Stock markets have enjoyed a banner half-decade, forcefully reclaiming the ground lost to the financial crisis, and then some. This vigorous performance has occurred thanks, above all else, to two key enablers: surging earnings and recovering valuations. On the surface, there is nothing especially questionable about either. Earnings naturally rise as economies grow, and valuations recover as risk aversion fades.

However, a closer examination reveals a significant vulnerability within this cozy equation. Corporate earnings growth has been, in a sense, too good – persistently outpacing both revenues and the economy. This has driven profit margins to multi-decade highs.

Worryingly, profit margins have long been assumed to be mean-reverting, arguing that these juicy gains may eventually have to reverse. Such a scenario would necessitate an eye-watering one-third decline in the S&P 500. With stakes as big as these, a clear sense of the downside risk is imperative. This report evaluates th

Ask 10 different money managers what metric they use to determine if a stock (or particular market) is overvalued, and you'll more than likely receive 10 different responses.  Of course buying at "the bottom" is easier said than done, as we all know so I submit to you this perspective.

Kyle Caldwell, personal finance reporter at the Daily Telegraph, determined whether stock markets were undervalued or overvalued. Caldwell used three measures: price to earnings (P/E), cyclically adjusted price to earnings ratio (CAPE) and price to book (P/B). His analysis included 34 countries, both developed and emerging and compared current measures to historical averages.

The CAPE adjusts for cyclical variations and takes a longer term view than the P/E considering the earnings average over the last 10 years instead of the 12 month average. Its premise is that eventually earnings will move back to their long term trend. Price to book divides the current value per share over the equity value sho

David Einhorn’s Comments at the Greenlight Re (GLRE) Investor Day on May 20th 2014

• Bernanke was predictable, but the new chairwoman is less predictable.
• It has been 5 yrs into the recovery. Corporate profits have increased a lot and continue to grow. Current earnings expectations are high at a double-digit growth rate. Q1 numbers are showing the economy growing at  ~1%.
• The fund is fully invested at 114% long and 66% short. It has increased its net long book from 35 to 50%.
• Largest longs are Alpha Bank, Apple, gold, Marvel, Micron, and Oil States International.
• Longs are cash-rich tech companies and businesses benefiting from structural changes. Shorts include secular decliners, momentum stocks, and iron ore related companies. Macro overlay due to monetary policy and unresolved imbalances.
• Divergence between stock and bond markets?  Bond market is saying that economy is slowing down and yields have come down. Yields are not down because of deflation – we are not in deflation as commo

We think BMW have positioned themselves as tech leaders to out-rival premium peers such as Tesla, and investors will increasingly be willing to credit this leadership with higher multiples.”

Tesla Motors Inc showed the world that there is demand for a high quality, low energy vehicle, and now it has to face the consequences of its actions. The San Francisco-based company said its mass market car Gen III will require a third production line, and deliveries are expected to start in 2017. Tesla Motors Inc (NASDAQ:TSLA) said the Gen III car will have a base price of $35,000, but total ASP including options would run to $45,000-$50,000.  (just thinking out loud: could it be investors don't care for a discounted car price?  When you go from luxury to discount retailer, what's the reaction?  Add to the the negative cash flow from due to the cost of the third plant)

BMW is building something different from what Tesla Motors Inc (TSLA) is offering, and the changes its making to the manufactur

I've been moving recently; hence no posts, charts, etc.  More exactly my son wished to get his own place (yay!) and with my lease expiring, I eyed a different unit with a much larger living area, kitchen and bedroom.  I've always wanted a loft and here was my opportunity.  The timing couldn't be more perfect with cool weather cooperating.   What was not perfect was the service of uHaul ($UHAL) when it came to accessing a storage area, or that of Time Warner Cable ($TWC) who (of course) assured me I'd have live service.  It's not rocket science guys.  We're not asking you to solve world hunger nor come up with a cure for Cancer.  Merely have the codes entered into the computer so one can access their storage unti and check the friggin' cable lines like a good little boy.  Your apologies are worthless.  Please allow me to raise an eyebrow and tell you off with a scathing rant that'll make your eyes water and give you nightmares for years in your little, crappy office with a space heater