When Were the Last Two Down Days in a Row? Who Cares?

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When Was the Last Time We Had Two Down Days in a Row? by David Merkel, CFA

I met with some board members from the local CFA Society for lunch today.  I commented, “When was the last time you saw two down days in a row?”  The answers ranged from at least a month, to sometime in May.  I use the S&P 500 as a measure, as most professionals do, and the answer is June 24th.  Admittedly, one of those declines was very small, but if you want to go back further, there were three down days in a row ending on June 12th.

This teaches a lesson: in a bull market, most professionals get skittish, and are looking for the turn, and think the market is running mindlessly higher without respite.

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Dov Gertzulin's DG Capital is having a strong year. According to a copy of the hedge fund's letter to investors of its DG Value Partners Class C strategy, the fund is up 36.4% of the year to the end of June, after a performance of 12.8% in the second quarter. The Class C strategy is Read More


For investors that have reduced risk, sensing overvaluation, the continued rise in prices numbs the senses, and makes things seem worse than they are for those that are trying to beat the market.

Why do I write this?  We all need to take  step back and focus on first principles.  What are our goals for clients?  What time horizon are we looking at?  Why are we looking at day-to-day performance?

Far better to try to analyze what is being neglected, than agonize over past performance.

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David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website RealMoney.com. Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.

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