November 14, 2008, 7:32 am -- WHAT'S FRANK THINKING?
Friday, November 14th, 2008, Prescott, Arizona, USA
"How yous doin'?"
One more week until November expiration, and we will be at a Trade Show in Las Vegas for most of it - whoever schedules these things should be taken out and beaten; or worse, held captive with their own money at a Vegas high stakes game of chance.
Anyway, we were wondering, as we approach the end of 2008, where we have been and how some of the big boys in the industry have done over the last decade or there about. In 1998, the S & P 500 was trading in the 1100s, and today it is trading near 900. That doesn't stand out as a great return, if anything - unless you had gone short. Plugging in the dividends that would have been collected over the last ten years, the average return is still terribly low.
So, as the guys on the Chicago street corner would ask "How's yous guys doin'?" If you have held your trading head above water over the last decade and are flat to higher, you are "doin'" quite well. In fact, you are probably beating many of the "big boys" in the industry. The largest of the fund families may not have suffered any major losses (some have), but only five of them would have beaten the average return of the S & P 500. But, as you can see from the above mentioned numbers, beating the SPUs was not much of a hurdle!
Although it may have been slightly easier for us moving money around and trading 5 and 10 lot spreads or selling strangles around our long stock positions than tossing around billions, like the American Funds' "Growth Fund of America" and their $178 billion, it has indeed been tough earning a respectable rate of return. Hopefully with the last few months of elections now over, and the incredible sell-off and ensuing small attempts at a rally surely soon coming to an end, improving one's earnings will once again become more commonplace. Volatility helps, and thanks mostly to the large overall market swings, some option traders have definitely improved their returns, well above what mere dividends would have provided. However, due to yo ho overall moves in such a short period, many option premium sellers also "took a bath." So, if you haven't beaten some of the big fund boys and girls, don't feel too bad - you are in good company, and there is plenty of it!
"You're seeing a return to traditional measures of value as investors become more focused on things like (price-to-earnings ratios), interest rates and earnings.”-- Alan Skrainka
Have a great weekend. Look for more of the same craziness in the markets next week!
FHW
| 
