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Latest Comments185 Comments
John Hussman: Risk Is Highest When People Forget It Exists
This is the obvious flaw in many bears' theses - that there has indeed been a correction in the markets. From May intraday high to June intraday low was -8.1% in the S&P 500. There were also several months before the May high was exceeded. Keep in mind that from 12/15/06 to 01/30/07 the S&P 500 build a nice consolidation base to digest its gains. A month and a half with zero gains is quite a rest for the markets.
It is intellectually dishonest for Hussman and the other perma-bears to claim the market is overbought and hasn't corrected when indeed it did correct just 7 months ago and just spent six weeks consolidating its gains.
Is it easier for him to face his underperformance in a bull market by externalizing the cause and claiming excess froth in sentiment?
Gleaning Info from Robust GDP Data
Unless you move the markets, why should we care how you take the revision? No offense, but the important thing for equity investors is how the report is perceived by those with the money to move the markets - and all of Barry's bearish scenarios, conspiracy theories, and poking holes in the GDP data is hot air.
The equity markets are what we trade to make money, not the GDP.
Non-Farm Payroll Data: Revisions & Estimates
I like what Pradeep had to say, when he boldly predicted the contents of this article.
"Now that actual GDP numbers are out expect the perma bear cheer leaders to offer no mea culpa, it will be more of how the data is manipulated and how it is one vast controversy. The fact remains average traders and investors like to read more about scary scenarios than about making profits."
The sun is shining and it is time to make hay!
'Bird Flu' Remains as Serious a Threat as Ever
In emerging world countries, parasites in the water kill FAR more people than exotic diseases like "bird flu."
"Bird flu" isn't a threat. But, "bird flu" is "sexy" and it's always more glamorous to romanticize about exotic diseases than it is to face reality. All of this is mere scare tactics, and you can bet your behind that the "government" will spend more time and more money on "bird flu" than they will on clean water in the emerging world, or clean hospitals here at home.
However, the key is "GOVERNMENT" SPENDING!!!!!
There is a solid stock market play on biotech, and I am currently long biotech, but completely unafraid of any "pandemic." HAH!
Gleaning Info from Robust GDP Data
"Now that actual GDP numbers are out expect the perma bear cheer leaders to offer no mea culpa, it will be more of how the data is manipulated and how it is one vast controversy. The fact remains average traders and investors like to read more about scary scenarios than about making profits."
Cheers!
Cashing Out at the Top of a Market Melt-up
Apparently the market has been "melting up" for two years now.
Cheers!
930 Days Since a 2% Decline
To your point about hedging, certainly there are different financial instruments around today - index tracking ETFs, double-leveraged ETFs, more extensive use of options, the big and Emini futures contracts, etc. Do these have a net increasing or net decreasing impact on index volatility? I don't know for sure, but I'm inclined to say they decrease net volatility. I'm sure Barry, Bill Cara, Mike Panzner, and others like them would be inclined to say these things increase risk.
930 Days Since a 2% Decline
www.billakanodoodahs.c.../
It's not so unusual as Barry wants to claim. Market returns are conditionally heteroskedastic, don'tcha know ... and it's been a long time since a 2% UP day, hasn't it. How many 2% UP days in the last three years? Don't expect Barry to mention that. But, you can get that information at
www.billakanodoodahs.c.../
Knock On Wood: 928 Days Since S&P 500 Had a One-Day 2% Decline
Knock On Wood: 928 Days Since S&P 500 Had a One-Day 2% Decline
www.billakanodoodahs.c.../
Knock On Wood: 928 Days Since S&P 500 Had a One-Day 2% Decline
The analysis of the streak, presented by the original author, is typical of most analyses of the streak; it examines only downside volatility and not upside volatility, does not view volatility of market returns in context of historical trends, and is geared more towards generating worry about the market than it is geared to illuminating the reader about the nature of historic returns. Therefore it is fairly typical, technically true, but meaningless and devoid of insight. I refer to such material as BS; your mileage may vary.
My analysis of the streak is on my site, and was posted some months ago, but it still stands as an expression of disagreement supported by substantive alternative data - I take it you haven't bothered to visit and read it.
:-)
Please feel free to ignore my comments if you so choose.
Regards,
Bill aka NO DooDahs!
Knock On Wood: 928 Days Since S&P 500 Had a One-Day 2% Decline
Google it, you'll find the meaning. Basically, the distribution of returns over time is non-constant, non-normal, and defies statistical prediction as it varies from month to month, or year to year. If you follow the link I posted, you'll see various measures of central tendency applied to the returns for the S&P 500 from 1950, on annual and decadal bases. Volatility expands and contracts, and it is useless to compare one period to another.
Regarding the PPT - if you really believe they exist, you have absolutely no excuse for not mortgaging your house, selling everything you own, and margining to the hilt to buy stocks and call options and long futures contracts. After all, if the PPT is out there, isn't your money SAFE in the markets?
If you're not willing to do those things, then do you REALLY believe in the PPT? Or do you just believe they will be unsuccessful? If you think they'll be unsuccessful, then why do you think they've been successful thus far?
Knock On Wood: 928 Days Since S&P 500 Had a One-Day 2% Decline
Knock On Wood: 928 Days Since S&P 500 Had a One-Day 2% Decline
Back to your arbitrarily-chosen "2% down day" as the subject of streaks. We’ve had 14 such year-long-or-more streaks since 1950, implying that we should get such a streak about every four years. If you look, we are about ten years removed from the last such streak, which was 526 trading days and ended in March of 1996. Incidentally, we've had four such streaks lasting over 700 trading days (almost 3 years!!) since 1950, and the last such streak ended in 1986.
Knocking on wood? More like trying to scare the statistically unsophisticated! Using 2% as a significant benchmark is showing ignorance of the historic return distribution of the marketplace, which, by the way, is conditionally heteroskedastic.
www.billakanodoodahs.c.../
The Message of the Markets: Wrong at Turning Points
www.billakanodoodahs.c.../
You are correct that profit growth is "a" key, but it is not the "only" one. Earnings quality, relative valuations, relative price strength, mean reversion, margin growth, and trading characteristics like low float and high short days to cover can all be used to find good stocks to hold, even for long periods. Several of those traits, like earnings quality and margin/profit growth, are really the only way the retail investor has to evaluate management. Let's face it, they're not gonna sit down for you & I to inverview them.
Back to economists - name a wealthy one (other than one that worked for the Fed and is now on the speaker circuit). Now name a bullish one. One can find times when the general market indices followed the economy and one can find times when the general market indices led the economy, but EVEN WHEN THE ECONOMY WAS "BAD" one could always find some stocks worth buying.
Check this out:
aaii.com/stockscreens/...
Literally dozens of long-only stock screening strategies, almost all of which outperformed the general market indices over the last nine years. You'll find that Graham's "Enterprising Investor" strategy would have doubled your money during the recent Bear years, while the indices were getting chopped off at the knees and some economists were, well, let's just say they weren't bullish on equities.
Cheers!