Sunday Morning Coffee

A few stray items.

This week's interview in Barron's was with Byron Wien. There were several interesting nuggets including this comment; ...whenever a category in the Standard & Poor's 500 gets to be more than 20%, you should probably pay attention, because a reversal is probably in store.

This is something I have harped on many times before, not that I claim any originality.

It makes sense to pay attention to sector weightings and pay heed to distortions from the norm. The crew at Bespoke usually has good info on this sort of thing. A sector becoming 30% is a clear warning (energy in the early 80's and tech at the start of this decade) but 20% might be a little less clear. Financials historically have been in the mid teens but had been hovering around 20% for several years before the crisis started.

Looking forward with this, energy seems to be one to watch. It has come up quite a bit this decade as you might imagine. I saw it top out around 16% but now is at 13.75%. If it does get to 20% or so I would be inclined to be underweight no matter what I thought of the fundies.

Another item from Barron's is that apparently the Bank of Japan, as in the central bank, is a public company. Barron's said the ticker in Japan is 8301. I found BNJAF for the five letter designator for US trading but it is not clear that it does actually trade. Both the Yahoo Finance and PinkSheets.com pages for the stock give the impression that there has been no trading for months.

Also the Barron's article says the Japanese government owns 55%, and you need its permission to own the shares. I'm not exactly sure what that means. Additionally the dividend is minuscule and the bank doesn't report earnings.

I am in no way advocating that anyone try to buy the central bank in Japan but I find the existence of shares to be fascinating. Central banks are meant to be independent so why not publicly traded? Central banks can fail. I was recently reminded that the current Federal Reserve is actually the third incarnation of a US central bank.

Buying shares in some central bank that presides over some monster surplus and a wealth fund is intriguing on some level.

One thing about ETFs that I did not get to in the video was that IndexUniverse is reporting that there is a Nordic ETF in the works that will mimic the FTSE Nordic 30 Index. The countries represented will be Sweden, Norway, Finland and Denmark. I might expect a lot of banks and a heavy weight in Vestas Wind (VWDRY).

Banks and Vestas is either right or wrong but all four countries have interesting companies and the effect of owning these countries might get blended away depending on what the fund ultimately looks like.

The picture is from the east end of Molokai near what I believe is mile marker 20. We hung out at a beach right across the street from this house.