SHORT INTERESTS: TIPS, TRENDS, OBSERVATIONS

Market SOB story

If small company stock returns –or the lack thereof — are getting you down, here’s another reason to cry over your lagging portfolio. Aronson + Partners of Philadelphia’s SOB index of “small over big” stock returns portends a grueling bear market. The index, which the $2 billion-asset firm designed to measure the difference between the return of stocks in Standard & Poor’s 500 stock index and the Russell 2000 small-cap index hasn’t been this wide since 1973 — just before one of the worst prolonged bear markets in history. The broad market indicator was 27.5% better than the Russell last August. “This is a number that’s only been this big about five times — in 1973, 1938, 1930 and 1929. Those years mean something in this business,” says Ted Aronson, chief investment officer.

And don’t expect a small-cap rally to narrow the gap anytime soon, says Bethesda, Md., money manager Charles Allmon. The Dow reached its peak for the 20th century on July 17, when it closed at 9338, says Mr. Allmon. He has 85% of his $135 million under management in cash, and believes the Dow will tank 40% to 60% from the high. “This market is far more dangerous than anything you saw in 1987.” It’s enough to make you sob.

Double your pleasure

Borrowing a few tricks from consumer marketing powerhouses like Procter & Gamble, the International Association for Financial Planning touted “Double Coupon Days!” in an Aug. 14 memo to members. In an effort to boost its ranks as it prepares to merge with the Institute of Certified Financial Planners, the trade group, based in Atlanta, has been offering members who bring in new blood $20 coupons that can be used to pay for all kinds of institute goodies, from registration fees and dues to how-to books.

But for a one-month stretch ending Sept. 15 — just before the group’s annual confab Oct. 3 to 6 in Salt Lake City — it’s upping the ante with double coupons. Are green stamps next?

CFP Board takes on Apple

The Certified Financial Planner Board of Standards is getting a taste of Big Apple bureaucracy. The Denver-based organization wrote New York Mayor Rudolph Giuliani in early July to protest the city’s decision to change the title of its welfare caseworkers to financial planner. The board is still awaiting a response. The move appears perfectly legal since the board does not control the term “financial planner,” only the registered trademark “Certified Financial Planner.” But it argues in its July 9 letter that “use of the term in this context is misleading and inappropriate.” A spokesman for the city that never backs down told the New York Times that caseworkers help recipients become financially self-sufficient and discuss topics like cash flow and credit information.

Says Noel Maye, a spokesman for the board, “It takes a little bit of time to get through the bureaucratic levels there. Right now we are just going to wait and see if they do respond to us.”

“The letter was an offer to work with the mayor and Family Independence Administration (formerly the welfare department) in coming up with possible titles that may be more appropriate or to work with the Family Independence Administration so that what their personnel are doing conforms with the widely understood definition of financial planning,” says Noel Maye, a spokesman for the CFP Board. “It takes a little bit of time to get through the bureaucratic levels there. Right now we are just going to wait and see if they do respond to us.”