Bern Factor. Weekly Letters

By Mark Bern, CFA ·         The Dow falls 832 points in one day! ·         Plausible reasons why the market dropped. ·         Positives still outweigh the negatives. ·         Stick with quality and look for good buying opportunities. Short answer: Probably not. I know it feels horrible when we read the headlines like: “Market Falls 832 Points!!!”   But let’s try to put that into perspective.   Yes, it is a big point drop and more of a percentage drop, at 3.15%, in one day than we have had for some time.   But it comes after the market has had a very strong run off of an intra-day low of 23,360 on February 9 th to a recent high of 29,951, or 15.37%.   The Dow Jones Industrial Average Index (^DJI) had posted a respectable year-to-date gain of 8.5% before this latest down draft and remain about 3.56% ahead...

By Mark Bern, CFA The latest Durable Goods Orders report from the Commerce Department shows a spike of 4.5% in August, but that was primarily driven by an increase in orders for aircraft.   When transportation is stripped out orders improved only 0.1%.   Of course, trucks are also putting in a strong showing but autos are actually in decline.   The takeaway is that Boeing (BA) remains a strong hold in our model portfolio (rated as a buy for new investors) as orders for new aircraft and the backlog of orders continue to pile up making the next several years look like we should see record sales and profits.   The only thing that could dent the current trend would be for China to cancel orders.   But that is unlikely because the main competitor, Airbus (AIR.PA) is behind in fulfilling orders and cannot keep up because of delays by it engine suppliers.   It has fewer orders and is producing fewer airplanes and yet is falling behind on its production commit...