5/8 Pre-Market Notes

...Garbage stocks outperforming value stocks is a hallmark of late stage rallies. Something to keep in mind as the cheerleaders remind us how close the market averages are to multi-year highs:
...Per the Hussman Funds Weekly Market Commentary for 4/3/06, S&P 500 stocks rated A have returned 1.01% year to date (as of 4/3/06); B rated stocks have returned 10.17%; and C rated stocks, or the lowest quality, have returned 16.90%. I don't invest in any of the Hussman funds, but do know some folks who love them. I use Oakmark for my mutual funds since I have been with them for so long and have been satisfied. But Dr. Hussman's weekly commentaries are free and well worth the read. I am one of those who is holding his nose, looking the other way, and picking stocks just because the markets are going up. But my bearish tendencies keep me watching the exits.
...The other factoid I'll mention this morning since we are hearing so much about the Dow being at multi-year highs: the Dow still has not taken out the December 1999 highs, so even when it gets back to that number it will just be getting back to where it was. And that is not taking inflation into account. If you use the inflation calculator put out by the Federal Reserve Bank of Minneapolis, the Dow would have to reach 14474.62 in 2006 to match thea 11908.50 reading in 1999 (December 1999 market high). Over the past eight years, the Dow performance has not even matched Treasury bills. That pesky inflation is an invisible tax. It really is the purchasing price of our dollars deteriorating.