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The Reformed Broker

Like the once mighty Incas, we have lost our leaders

This spring, market leaders that we used to count on for good performance, like Apple, Silver Wheaton, and Goldman Sachs, are starting to slip

By Joshua M. BrownGuest blogger / April 15, 2011

The 15th century Inca site in Peru, Machu Picchu, is shown. The Incan Empire stretched across much of South America until Spanish conquistadors arrived in the mid-16th century. Just as the Incan leaders fell, so too have the leaders of the US stock market, writes guest blogger Joshua M. Brown.

Casa Editorial El Tiempo/El Tiempo de Colombia/Newscom/File


In 1532, the Inca Empire ruled over almost the entire Western half of the South American continent, from Southern Colombia through Peru to the southern tip of modern-day Chile. It had between 6 and 9 million inhabitants. Upon his arrival at Cajamarca, Francisco Pizarro captured the Inca leader, Atahualpa, rather than fight an army of thousands.

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With the leader taken out, Pizarro was able to conquer the entire Inca Empire with just 169 soldiers.

Like the once-mighty Incas, we have lost our market leaders this spring one by one. In like fashion, we've seen the indexes fall into a listless submission as the stocks we once looked to for higher highs can no longer rally their brethren...

Apple is some $30 off its high (10%) for the first time in, well, I can hardly remember. The usual concerns about Steve Jobs' health have been compounded with the sense that Google's Android is going to give iPhone a serious run for its money.

Speaking of Google, the company is now in the throes of a mid-life crisis way earlier than anyone expected...and its ugly to watch. While the company continues kicking ass in search and ads, the unstoppableness and swagger are gone, too much inertia for too long.

We've lost the silver miners too, even as the price of the metal itself continues to climb. Psychologically speaking, this is a tough loss for the bulls - the silver names were the real firepower in the commodity-related equity patch. First we got the surprise resignation of Silver Wheaton's CEO then we got news out of Bolivia that the government was going to start nationalizing mines to appease the envious unions. Silver names Coeur D'Alene and Pan American Silver were slammed even as they had just broken out after months of grinding toward their '08 highs.

Brazil and China are now quietly beginning their own inflation battles. The related ADRs are nowhere in terms of year-to-date performance. Monetary and fiscal tightening in the BRIC countries has taken an entire swathe of leadership names out of the race.