Don’t be so quick to fade prevailing opinion. James Surowiecki’s The Wisdom of Crowds (Anchor, 2005) states that large groups are often “remarkably intelligent and often smarter than the smartest people in them.” According to the author, wise crowds need decentralization, diversity of opinion, independence, and a good method for aggregating opinions–attributes can also be used to describe the modern capital markets. Surowiecki’s theories go a long way in explaining that, although fundamentals may not support current asset price trends, the tail may very well end up wagging the dog.
The Monthly Index Report for August 2006
| Index |
Jul-06 |
QTD |
YTD |
Description |
| S&P 500 Index* |
0.51% |
0.51% |
2.27% |
Large-cap stocks |
| DJIA* |
0.32% |
0.32% |
4.37% |
Large-cap stocks |
| Nasdaq Comp.* |
-3.71% |
-3.71% |
-5.16% |
Large-cap tech stocks |
| Russell 1000 Growth |
-1.90% |
-1.90% |
-2.82% |
Large-cap growth stocks |
| Russell 1000 Value |
2.43% |
2.43% |
9.15% |
Large-cap value stocks |
| Russell 2000 Growth |
-5.19% |
-5.19% |
0.56% |
Small-cap growth stocks |
| Russell 2000 Value |
-1.39% |
-1.39% |
8.90% |
Small-cap value stocks |
| EAFE |
1.00% |
1.00% |
11.61% |
Europe, Australasia & Far East Index |
| Lehman Aggregate |
1.35% |
1.35% |
0.62% |
U.S. Government Bonds |
| Lehman High Yield |
0.98% |
0.98% |
4.15% |
High Yield Corporate Bonds |
| Calyon Financial Barclay Index** |
-2.18% |
-2.18% |
-0.24% |
Managed Futures |
| 3-month Treasury Bill |
|
|
4.23% |
|
| All returns are estimates as of July 31, 2006. *Return numbers do not include dividends. ** Returns are estimates as of July 28, 2006. |
Ben Warwick is CIO of Memphis-based Sovereign Wealth Management. He can be reached at [email protected].
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August 01, 2006 at 08:00 PM
