt a systematic approach for preventing foreclosure on mortgages it acquires in the bailout as well as loans held by Fannie Mae and Freddie Mac, to allow judges to rewrite mortgages to lower bankrupt homeowners’ monthly payments, to limit executive pay packages of companies which sell their bad assets to the government, and to require that the government get shares in those companies.

The market responded to rumors of the plan as well as new limits on short selling of financial companies on Thursday and Friday with sizeable rallies. Today, however, after digesting a few more details on the bailout plan as well as news that the government approved requests from Goldman Sachs and Morgan Stanley to change their status to bank holding companies, the market gave back nearly half of those gains. Congressional action on the bailout plan could come as early as Wednesday.

Posted 9/22/08 5:56pm ET in Economy | Permalink | Comments (0)

Market Meltdown

The Dow Jones Industrial Average lost 500 points on Monday and 450 points on Wednesday this week in the wake of the bankruptcy of Lehman Brothers and the Federal Reserve’s unprecedented bailouts of Fannie Mae, Freddie Mac, and American International Group. The Federal Reserve is doing everything in their power to keep our financial system from completely unraveling. How successful will they be? How quickly? If you believe in America, you have to believe that we will survive this crisis.

How and why did our financial system get into this mess? Many pundits are blaming the move toward deregulation. Think of the battle between regulation and deregulation as a pendulum. It’s pretty obvious that the pendulum soon will swing back toward regulation.

Posted 9/18/08 3:38pm ET in Market | Permalink | Comments (0)

Stay Disciplined

The Top Eight Model Portfolio was heavily weighted through August in Fidelity Investments energy and natural resources Select funds. For a considerable length of time, this weighting proved advantageous as the Top Eight Model Portfolio made all time highs in May and June. The energy and natural resource funds let us down in July and August, however, and Fundranker has reduced the Top Eight Model Porftfolio’s exposure to them, at the same time increasing it’s diversification.

Many investors turn tail in tough market conditions, sell their shares, and park the proceeds in cash. Then they are in the unenviable position of having to figure out when to reinvest in the market. It is easy for them to miss out on major upside market moves while they try to decide.

Fundranker, however, remains invested and trusts its technical investment system to reposition the Top Eight Model Portfolio into currently best performing Select funds in order to maximize its potential for future returns. It never misses out on major upside market moves because it is always in the market. In a long term rising market, this strategy more than makes up for market downturns.

Stay disciplined. Stick with the Fundranker system, and let it position you in the best performing funds. View downturns as opportunities to invest new money, rather than as times to panic and cash out.

Posted 9/10/08 3:08pm ET in Fundranker | Permalink | Comments (0)