links for 2011-04-25

The market remains schizophrenic. One day, stock prices tumble because Standard & Poor's questions the credit rating of the United States, and investors panic and sell and fret, and the front pages of many newspapers are apocalyptic. The next day stocks rise because of earnings, and everyone feels good again. The erratic patterns are rarely remarked upon.

The Federal Reserve’s experimental effort to spur a recovery by purchasing vast quantities of federal debt has pumped up the stock market, reduced the cost of American exports and allowed companies to borrow money at lower interest rates. But most Americans are not feeling the difference, in part because those benefits have been surprisingly small. The latest estimates from economists, in fact, suggest that the pace of recovery from the global financial crisis has flagged since November, when the Fed started buying $600 billion in Treasury securities to push private dollars into investments that create jobs.

Even with the big rally since March 2009, it's been a tough decade for long-term buy and hold investors. But it's been even worse for the perma-bears, judging by the performance of so-called bear funds. For the 10 years ended March 30, the average bear fund lost an average of 10% annually, the worst-performing strategy among the 90 tracked by Morningstar. Bear funds have also been the worst-performing group in the past 5 years, with an average annual decline of 13%.