Finding the “Winner” in Market Turmoil

dow jones high[This article also appears on SeekingAlpha, Equities Leave Investors Nowhere To Hide]

Seeking refuge is this turbulent market? You probably won’t find any if you are looking only at the equities.

It has been a very tough month since the Dow closed at record high of 14,000 on July 19, 2007. In the last 20 trading days, the index has lost 1,139 points, closing at 12,861 yesterday. That’s a drop of 8.14%. At the same time, S&P 500 gave up all the gains of 2007 when the benchmark ended yesterday’s session another 19 points lower. In the past month, S&P was down 9.47%. Though NASDAQ still posts year-to-date gain, that index also suffered a 9.63% decline since July 19th. When today’s trading concludes, the losses of all indexes could be more than 10%.

And the current crisis may not be over any time soon. From what I heard, September 31 will be the time that hedge funds re-valuate their investments and investors are required to notify the fund 45 days ahead whether they want to redeem their shares. So the markets in the next one and a half months could be volatile as more investment firms could reveal their losses.

So far the decline is across-the-board. The following is performances of major sectors since July 19th, together with their 52-week highs.

Index 52W High 07/19/07 08/15/07 Change (%)
Airlines
(DJUSAR)
133 131 110 -16.03
Banks
(DJUSBK)
571 539 491 -8.91
Consumer Service
(DJUSCY)
363 359 320 -10.86
Oil & Gas
(DJUSEN)
650 647 570 -11.90
Financial
(DJUSFN)
613 580 512 -11.72
Health Care
(DJUSHC)
364 353 335 -5.10
Home Construction
(DJUSHB)
790 534 420 -21.35
Insurance
(DJUSIR)
499 478 431 -9.83
Pharmaceuticals
(DJUSPR)
303 287 269 -6.27
Precious Metals
(DJUSPM)
110 91 83 -8.79
Real Estate
(DJUSRE)
371 307 263 -14.33
Retailers
(DJUSRT)
407 396 354 -10.61
Semiconductors
(DJUSSC)
1460 1425 1277 -10.39
Technology
(DJUSTC)
652 650 589 -9.38
Utilities
(DJUSUT)
207 200 182 -9.00

Not really any “winner” as they all tracked the decline of the broad market and, not surprisingly, the home construction sector suffered the heaviest loss. Meanwhile, the credit worry has spread around the world as markets in both Asia and Europe followed the declines on Wall Street in recent weeks. The iShares MSCI EAFE Index ETF (EFA), which tracks MSCI EAFE index consisting of 21 developed economies outside of North America, has lost 10.82% over the same period.

Looking for safe haven? You may find it in Treasury bonds.

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