Saturday, March 22, 2008

Cheap Stocks Random Notes: Unprecedented Market Volatility
Cheap Stocks 21 Net/Net Index Positive for Week Ended 3/22/08,

We don't tend to comment on the broad markets, but some research we conducted recently is worthy of repeating. In terms of market volatility, the pundits often refer to the VIX Index, a measure of expected volatility. Unfortunately, this does not resonate well with many individual investors. But the following points might:

*So far in 2008, the S&P 500 has finished 28 days- more than half of it's 55 trading-days up or down 1%.
*For historical perspective, we checked data for 1929. 1930, 1987, 1999, 2001, and 2007, and none of those seemingly volatile environments could measure up.
*The S&P has also finished 11 days, or 20% of trading days up or down 2%.

While we are not adept at broad market predictions (or any predictions), given the constant flow of bad news/good news, we expect this trend to continue. Buckle Up!

CS21 Net/Net Index
The CS21 Net/Net Index closed a very volatile week up .52% at 94.27. Since inception, the index is down 5.73%.

Music distributor Handleman(HDL), was down sharply again this past week, 31%, as the company was delisted by the NYSE, and will now trade on the Pink Sheets. We'll continue to keep HDL in the CS21 Net/Net Index. This situation reflects one of the realities of net/net investing.

Other Losers:
Tandy Brands (TBAC): -16.1%
Renovis (RVIS): -14.7%
Nu Horizons Electronics(NUHC): -6.7%

Ditech (DITC): +16.3%
Audiovoxx (VOXX): +7.7%
Replidyne (RDYN): +7%

Performance: Cheap Stocks 21 Net/Net Index vs Russell Microcap Index
Since inception (2/12/08):
CS21Net/Net: -5.73%
Russell Micro: -5.37%

*The author does not have positions in any of the companies that comprise The Cheap Stocks 21 Net/Net Index. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. The author will not trade any of the securities mentioned (buy, sell, short) for at least two weeks following the date of this post.

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