1/27/2006

Commentary:  Victor Victorious

Last Saturday, the day after the market's Friday
meltdown in which the S&P lost over 23 points,
Victor Niederhoffer at his Daily Speculations site
wrote the following prescient note:


Our readers know that when a big decline occurs, like the
23-pointer last Friday, it's generally time to take out the
canes. Such declines have been incredibly bullish for all
foreseeable periods of the future since 1850.


Taking out the canes is a reference to shrewd
elderly speculators, who in olden times would
hobble down to Wall Street on their canes to buy
cheap when every one else was selling.

Victor is a studious man. His conclusions are
always based on detailed statistical analysis.
That doesn't mean they always pan out. There
are no sure things in the market. Every outcome
depends on opposing probabilities. But Victor is
usually right. He has to be. It's how he earns his
daily bread, and he has a lot of mouths to feed.

Anyway, here we are a week later, and the gloom
of last Friday seems a distant memory. It's
beginning to feel like 1999 all over again.

One hint that the Telecosm is taking off is the
extent by which Broadcom (BRCM) exceeded
expectations in its earnings report this week.
Unless it's a purely Broadcom phenomenon,
it suggests that tech spending is accelerating
at a suddenly rapid clip, as it did in the last boom.

Another indicator (ha ha) is the hits on this site.
More hits means more Gilder investors means
higher prices for Gilder stocks, right?


The Week's Top Gainers and Losers

Gainers Losers
 BRCM + 23.9%   LNOP - 6.9%  
 NETL + 20.2%   TXN - 4.5% 
 PWER + 16.4%   INTC - 0.4% 
 ZRAN + 13.8%   SIGM - 0.3%  
 SYNA + 12.1%   FLEX - 0.2%  

Life can be delicious in earnings season. There
were two other double digit gainers in the GTI
this week: FNSR up 11.7% and AMD up 11.6%.

The Week Day by Day:
 


Another great week for the GTI. It seems to be in a
league of its own. For the year it is now up 15.6%,
compared to only 4.5% for the NASDAQ and
2.8% for the S&P. We haven't enjoyed this level
of dominance since the good old days.


Returns for the Week:

Gilder Technology Index (GTI):  + 6.4%
Nasdaq Composite Index (NSD):  + 2.5%
S&P 500 Index (S&P): 
+ 1.8%

Historical Returns:

Period GTI    NSD  S&P 
1997 (est'd) 21% 22% 31%
1998 (est'd) 48% 40%  27%
1999 284% 86%  20%
2000 - 44% - 39% - 10%
2001  - 43% - 21%  - 13%
2002 - 56% - 32% - 23%
2003  130% 50% 26%
2004   3% 9%    9%
2005   5.1%  1.4% 3.0%
2006 to date  15.6%  4.5% 2.8%
Avg for 9+ yrs  11.8%  6.6% 6.2%
Last 52 wks 35% 13% 10%
Since the high
of 3/06/00
- 74% - 54% - 16%
Since the low
of 10/09/02
331% 107% 65%

Comparison of Returns for GTI Stocks
By Whether or Not They Pay Dividends:

Year Do Pay
Dividends
Do Not Pay
Dividends
2004 11.6% - 3.3%
2005 11.1% 4.2%
2006 to date 4.8% 20.4%

Makeup of the GTI:

The GTI companies are those "Telecosm
Technologies" in the Gilder Technology
Report whose stock is readily available to
investors. If a company is not traded on the
NYSE, AMEX, or NASDAQ National Market,
it is not in the GTI.

There are now 27 companies in the GTI.

Advances vs. Declines:

Among the GTI stocks this week, there were
21 up, 5 down, 1 unchanged.

 

The Year to Date:




From the GTI's Origin (1/1/99) to Now:




Weekly Change in the GTI, Last 52 Weeks:





Trailing 3-Month Returns, Last 52 Weeks:


 

Volatility, Trend, Recovery:

As an indication of volatility, this table shows a
verage weekly change in the GTI
each year:
 
Year Ave Wkly Change
1999 4.2%
2000 7.7%
2001 8.5%
2002 6.8%
2003 4.3%
2004 3.4%
2005 2.1%
2006 to date 4.9%

As an indication of trend, this table shows
number of up weeks for the GTI each year
:
 


Year
Number of Up Weeks
As a %
1999 39 of 52 75%
2000 24 of 52 46%
2001 22 of 52 42%
2002 19 of 52 37%
2003 31 of 53 58%
2004 28 of 52 54%
2005 26 of 52 50%
2006 to date 3 of 4 75%

The GTI fell 94.1% from its March 6, 2000,
high to its October 9, 2002, low.  Click here
for the details of its long recovery attempt.