Has anyone even had the chance to digest exactly how much has been going on this year? Remember that whole Arab Spring thing? How about the Summer Crash? Inflation, deflation, Fed, ECB, Democrats, Republicans...it's been stressful for everyone. I'm fairly convinced more gray hairs have appeared this year to traders than even in 2008. Despite immense volatility, the S&P 500
has gone absolutely nowhere. Active managers have had an awful year as the whipsaw risk was huge and only known with hindsight.
Having said that, there are two stocks in particular that summarize 2011. Take a look below at the price ratios of the following relative to the S&P 500. As a reminder, a rising price ratio means the numerator/stock is outperforming (up more/down less) the denominator.
(MO) -- Stressed Out? Have a Smoke...
: Aside from the high dividend yield, the outperformance of a company that sells cigarettes in one of the most anxiety-ridden investment environments in recent memory should come as no surprise.
(TASR) -- Social Unrest? Zap away!
: While the price ratio doesn't look all that great now, TASER significantly outperformed starting in August as the Occupy Wall Street movement took hold and the Summer Crash began. It appears that investors were making a real bet on increased sales of self-defense products.
How will 2012 look? Will social unrest continue and the sideways S&P 500 continue along its path to nowhere? If you've followed my more recent articles calling for a “Winter Resolution,” we may be headed for an actual trend, believe it or not (see From Fall Melt-Up to Winter Resolution
). Whether it's up or down is not clear just yet, but I think watching the relative performance of TASER and Altria to the market might provide some clues.
No positions in stocks mentioned.
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