stockmarket - What We're Reading - StockBuz2024-03-29T11:19:55Zhttp://stockbuz.ning.com/articles/feed/tag/stockmarketBull Case Thwarted By Bumpy Landinghttp://stockbuz.ning.com/articles/bull-case-thwarted-by-bumpy-landing2023-02-25T15:51:15.000Z2023-02-25T15:51:15.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a href="http://storage.ning.com/topology/rest/1.0/file/get/10972951660?profile=RESIZE_180x180" target="_blank"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/10972951660?profile=RESIZE_180x180" alt="10972951660?profile=RESIZE_180x180" /></a>Wall Street’s reaction to hotter-than-estimated inflation data suggested growing bets the Federal Reserve has a long ways to go in its aggressive tightening crusade, making the odds of a soft landing look slimmer.</p>
<p>After a lengthy period of subdued equity swings, volatility has been gaining traction. That doesn’t bode well for a market that’s gotten more expensive after an exuberant rally from its October lows. Stock gains have been dwindling by the day amid fears that a recession in the world’s largest economy could further hamper the prospects for Corporate America.</p>
<p>A slide in the S&P 500 Friday added to its worst weekly selloff since early December. The tech-heavy Nasdaq 100 tumbled about 2% as the Treasury two-year yield topped 4.8%, the highest since 2007. The dollar climbed. Swaps are now pricing in 25 basis-point hikes at the Fed’s next three meetings, and bets on the peak rate rose to about 5.4% by July. The benchmark sits in a 4.5%-4.75% range.</p>
<p>“There’s little room for upside in stocks right now given the inflation news, current market valuations after the January rally, and a weak Q4 earnings season,” Brian Overby, senior markets strategist at Ally. “The ‘no landing’ view is quickly becoming more of a ‘bumpy landing’ view with the concept of higher interest rates for longer settling in.”</p>
<p>The unexpected acceleration in the personal consumption expenditures gauge underscored the risks of persistently high inflation. Furthermore, resilient spending paired with the exceptional strength of the labor market will make it tougher for the Fed to get inflation to its 2% goal. Separate data showed US consumer sentiment rose to the highest in a year while new home sales topped forecasts.</p>
<p>Officials may need to raise rates as high as 6.5% to defeat inflation, according to new research that was critical of the central bank’s initially slow response to rising prices. In a paper presented Friday in New York, a quintet of Wall Street economists and academics argue that policymakers have an overly-optimistic outlook and will need to inflict some economic pain to get prices under control.</p>
<p>Read: Fed Officials Flag Risk of Sticky Inflation as PCE Comes in Hot</p>
<p>Mohamed El-Erian says financial markets are starting to doubt whether the Fed can bring inflation down to its target.</p>
<p>“We’re seeing actual and survey indicators heading the wrong way,” El-Erian, the chairman of Gramercy Funds and a Bloomberg Opinion columnist told Bloomberg Television.</p>
<p>Cleveland Fed President Loretta Mester said a bigger-than-expected rise in the central bank’s preferred inflation gauge shows the need to keep raising rates, but stopped short of suggesting this warranted a step-up to a half-point hike. The report is “just consistent with the fact that the Fed needs to do a little more on our policy rate to make sure that inflation is moving back down,” she added.</p>
<p>As investors position for the risk that the Fed persists with hawkish policy moves, they have been dumping equities and cash alike in favor of bonds, Bank of America Corp. strategists said.</p>
<p>Global equity funds lost $7 billion in outflows in the week through Feb. 22, while $3.8 billion left cash funds, according to a note from the bank, which cited EPFR Global data. At $4.9 billion, bonds drew additions for an eighth straight week in the longest such streak since November 2021, the team led by Michael Hartnett said.</p>
<p>David Donabedian, chief investment officer of CIBC Private Wealth US:</p>
<p>“So the bullish narrative that the market had coming into the year of slowing economy headed toward a soft landing and slowing inflation allowing the Fed to stop raising rates ASAP, that’s been blown up here by the data. My view is that the market rally that we’ve seen since October was a bear-market rally.”</p>
<p>Peter van Dooijeweert at Man Solutions:</p>
<p>“Today’s PCE data is a little bit more than the market wants to deal with. It’s fine to have rising rates off good economic data and avoiding a hard landing. It’s just not okay for the market to have to grapple with a return to rising inflation.”</p>
<p>Greg Wilensky, head of US fixed income at Janus Henderson:</p>
<p>“This was not the news the Fed or investors had been hoping for and, as such, we expect markets to adjust to the likelihood that the Fed will need to raise rates higher, and keep them higher for longer, than they had been pricing in previously. Viewing the hotter inflation data together with continued strength in the labor market and consumer spending implies that the Fed still has work to do. It appears investors will have to wait a little longer for the much-anticipated Fed pause.”</p>
<p>Krishna Guha, vice chairman at Evercore:</p>
<p>“The likelihood of achieving a soft landing dips, with the risk of no-landing potentially forcing the Fed to push rates higher and hold longer, with greater risk that this ultimately pushes the economy into a mild recession. So risk-off pure and simple. We still think the Fed is not likely to return to 50bp hikes, though that risk has nudged up with the latest data.”</p>
<p>Chris Zaccarelli, chief investment officer at Independent Advisor Alliance:</p>
<p>“It is much too soon for the Fed to say ‘mission accomplished.’ It is far too early to extend duration and buy the dips in bond prices, let alone trying to continue to buy the dips in the stock market. We have been exercising much more caution and have advised our clients to be careful and not aggressive at this point in the economic cycle.”</p>
<p>Peter Boockvar, author of the Boock Report:</p>
<p>“Bottom line, Treasury yields are moving higher in response to the higher than expected inflation stats and reminder that while the trend will still be down, it will still take time to get to some Fed comfort level. Either way, at least looking at the core PCE, we FINALLY have ZERO real interest rates. I know some are still trying to figure out how many hikes the Fed has left, but it’s not many and AGAIN, higher rates for a longer time frame should be the focus.”</p>
<p>Jeffrey Roach, chief economist at LPL Financial:</p>
<p>“The Fed may still decide to hike by 0.25% at the next meeting but this report means that the Fed will likely continue hiking into the summer. Markets will likely stay choppy during these months where higher rates have yet to materially cool consumer spending.”</p>
<p>Money managers are fortifying portfolios and hedging the risk of a prolonged inflation fight by sticking to credit maturing in just a few years.</p>
<p>Some funds are actively cutting so-called duration, a measure of sensitivity to interest rates, to limit the fallout if central banks keep hiking to tackle inflation. Others are simply focusing on short-dated notes as the additional yield they get from longer securities is too small to justify the risk of a slump when rates rise.</p>
<p>In corporate news, Boeing Co. sank after pausing deliveries of its 787 Dreamliner over a documentation issue with a fuselage component. Carvana Co. slumped on a much wider loss than Wall Street had expected for the used-car retailer. Beyond Meat Inc. surged on sales that exceeded expectations and the plant-based meat maker showed progress toward its goal of becoming profitable.</p>
<p>On the geopolitical front, the US will impose a 200% tariff on all imports of Russian-made aluminum, as well as aluminum products made with metal smelted or cast in the country, in a move that could ripple through global manufacturing supply chains.</p>
<p>Treasury Secretary Janet Yellen warned China and other nations against providing material support to Russia, saying any such actions would amount to an evasion of sanctions and would “provoke very serious consequences.”</p>
<p>Elsewhere, the yen retreated as Bank of Japan Governor nominee Kazuo Ueda warned against any magical solution to produce stable inflation and normalize policy as he largely stuck to the existing central bank script in the first parliamentary hearing to approve his appointment.</p>
<p>Courtesy of <a href="https://ca.finance.yahoo.com/news/asia-stocks-open-mixed-bumpy-224011362.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAC2KqAQpcrytYQPOJ4yCRcMbYMvwdiaPZX34n1bji-ZZ55RH7z70lgthb9ZvWMb8MZl4gOvrxQKxBRHCRMVqta-oComTXzSU2jZU0GhGpTGNySDOoed1G2MK71-5Rb7wGmKX5a1Z3-so7lHR2OD_VqeNN4C0wDmlapkxf7ys_4do" target="_blank">Bloomberg and Yahoo</a></p></div>Carl Icahn Says It's Still A Bear Markethttp://stockbuz.ning.com/articles/carl-icahn-says-it-s-still-a-bear-market2022-11-12T17:20:54.000Z2022-11-12T17:20:54.000ZKoshttp://stockbuz.ning.com/members/Kos<div><iframe width="560" height="315" src="https://www.youtube.com/embed/Le-hcgt26nU" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen=""></iframe></div>Ray Dalio: Why America Is Entering A Horrific Financial Crisishttp://stockbuz.ning.com/articles/ray-dalio-why-america-is-entering-a-horrific-financial-crisis2022-07-11T21:41:18.000Z2022-07-11T21:41:18.000ZKoshttp://stockbuz.ning.com/members/Kos<div><p><iframe title="YouTube video player" src="https://www.youtube.com/embed/arUsvBEJHYk" width="560" height="315" frameborder="0" allowfullscreen=""></iframe></p></div>U.S. Markets Face An Unprecedented Era Of Discomforthttp://stockbuz.ning.com/articles/u-s-markets-face-an-unprecedented-era-of-discomfort-that-many-co2022-03-06T21:09:48.000Z2022-03-06T21:09:48.000ZKoshttp://stockbuz.ning.com/members/Kos<div><h3 class="subtitle">Are we officially in the process of being caught off guard?</h3><div> </div><div class="available-content"><div class="body markup"><p>I wasn’t even going to write a note this morning, because it’s Sunday and I have a couple pieces planned for the week to come. But then I had an interesting set of realizations this morning while walking to get my coffee:</p><ol><li><p>Many young people on Wall Street nowadays have never experienced real volatility in markets</p></li><li><p>Russia’s invasion of Ukraine and inflation at 7.5% in the U.S. are two extremely different, complex and unmapped pieces of terrain that we are going to be forced to navigate</p></li></ol><p>In other words, we have a ton of inexperienced market participants that should be bracing for the economic shock of their lifetimes, but they’re not - they’re still at the stage where walking around Manhattan in Patagonia vests, drinking Starbucks and making dinner reservations at whatever douche-motel is trendy this week are among their top concerns.</p><p>This wasn’t a big deal <a href="https://quoththeraven.substack.com/p/why-we-could-be-staring-down-the?s=w">when I first pointed out in November</a> that I thought the NASDAQ could crash. We weren’t dealing with Russia <em>or </em>inflation <em>just 5 months ago</em>.</p><p>In that same short span of time, risks to markets have gone from non-existent, to potentially grave. 5 months is <em>nothing</em>; it’s a <em>split second</em> when gauged relative to the reaction times of 27 year old guys named Kyle who help draw up models to justify 45x P/Es on sell side reports.</p><p>And I think there’s a chance shit gets <em>real </em>for the Kyles, the Tylers <em>and </em>the Jordans working on Wall Street, in addition to a lot of other “investors” who got their financial education from 2AM Tik Tok videos, YouTube livestreams and Twitter spaces calls with AMC “apes”, very soon.</p><p>While market pullbacks over the last two decades have been akin to light breeze on a summer day, a coming supercycle of discomfort, where the U.S. dollar is challenged and our debt may actual come due, could be a Category 5 hurricane.</p><p>And nobody has even considered “evacuating” markets yet.</p><div><hr /></div><p>The housing crisis was almost <em>15 years ago </em>at this point. We’ve had the better part of <em>2 decades </em>of nothing but synthetic, Fed produced heroin, mainlined into our brokerage accounts since then.</p><div class="captioned-image-container"><a class="image-link image2" href="https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2ad66fdd-f4cd-4576-9d16-0c1c5c9def38_659x439.jpeg" target="_blank"><img class="sizing-normal" title="Lehman&amp;#39;s Collapse, on the Front Page - WSJ" src="https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2ad66fdd-f4cd-4576-9d16-0c1c5c9def38_659x439.jpeg" alt="Lehman&amp;#39;s Collapse, on the Front Page - WSJ" width="659" height="439" /></a></div><p>I have a long railed against what I have called this “arrogant” monetary policy: the idea that we can micromanage the economy in a way that is going to make everybody comfortable, all the time.</p><p>I have argued that the feeling of entitlement that comes with expecting to be comfortable all the time goes beyond being “arrogant”: it’s just plain unreasonable. The laws of nature - no matter what industry we’re talking about - all but guarantee some discomfort somewhere along the way.<br /> <br /> This is a lesson that I think we’re going to be learning the hard way this year, and potentially for years to come. Over the last 20 years, we have watched people make fortunes in the market simply by <em>guessing</em> a stock and pouring money into it while the Fed backstops markets from ever moving lower.</p><p>We have overdrawn ourselves at the bank, so to speak, <em>as much as humanly possible.</em> Not only have companies with terrible financials been bid up, they have been bid up to fever pitch valuations that – even in the best of financial circumstances - no company should really ever be afforded.</p><div class="captioned-image-container"><a class="image-link image2" href="https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F760eeb01-4cc6-4687-ab9a-0be540bbaf0b_857x479.png" target="_blank"><img class="sizing-normal" src="https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F760eeb01-4cc6-4687-ab9a-0be540bbaf0b_857x479.png" alt="" width="857" height="479" /></a></div><p>And in addition to discomfort, one of nature’s guarantees is often reversion to the mean. Reversion to the mean becomes far more painful the further off the path of normalcy you have drifted. Heading into 2022, after two years of unprecedented and basically unlimited quantitative easing, which was lopped on top of two decades of additional quantitative easing, we’ve gotten about as far off that path as possible.</p><div class="captioned-image-container"><a class="image-link image2" href="https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F66dfacb4-b042-4a68-82a9-5b24f6d8c503_668x468.png" target="_blank"><img class="sizing-normal" src="https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F66dfacb4-b042-4a68-82a9-5b24f6d8c503_668x468.png" alt="" width="668" height="468" /></a></div><p><br /> In addition to veering off course, the shock of running headfirst into two immoveable monoliths of volatility - the Fed attempting to curb unrelenting and blistering inflation and an unprovoked invasion of a sovereign nation in Europe - may have only just begun to be absorbed by markets. There’s a reason that the cycle of markets diagram, when swinging lower, starts with “anxiety” and “denial”.</p><p>We haven’t even begun to approach “fear” yet, because markets have sold off in orderly fashion. This was the <a href="https://quoththeraven.substack.com/p/its-still-starting-to-feel-like-time?s=w">cornerstone of my prediction</a> that we are still due for a limit down morning and real capitulation one of these days.</p><div class="captioned-image-container"><a class="image-link image2" href="https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F451d9249-61a4-44b6-9140-5fac877c3642_600x500.png" target="_blank"><img class="sizing-normal" title="Riding the Emotional Wave of a Market Cycle | by Chris | Argent Crypto, Inc. | Medium" src="https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F451d9249-61a4-44b6-9140-5fac877c3642_600x500.png" alt="Riding the Emotional Wave of a Market Cycle | by Chris | Argent Crypto, Inc. | Medium" width="600" height="500" /></a></div><p>The truth is that while many investors see this as simply another “BTFD” moment like we’ve had in years’ past, we haven’t even started to ponder the long-lasting effects of what could be coming down the pike for U.S. markets, the U.S. dollar and geopolitical tensions.</p><div><hr /></div><p><em>Today’s blog post has been published without a paywall because I believe the content to be far too important. <strong>However, if you have the means and would like to support my work by subscribing, I’d be happy to offer you 22% off to become a subscriber in 2022:</strong></em></p><p class="button-wrapper"><a href="https://quoththeraven.substack.com/subscribe?coupon=0ded1dfd">https://quoththeraven.substack.com/subscribe?coupon=0ded1dfd</a>","text":"Get 22% off forever","action":null,"class":null}"><a class="button primary" href="https://quoththeraven.substack.com/subscribe?coupon=0ded1dfd">Get 22% off forever</a></p><div><hr /></div><p>The Fed doesn’t have any other option but to hike, in my opinion - regardless of what happens in Ukraine.</p><p>Either the Fed will allow the American public to suffer through continued unprecedented inflation, which will have psychological and monetary effects on the American consumer the likes of which we’ve never seen, or they will be consistently hiking rates, which will start the countdown on a ticking time bomb of debt and malinvestment that has been gestating and growing since 1999. Given that the geopolitical conflict is making inflation <em>worse </em>than it was when CPI was 7.5%, the Fed is going to have to react - even if it’s just for show.</p><div class="captioned-image-container"><a class="image-link image2" href="https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4a3e6fc4-3307-4db9-8f85-eeabdb8ef276_699x348.png" target="_blank"><img class="sizing-normal" src="https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4a3e6fc4-3307-4db9-8f85-eeabdb8ef276_699x348.png" alt="" width="699" height="348" /></a></div><p>And Russia’s invasion of Ukraine is an all out wild card. Nobody knows what path it is going to go down or how it will end. Analysts have drawn up scenarios ranging from a cease-fire tomorrow to a full-on nuclear holocaust. And while there are hopes for a temporary cease-fire, which would at least stop the humanitarian crisis of killing of innocent civilians, the shockwaves on the global economic system and the geopolitical implications of Russia’s actions are likely to stick around for years to come.<br /> <br /> In fact, <a href="https://quoththeraven.substack.com/p/fiat-currency-zero-hour-russia-and?s=w">I wrote a week ago</a> that I believe this invasion marks the beginning of Russia and China’s official war on the U.S. dollar as the global reserve currency. <br /> <br /> Both rate hikes and the geopolitical conflict will have effects, even in a best case scenario, that linger for years to come. The number of potential outcomes that can occur as a result of these effects that also end with the market moving to all time highs over the next few years, has dwindled. The outcomes that do result in new all-time highs - hyperinflation and QE - would have devastating consequences that would make the market’s move higher, in nominal terms, moot.</p><div><hr /></div><p>Perhaps over long periods of time, the market may move higher in real terms once again, but appear to clearly be entering a stagflationary period of discomfort that many “analysts” couldn’t have ever fathomed just <em>months </em>ago. <br /> <br /> And if analysts couldn’t have predicted it, markets - commodity markets, equity markets, debt markets, FX markets and otherwise – may only be pricing in the very, very beginning of this new era for the United States.</p><p>The “new era” of discomfort may not last weeks, months or years, but rather decades, especially if the U.S. dollar is finally called into question as the world’s reserve currency.<br /> <br /> This coming week, I’ll be publishing an article that asks about the opposite idea: is it possible for us to get through this and put it behind us relatively quickly? In fact, I’ll even urge my readers to think about whether or not the worst could be over. But this morning, I couldn’t help but feel that – even in a situation where the <em>volatility </em>dies down – the market’s discomfort could be long lasting.</p><p>If we are, in fact, approaching a new epoch of discomfort for investing in the U.S. (which, by the way I hate to say that we probably <em>deserve),</em> investors’ reactions in the public markets have still not reflected the size of the potential volatility going forward.</p><p>There’s a part of me that still believes markets need to move 30% or 40% lower just based on Fed rate hikes alone, as I predicted weeks ago. Throwing into the mix a new, uncharted geopolitical relationship with Russia and Putin as the “wild card”, I can’t help but feel that the odds of long lasting discomfort have spiked profoundly.</p><p><em>And remember: the next crisis, we may not be able to print our way out of anymore…</em></p><p><em>Courtesy of <a href="https://quoththeraven.substack.com/p/us-markets-face-an-unprecedented?s=w" target="_blank">quoththeraven</a></em></p></div></div></div>Market Predictions For 2018? Bring 'Em On!http://stockbuz.ning.com/articles/market-predictions-for-2018-bring-em-on2017-12-12T19:13:54.000Z2017-12-12T19:13:54.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><h2 id="ae-body">Saxo Bank has a few</h2>
<p><img title="" class="cms-png img-responsive" src="http://az705044.vo.msecnd.net/20171212/2017-12-12_10-26-20.png" /></p>
<p>Naturally, predictions like this are more for bank PR than education but they have some value.</p>
<p>For one, they're a reminder that unexpected, huge and unpredictable moves happen in markets. And they happen far more often than we expect.</p>
<p>The thing is, they usually happen somewhere you least expect.</p>
<p>As for this set of predictions, let's hope this trader is you (from the report):</p>
<p>"World markets are increasingly full of signs and wonders, and the collapse of volatility seen across asset classes in 2017 was no exception. The historic lows in the VIX and MOVE indices are matched by record highs in stocks and real estate, and the result is a powder keg that is set to blow sky-high as the S&P 500 loses 25% of its value in a rapid, spectacular, one-off move reminiscent of 1987. A whole swathe of short volatility funds are completely wiped out and a formerly unknown long volatility trader realises a 1000% gain and instantly becomes a legend."</p>
<p>Courtesy of <a href="http://www.forexlive.com/news/!/who-wants-some-outrageous-predictions-for-2018-20171212" target="_blank">ForexLive</a></p>
</div>Are Investors Getting Too Bulled Up?http://stockbuz.ning.com/articles/are-investors-getting-too-bulled-up2017-07-22T13:48:24.000Z2017-07-22T13:48:24.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><em>Ran across this post and found it interesting although anything that's only been around 7-1/2 years is truly untested but only time will tell.  All eyes are on Congress for a break in taxes for the wealthy, as well as 'stumbles' from our leader and chief, Mr. Trump.  Between the Russia investigation and foreign relations (yikes!) the tension is building, or at least being applied by the left.  Will they reach the proportions where firms hit the 'sell' button? I have to say that September is coming -  the worst month for the market thanks to Mutual Fund profit taking at end of fiscal year.  Anything is possible.  Enjoy the ride.  From <a href="https://lyonssharepro.com/2017/07/are-investors-getting-too-bulled-up/" target="_blank">LyonsShare</a>:</em></p>
<p>Sentiment indicators can be useful tools for investors, mainly on a contrarian basis. That is, generally when readings get overly bullish, it may signal a lack of remaining buyers in the market and vulnerability to a decline in prices. Conversely, when sentiment is extremely bearish, it is often a sign that selling has been overdone and prices are due for a bounce.</p>
<p>In general, there are two types of sentiment indicators: survey-based and real money gauges. We have found surveys to be less reliable than they once were. This may be due to the fact that sentiment is now widely known as a contrarian tool and survey respondents may be hesitant to look like the “dumb money”.</p>
<p>For that reason, we prefer real money sentiment indicators which show what investors are actually doing with their money. Folks can respond however they’d like in a survey, but at the end of the day they vote with their money. Therefore, these types of measures are typically better barometers of true investor sentiment.</p>
<p>One relatively new real money sentiment indicator is the subject of today’s Chart Of The Day. TD Ameritrade launched their Investor Movement Index® (IMX) the back in 2010 as a way of tracking investor sentiment based upon TDA customers’ money flows. In their words:</p>
<p><i>“The Investor Movement Index, or the IMX, is a proprietary, behavior-based index created by TD Ameritrade designed to indicate the sentiment of individual investors’ portfolios. It measures what investors are actually doing, and how they are actually positioned in the markets.</i></p>
<p><i>The IMX does this by using data including holdings/positions, trading activity, and other data from a sample of our 6 million funded client accounts.”</i></p>
<p>The reason we chose to make the IMX our Chart Of The Day today is because the latest reading (6.58), as of the end of June 2017, marked the highest reading in the 7-year history of the indicator. Additionally, it exhibited its 3rd largest month-over-month jump ever (+0.45), behind May and August 2016.</p>
<p><img class="alignnone wp-image-2767 size-large" src="https://lyonssharepro.com/wp-content/uploads/2017/07/TDA-IMX-July-2017-1024x660.jpg" alt="" width="770" height="496" /></p>
<p>Now, before you go selling your entire portfolio, there are few factors that may mitigate one’s concern over this high reading. First off, the indicator is only 7 ½ years old.  In market indicator years, that makes the IMX but an infant. It has not even been through a complete market cycle yet. Therefore, we cannot be sure what the indicator is or is not capable of, outside of its very brief history.</p>
<p>Secondly, while the indicator is at an all-time high, the stock market is as well. And if ever there is a reasonable time for sentiment to be at all-time highs, it is when stocks are also at highs. It would be more concerning if the IMX was hitting new highs when it “wasn’t supposed to”, e.g., while the stock market was either declining or at least making lower highs.</p>
<p>For example, one of the larger jumps (+0.41) in the IMX’s history occurred in June 2015 — despite the fact that the S&P 500 lost more than 2% for the month. Of course, stocks were undergoing a significant intermediate-term top at the time and a sharp correction followed soon afterward.</p>
<p>We are not saying that an all-time high in this sentiment indicator is a welcomed data point. It is just that the conditions surrounding the latest reading do somewhat justify it — or at least reasonably explain it. However, we will certainly monitor this new sentiment tool closely in the months to come.</p>
</div>Paper Trading Is Obsoletehttp://stockbuz.ning.com/articles/paper-trading-is-obsolete2016-08-18T17:22:37.000Z2016-08-18T17:22:37.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><em><span style="color: #00ff00;"><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291340?profile=original"><img class="align-left" style="padding: 10px;" src="http://storage.ning.com/topology/rest/1.0/file/get/1291340?profile=original" width="297"></a>I don't actually embrace this headline. In my experience, yes, emotions exist while paper trading. It's merely that you can sleep at night knowing your bank account didn't go up in flames but that's just me. It's also essential in my book that you determine what "type" of trader you want to be. It's one thing to say you want to invest like Warren Buffett but just what does that entail? Do you rally know? It's also super easy to be sucked in by get-rich-quick ads and bloggers who entice you to sign up for their premium edition (none of which I recommend). Don't underestimate the market. It's NOT easy, even if you believe you've got a plan and everyone loses. Everyone. The trick is not to be fooled. Ignore the headline newsfeed hype and learn to invest without emotion. You'll be going up against high-frequency programs and number crunchers with degrees. Are you truly ready to put up your hard earned cash against them? Remember, if it were simple, everyone would be doing it. From <a href="http://abnormalreturns.com/2016/08/14/paper-trading-is-obsolete/" target="_blank">AbnormalReturns:</a>:<br></span></em></p>
<div class="top-content content-section">
<blockquote>
<p>If you’d like to teach a kid to ride a bike, training wheels are a bad idea. You’re much better off with a small bike with <a href="https://www.youtube.com/watch?v=kayqX056Vks" target="_blank">no</a> pedals.</p>
<p>All training wheels do is confuse, distract or stall… Find something worth doing, find others to join in. Merely begin. – <a href="http://sethgodin.typepad.com/seths_blog/2016/08/without-training-wheels.html"><strong>Seth Godin</strong></a></p>
</blockquote>
<p>Godin wasn’t talking about trading and investing but he might as should have. For a long time many pundits have told beginning traders to ‘paper trade.’ That is, conduct simulated trades so as to not only test a strategy but also get a feel for how it works in real-time. In this light, paper trading only “confuses, distracts and stalls.” <a href="http://abnormalreturns.com/2011/09/19/fantasy-tradingfantasy-football/">As I wrote a while ago</a>:</p>
<blockquote>
<p>The bottom line is that traders trade. No matter how small the notional amounts involved there is no substitute for putting real money on the line.</p>
</blockquote>
<p><a href="http://abnormalreturns.com/2014/05/05/trading-rules-retail-trader/">I have always been skeptical of that advice</a>, but today that advice is obsolete. The problem is that paper trading avoids the most difficult aspect of trading, the emotional side. <strong>Howard Lindzon</strong> <a href="http://howardlindzon.com/should-you-paper-trade/">writes</a>:</p>
<blockquote>
<p>You can’t learn if real money and emotions are not on the line. It has never been easier to journal your ‘paper’ trades, but I say dive in small, journal your real investments, no matter how small they are and learn faster.</p>
</blockquote>
<p>Traders today have access to <a href="https://investorjunkie.com/12474/commission-free-etfs/">commission-free ETF trades</a> through all the major brokerages. If zero-commission ETFs are not enough, you can also trade US stocks through the <a href="https://www.robinhood.com/">zero-commission broker</a>. In short, having a small account is no longer a barrier to testing a trading system.</p>
<p><a href="http://www.nytimes.com/2014/05/05/your-money/stocks-and-bonds/seven-tips-for-stock-traders-determined-to-defy-the-odds.html">That isn’t to say you should jump right into trading without a plan</a>. You should track your results, recognize that losses will happen and make sure any damage done in your trading account does not affect the rest of your financial life.</p>
<p>Having some experience investing and trading is useful even for investors whose philosophy is more focused on a diversified, index-centric portfolio. Knowing how an individual stock (or ETF) trades can provide useful insight into the operation of the overall markets. Luckily now individuals can do this from the beginning of their investing lives before the stakes get higher.</p>
</div></div>Larry Williams On Crude Oil And Gold Bugshttp://stockbuz.ning.com/articles/larry-williams-on-crude-oil-and-gold-bugs2016-06-03T18:51:22.000Z2016-06-03T18:51:22.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div>Tipping the hat to member GT. We haven't seen Larry Williams in such a long time.
<p><iframe scrolling="no" src="http://finance.yahoo.com/video/crude-calls-where-exactly-oil-052851624.html?format=embed" allowfullscreen="true" mozallowfullscreen="true" webkitallowfullscreen="true" allowtransparency="true" frameborder="0" height="360" width="640"></iframe></p>
</div>Debt Doesn't Go On Foreverhttp://stockbuz.ning.com/articles/debt-doesn-t-go-on-forever2016-04-10T21:08:24.000Z2016-04-10T21:08:24.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291294?profile=original"><img class="align-left" style="padding: 20px;" src="http://storage.ning.com/topology/rest/1.0/file/get/1291294?profile=RESIZE_480x480" width="471"></a>NYSE margin debt fell again during the month of February. After the selloff in stocks that kicked off 2016, this should come as no surprise. Investors are usually forced to reduce leveraged bets during these sorts of episodes in the stock market. In fact, this forced selling can actually exacerbate the volatility. And because margin debt is only now beginning to come down from record highs, surpassing those seen at the 2000 and 2007 peak, this should be of concern to most equity investors.</p>
<p>To fully appreciate this risk, I prefer to look at margin debt relative to overall economic activity. When leveraged financial speculation becomes large relative to the economy, it’s usually a sign investors have become far too greedy. As Warren Buffett would say, this is usually a good time to become more fearful, or conservative towards the stock market.</p>
<p>Not only did margin debt recently hit nominal record-highs, it hit new record-highs in relation to GDP, as well. In other words, over the past several decades, investors have never become so greedy as they did recently. And yes, this includes the dotcom bubble.</p>
<p><a href="https://i1.wp.com/www.thefelderreport.com/wp-content/uploads/2016/03/Screen-Shot-2016-03-30-at-12.31.30-PM.png?ssl=1" rel="attachment wp-att-10379"><img class="aligncenter size-full wp-image-10379" src="https://i1.wp.com/www.thefelderreport.com/wp-content/uploads/2016/03/Screen-Shot-2016-03-30-at-12.31.30-PM.png?zoom=1.5&resize=696%2C365&ssl=1" alt="Screen Shot 2016-03-30 at 12.31.30 PM" height="365" width="696"></a></p>
<p>One reason I prefer this measure is that it has a fairly high negative correlation with forward 3-year returns in the stock market. When investors become too greedy, returns over the subsequent 3 years are poor and vice versa. As of the end of February, the latest forecast implied by this measure is for a loss of about 35% over the next three years.</p>
<p><a href="https://i2.wp.com/www.thefelderreport.com/wp-content/uploads/2016/03/Screen-Shot-2016-03-30-at-12.31.17-PM.png?ssl=1" rel="attachment wp-att-10380"><img class="aligncenter size-full wp-image-10380" src="https://i2.wp.com/www.thefelderreport.com/wp-content/uploads/2016/03/Screen-Shot-2016-03-30-at-12.31.17-PM.png?zoom=1.5&resize=696%2C330&ssl=1" alt="Screen Shot 2016-03-30 at 12.31.17 PM" height="330" width="696"></a></p>
<p>While this measure is pretty good at forecasting 3-year returns that doesn’t help much for investors concerned with the next year or so. In this regard, it may be helpful to observe the trend of margin debt. Where is the nominal level of margin debt relative to its 12-month moving average or simply its level from one year ago? Historically, when these indicators turn negative from such lofty levels, a bear market, as defined by at least a 20% drawdown, is already underway. Right now both of these measure are, in fact, negative.</p>
<p><a href="https://i1.wp.com/www.thefelderreport.com/wp-content/uploads/2016/03/Screen-Shot-2016-03-30-at-12.35.29-PM.png?ssl=1" rel="attachment wp-att-10381"><img class="aligncenter size-full wp-image-10381" src="https://i1.wp.com/www.thefelderreport.com/wp-content/uploads/2016/03/Screen-Shot-2016-03-30-at-12.35.29-PM.png?zoom=1.5&resize=696%2C360&ssl=1" alt="Screen Shot 2016-03-30 at 12.35.29 PM" height="360" width="696"></a></p>
<p><a href="https://i0.wp.com/www.thefelderreport.com/wp-content/uploads/2016/03/Screen-Shot-2016-03-30-at-2.03.23-PM.png?ssl=1" rel="attachment wp-att-10382"><img class="aligncenter size-full wp-image-10382" src="https://i0.wp.com/www.thefelderreport.com/wp-content/uploads/2016/03/Screen-Shot-2016-03-30-at-2.03.23-PM.png?zoom=1.5&resize=696%2C330&ssl=1" alt="Screen Shot 2016-03-30 at 2.03.23 PM" height="330" width="696"></a></p>
<p>So margin debt right now is sending a very clear signal that investors have recently become very greedy. This suggests returns over the next several years should be very poor. Finally, the trend in margin debt also suggests that a new bear market is likely underway. If history is to rhyme, that means a decline of at least 20% in the S&P 500 is very likely to occur sometime soon. And because of the sheer size of the potential forced supply that could come to market in this sort of environment, that could easily be just the beginning.</p>
<p>Courtesy of <a href="https://www.thefelderreport.com/2016/03/31/this-indicator-suggests-a-bear-market-is-now-underway-and-its-likely-to-be-a-painful-one/" target="_blank">Felderreport</a></p></div>Why Most People Fail At Tradinghttp://stockbuz.ning.com/articles/why-most-people-fail-at-trading2016-02-22T19:55:04.000Z2016-02-22T19:55:04.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>One item I completely agree with is the pundits and "know it alls" on entertainment <span style="text-decoration: line-through;">news</span> television. They're there to entertain you; not make you rich. I get my economic releases on them and *off* they go the rest of the day. I trust my charts; charts don't lie. People do.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291386?profile=original"><img class="align-center" src="http://storage.ning.com/topology/rest/1.0/file/get/1291386?profile=RESIZE_1024x1024" width="525"></a>Courtesy of <a href="http://www.martinkronicle.com/2013/01/11/itsnotintellectual" target="_blank">Martinkronicle</a></p></div>Recession Proponents Watching Yield Curvehttp://stockbuz.ning.com/articles/recession-proponents-watching-yield-curve2016-01-05T00:54:01.000Z2016-01-05T00:54:01.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><div class="copy-paste-block">
<p>Is our economic recovery truly as strong as charts would imply?  Are we strong enough to stand on our own at these levels, or have we overshot the boundaries thanks to quantitative easing?  Are economics in the U.S. strong enough or does recession lie ahead?</p>
<p>Curve watchers Anonymous has an eye on the yield curve. Here is a snapshot of year-end-closing values from 1998-12-31 through 2015-12-31.<br />
<br />
<b>Yield Curve Year End Closing Values 1998-2015</b></p>
<a href="http://4.bp.blogspot.com/-s3_Sk6ZDLY8/VobmqITK9jI/AAAAAAAAgws/Bj8lksAkpmI/s1600/yield%2Bcurve%2B2015-12-31.png" target="_blank"><img src="http://4.bp.blogspot.com/-s3_Sk6ZDLY8/VobmqITK9jI/AAAAAAAAgws/Bj8lksAkpmI/s400/yield%2Bcurve%2B2015-12-31.png" border="0" /></a><br />
<br />
Unlike 1999-2000 and again 2007-2007, no portions of the yield curve are inverted today (shorter-term rates higher than longer-term rates).<br />
<br />
Inversion is the traditional harbinger of recessions, but with the low end of the curve still very close to zero despite the first Fed hike, inversions are unlikely.<br />
<br />
<b>Yield Curve Differentials: 3-Month to Longer Durations</b></div>
<div class="copy-paste-block"><a href="http://3.bp.blogspot.com/-pbsTc9J2dKU/VobkrALzxwI/AAAAAAAAgwg/_hVEMY76xKY/s1600/yield%2Bcurve%2B2015-12-31A.png" target="_blank"><img src="http://3.bp.blogspot.com/-pbsTc9J2dKU/VobkrALzxwI/AAAAAAAAgwg/_hVEMY76xKY/s400/yield%2Bcurve%2B2015-12-31A.png" border="0" /></a></div>
<div class="copy-paste-block"><br />
<br />
<b>Yield Curve Differentials: 1-year to Longer Durations</b><br />
<a href="http://4.bp.blogspot.com/-XwNPW9KwsnM/VoboYT3arvI/AAAAAAAAgw4/N9i-QbLfhdo/s1600/yield%2Bcurve%2B2015-12-31B.png" target="_blank"><img src="http://4.bp.blogspot.com/-XwNPW9KwsnM/VoboYT3arvI/AAAAAAAAgw4/N9i-QbLfhdo/s400/yield%2Bcurve%2B2015-12-31B.png" border="0" /></a><br /></div>
<div class="copy-paste-block"></div>
<div class="copy-paste-block"><b>Yield Curve Differentials: 2-year to Longer Durations</b><br />
<br />
<a href="http://3.bp.blogspot.com/-HFbw36is7A0/VobpyC-avFI/AAAAAAAAgxE/5oD88PBoz8g/s1600/yield%2Bcurve%2B2015-12-31C.png" target="_blank"><img src="http://3.bp.blogspot.com/-HFbw36is7A0/VobpyC-avFI/AAAAAAAAgxE/5oD88PBoz8g/s400/yield%2Bcurve%2B2015-12-31C.png" border="0" /></a><br />
<br />
In general, albeit with some volatility, the yield curve has been flattening and spreads shrinking since 2013.<br />
<br />
If the economy was truly strengthening, one would expect the yield curve to steepen, with rates rising faster at the long end of the curve rather than the short end of the curve. But that's certainly not happening.<br />
<br />
<b>Is an Inversion Necessary to Signal a Recession?</b><br />
<br />
Many believe no recession is on the horizon because the yield curve is not inverted.<br />
<br />
Pater Tenbebrarum at the Acting Man blog dispels that myth in <a href="http://www.acting-man.com/?p=31732">A Dangerous Misconception</a>.<br />
<br />
<blockquote class="tr_bq">One popular theme gets reprinted in variations over and over again. Here is a recent example from Business Insider, which breathlessly informs us of the infallibility of the yield curve as a forecasting tool: “<a href="http://www.businessinsider.com/inverted-yield-curve-predicts-recessions-2014-7?nr_email_referer=1&utm_source=Triggermail&utm_medium=email&utm_term=Markets%20Chart%20Of%20The%20Day&utm_campaign=Moneygame_COTD_070814" target="_blank">This Market Measure Has A Perfect Track Record For Predicting US Recessions</a>” the headline informs us – and we dimly remember having seen variants of this article on the same site at least three times by now:<br />
<br />
<i>There are very few market indicators that can predict recessions without sending out false positives. The yield curve is one of them. At a breakfast earlier today, LPL Financial's Jeffrey Kleintop noted that the yield curve inverted just prior to every U.S. recession in the past 50 years. "That is seven out of seven times — a perfect forecasting track record," he reiterated.</i><br />
<br />
This is it! The holy grail of forecasting, Jeffrey Kleintop has discovered it. You'll never have to worry about actual earnings reports, a massive bubble in junk debt, the sluggishness of the economy, new record levels in sentiment measures and margin debt, record low mutual fund cash reserves, the pace of money supply growth, or anything else again. Just watch the yield curve!<br />
<br />
<b>When Perfect Indicators Fail</b><br />
<br />
The so-called “perfect track record” Mr. Kleintop emphasizes is pretty much worthless once the central bank enforces ZIRP on the short end and has already begun implementing massive debt monetization programs. Here is a chart showing the relationship between 3-month and 10 year Japanese interest rates since 1989, with all six recessions since then indicated:<br />
<br />
<a href="http://2.bp.blogspot.com/-RvtW5cvPsFI/Vobu34fjolI/AAAAAAAAgxU/-z9mKLImEI0/s1600/Japan%2BInversions.png" target="_blank"><img src="http://2.bp.blogspot.com/-RvtW5cvPsFI/Vobu34fjolI/AAAAAAAAgxU/-z9mKLImEI0/s400/Japan%2BInversions.png" border="0" /></a><br />
<br />
Over the past 25 years, the “perfect forecasting record” has worked exactly 1 out of 6 times in Japan – and that was in 1989.<br />
<br />
There is no “holy grail” indicator that can be used to make perfect economic and market forecasts. It is true that if there is a yield curve inversion, it definitely indicates trouble is on the horizon. Alas, we don't remember hearing many real time warnings (in fact, we don't remember any) from Wall Street analysts when such inversions actually occurred in the past (such as e.g. in 1999/2000 and 2006/2007), which makes this new preoccupation especially funny. Obviously, the only time to pay attention to this indicator is when it suggests that a bubble can keep growing!<br />
<br />
There is only one thing that is certain: things will continually change. There is no indicator that is fool-proof.</blockquote>
I captured the charts at the beginning of this post on December 31. With the 2016 opening equity carnage today, the curve will be flatter at the end of the day.<br />
<br />
The yield curve does not believe the economy is strengthening, and neither do I.</div>
<div class="copy-paste-block"></div>
<div class="copy-paste-block"><span>Courtesy of <a href="http://globaleconomicanalysis.blogspot.com/2016/01/flattening-of-yield-curve-in-pictures_4.html?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29" target="_blank">Mish</a></span></div>
</div>How Markets Are Manipulatedhttp://stockbuz.ning.com/articles/how-markets-are-manipulated2015-11-16T16:09:18.000Z2015-11-16T16:09:18.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>There once was a series of interviews with Jim Cramer, as you'll see here where he talks about his days as a Hedge Fund Manager, and they were a wonder to behold.  It seems many have been '<em>scrubbed</em>' from the web (nice job Jim) but I came across this one and it'll give you a glimpse into the games that are played behind the scenes.  CNBC and its cohorts are <em>entertainment</em> and easily swayed.  Get your economic data and hit the 'mute' button.  Opinions are swayed by the opinions’ of others but it doesn't make them fact.  Learn this early.</p>
<p><iframe width="640" height="480" src="https://www.youtube.com/embed/JEzsfPmh894" frameborder="0" allowfullscreen=""></iframe></p>
</div>Seven Reasons For Market Upsidehttp://stockbuz.ning.com/articles/seven-reasons-for-market-upside2015-10-19T23:03:18.000Z2015-10-19T23:03:18.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>Omega Advisors Founder, CEO and Chairman Leon Cooperman discusses his outlook for the markets.  Of course he was short on time so we have no idea if he's short bonds but that would be my guess.   Hat tip Sadiq for this interview.</p>
<p><script src="//cdn.gotraffic.net/projector/latest/bplayer.js" type="text/javascript">
BPlayer(null, {"id":"0qkX1IyRRjytj3izy9xk8Q","htmlChildId":"bbg-video-player-0qkX1IyRRjytj3izy9xk8Q","serverUrl":"http://www.bloomberg.com/api/embed","idType":"BMMR","autoplay":false,"log_debug":false,"ui_controls_popout":false,"wmode":"opaque","share_metadata":{"canonical_url":"http://bloom.bg/1MoCBxi"},"use_share_overlay":true,"video_autoplay_on_page":false,"use_js_ads":true,"ad_code_prefix":"","ad_tag_gpt_preroll":true,"ad_tag_gpt_midroll":true,"ad_tag_sz_preroll":"1x7","ad_tag_sz_midroll":"1x7","ad_tag_sz_overlay":"1x7","ad_network_id_preroll":"5262","ad_network_id_midroll":"5262","ad_network_id_overlay":"5262","ads_vast_timeout":10000,"ads_playback_timeout":10000,"use_comscore":true,"comscore_ns_site":"bloomberg","comscore_page_level_tags":{"bb_brand":"bbiz","bss_cont_play":0,"bb_region":"US"},"use_chartbeat":true,"chartbeat_uid":"15087","chartbeat_domain":"bloomberg.com","vertical":"business","ad_tag_overlay":"business/videooverlay","use_parsely":true,"source":"BBIZweb","module_conviva_insights":"enabled","conviva_account":"c3.Bloomberg","zone":"video","ad_tag_cust_params_preroll":"","width":640,"height":360,"ad_tag":"","ad_tag_midroll":"","offsite_embed":true});
</script></p>
</div>50 years And 12 Items Later From Warren Buffetthttp://stockbuz.ning.com/articles/50-years-and-12-items-from-warren-buffett2015-05-08T16:24:35.000Z2015-05-08T16:24:35.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><strong><a target="_blank" href="http://motivatorcoach.com/wp-content/uploads/2012/12/warren.jpg"><img class="align-left" src="http://images.forbes.com/media/2014/01/29/0129_warren-buffet-book2_670.jpg?width=300" width="300" /></a></strong>With 50 years at Berkshire Hathaway, I still read in on articles featuring Mr. Buffett.  You just never know what you'll find..</p>
<p><strong>1. “We are limited, of course, to businesses whose economic prospects we can evaluate. And that’s a serious limitation: Charlie and I have no idea what a great many companies will look like ten years from now.”</strong></p>
<p><strong>“My experience in business helps me as an investor and that my investment experience has made me a better businessman. Each pursuit teaches lessons that are applicable to the other. And some truths can only be fully learned through experience.”</strong></p>
<p>Treat an investment security as a proportional ownership of a business!  A security is not just a piece of paper. Not all businesses can be reasonably valued. That’s OK. Put them in the “too hard pile” and move on. <br />
 </p>
<p><strong>2. “Periodically, financial markets will become divorced from reality.”</strong></p>
<p><strong>“For those investors who plan to sell within a year or two after their purchase, I can offer no assurances, whatever the entry price. Movements of the general stock market during such abbreviated periods will likely be far more important in determining your results than the concomitant change in the intrinsic value of your Berkshire shares. As Ben Graham said many decades ago: ‘In the short-term the market is a voting machine; in the long-run it acts as a weighing machine.’ Occasionally, the voting decisions of investors – amateurs and professionals alike – border on lunacy</strong>.”</p>
<p>Make bi-polar Mr. Market your servant rather than your master! <br />
 </p>
<p><strong>3. “A business with terrific economics can be a bad investment if it is bought for too high a price. In other words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire is not exempt from this.”</strong></p>
<p>Buy at a bargain price which provides a margin of safety! <br />
 </p>
<p><strong>4. “As Tom Watson, Sr. of IBM said, ‘I’m no genius, but I’m smart in spots and I stay around those spots.'”</strong></p>
<p>Circle of competence! Risk comes from not knowing what you are doing. <br />
 </p>
<p><strong>5. “Decades ago, Ben Graham pinpointed the blame for investment failure, using a quote from Shakespeare: ‘The fault, dear Brutus, is not in our stars, but in ourselves.'”</strong></p>
<p>Most investing mistakes are psychological! Investing is simple, but not easy. Buffett has a great system, but his emotional and psychological temperament is especially suitable for investing. Like Charlie Munger, he is highly rational as human beings go. Everyone, including Buffett, makes mistakes. You can do very well in investing by just avoiding stupid mistakes. <br />
 </p>
<p><strong>6. “It is entirely predictable that people will occasionally panic, but not at all predictable when this will happen. Though practically all days are relatively uneventful, tomorrow is always uncertain. (I felt no special apprehension on December 6, 1941 or September 10, 2001.) And if you can’t predict what tomorrow will bring, you must be prepared for whatever it does. Investors, of course, can, by their own behavior, make stock ownership highly risky. And many do. Active trading, attempts to “time” market movements, inadequate diversification, the payment of high and unnecessary fees to managers and advisors, and the use of borrowed money can destroy the decent returns that a life-long owner of equities would otherwise enjoy. Indeed, borrowed money has no place in the investor’s tool kit: Anything can happen anytime in markets. And no advisor, economist, or TV commentator – and definitely not Charlie nor I – can tell you when chaos will occur. Market forecasters will fill your ear but will never fill your wallet.”</strong></p>
<p>Buy at a bargain and wait! See my post on <a href="http://25iq.com/2013/11/03/a-dozen-investors-talk-about-the-folly-of-macroeconomic-forecasting-and-the-importance-on-focusing-on-valuationmargin-of-safety-today/" target="_blank">avoiding forecasting</a>. See also Seth Klarman and Howard Marks posts on this point. You can determine that buying an investment *now* is a bargain that creates a margin of safety based on a valuation process, but you cannot predict *when* the price will rise.  So you wait.</p>
<p> </p>
<p><strong>7. “Gains won’t come in a smooth or uninterrupted manner; they never have.”</strong></p>
<p>Investing results will always be lumpy!</p>
<p> </p>
<p><strong>8.”Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments – far riskier investments – than widely-diversified stock portfolios that are bought over time and that are owned in a manner invoking only token fees and commissions. That lesson has not customarily been taught in business schools, where volatility is almost universally used as a proxy for risk. Though this pedagogic assumption makes for easy teaching, it is dead wrong: Volatility is far from synonymous with risk. Popular formulas that equate the two terms lead students, investors and CEOs astray.”</strong></p>
<p><strong>“It is true, of course, that owning equities for a day or a week or a year is far riskier (in both nominal and purchasing-power terms) than leaving funds in cash-equivalents. That is relevant to certain investors – say, investment banks – whose viability can be threatened by declines in asset prices and which might be forced to sell securities during depressed markets. Additionally, any party that might have meaningful near-term needs for funds should keep appropriate sums in Treasuries or insured bank deposits.”</strong></p>
<p>Risk is not the same as volatility!<br />
 </p>
<p><strong>9. For the great majority of investors, however, who can – and should – invest with a multi-decade horizon, quotational declines are unimportant. Their focus should remain fixed on attaining significant gains in purchasing power over their investing lifetime. For them, a diversified equity portfolio, bought over time, will prove far less risky….”</strong></p>
<p>Most investors should buy a diversified portfolio of low fee index funds/ETFs! <br />
 </p>
<p><strong>10. “Huge institutional investors, viewed as a group, have long underperformed the unsophisticated index-fund investor who simply sits tight for decades. A major reason has been fees: Many institutions pay substantial sums to consultants who, in turn, recommend high-fee managers. And that is a fool’s game.”</strong></p>
<p>Follow the cost matters hypothesis! <br />
 </p>
<p><strong>11. Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.” “When bills come due, only cash is legal tender. Don’t leave home without it.”</strong></p>
<p>The only unforgivable sin in business is to run out of cash!  The need for some cash as dry powder applies to everyone, the only question is how much cash to have on hand.<br />
 </p>
<p><strong>12. “We will never play financial Russian roulette with the funds you’ve entrusted to us, even if the metaphorical gun has 100 chambers and only one bullet. In our view, it is madness to risk losing what you need in pursuing what you simply desire.”</strong></p>
<p>Black Swans can appear any time! People will try to get you to buy things by hiding this risk.</p>
<p>Originally from <a href="http://25iq.com/2015/02/28/a-dozen-things-taught-by-warren-buffett-in-his-50th-anniversary-letter-that-will-benefit-ordinary-investors/" target="_blank">25iq</a></p>
</div>Headlines And Risk Appetitehttp://stockbuz.ning.com/articles/headlines-and-risk-appetite2014-10-07T13:18:59.000Z2014-10-07T13:18:59.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>Very quickly some morning headlines.  While a few of the geopolitical risk headlines may be behind us (Brazil election, Russian border, etc) I believe markets are waiting for this quarters earnings (and guidance) to set the stage.  Multi-nationals with exposure overseas may struggle going forward if one believes the headlines below:</p>
<ul>
<li>IMF revises and raises growth for the US BUT <a href="http://www.marketwatch.com/story/imf-again-slices-global-growth-view-on-europe-japan-woes-2014-10-07" target="_blank">lowers prospects for the world</a> (4.0 to 3.0%)</li>
<li>IMF says some valuations are "frothy"</li>
<li>SODA warns of miss and citing lower US demand (stick a fork in it)</li>
<li>Women's apparel mfgr CBK warns of lower sales; blames low mall traffic.</li>
<li>Hong Kong retailers experience sharp sales decline (blames protests of course because happy people would be spending)</li>
<li>AGCO cuts forecast, shares down 6% premarket</li>
<li>Taiwan's exports growth slips</li>
<li>MCD Japan expects net loss this year</li>
<li style="list-style: none">Slide in German industrial output stokes fear of recession</li>
</ul>
</div>Countries Which Are Overvalued or Undervaluedhttp://stockbuz.ning.com/articles/countries-which-are-overvalued-or-undervalued2014-08-25T18:02:32.000Z2014-08-25T18:02:32.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>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.</p>
<blockquote>
<p><a href="http://www.telegraph.co.uk/finance/personalfinance/investing/10881855/Revealed-The-worlds-cheapest-stock-markets.html" target="_blank" rel="nofollow">Kyle Caldwell</a>, personal finance reporter at the Daily Telegraph, determined whether stock markets were <a title="CAPE: European Value Stocks Still Cheap Relative To Growth" href="http://www.valuewalk.com/2014/06/cape-european-value-stocks-still-cheap-relative-to-growth/">undervalued</a> or <a title="John Rogers: Fundamental risks in the BRIC countries" href="http://www.valuewalk.com/2014/07/john-rogers-ariel-letters/">overvalued</a>. Caldwell used three <a title="Value Investing & The Stock Market: A Look At 1814-2014" href="http://www.valuewalk.com/2014/08/value-investing-stock-market-look-1814-2014/">measures</a>: 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.</p>
<p>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 shown in the company’s balance sheet. The latter includes the value of buildings, intangible assets and other assets if they were to be liquidated. Price to book helps analysts adjust for any distortion caused by companies overstating earnings.</p>
<p>Some of these countries are undervalued because of political or financial unrest including Turkey, Russia and Greece.</p>
</blockquote>
<p>Does that make them a bad investment here? You be the judge. Beauty is in the eye of the beholder and "cheap" depends on your appetite for downside risk (or if you're dollar cost averaging).</p>
<blockquote>
<p>By all three measures, the <a title="S&P 500 One Of The Most Expensive Indixes In The World: SocGen" href="http://www.valuewalk.com/2013/11/sp-500-could-correct-by-9-in-2015-by-12-in-2016/">U.S.</a> is expensive. This is likely due to indices such as the Dow Jones Industrials and the <a title="S&P 500 Overvalued By Nearly Any Metric: Goldman" href="http://www.valuewalk.com/2014/01/sp-500-overvalued-goldman/">S&P 500</a> reaching record highs and consistent performance after the 2008 financial crisis. Josh Wright, Bloomberg economist and Brian Barnier, strategist at ValueAdvisors, LLC agrees in a <a href="http://www.bloombergbriefs.com/" target="_blank" rel="nofollow">Bloomberg Briefs</a> report, that the current <a title="Who’s Afraid of Robert Shiller’s CAPE Ratio?" href="http://www.valuewalk.com/2014/08/whos-afraid-shillers-cape-ratio/">CAPE</a> level of 26.2 is high relative to its long term median and its long term average. While it is still below peak levels reached during the 2000 dotcom bubble, it is <a title="How to Value Invest in an Expensive Market" href="http://www.valuewalk.com/2014/05/invest-expensive-market/">concerning</a>.</p>
</blockquote>
<p></p>
<p></p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290904?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290862?profile=RESIZE_1024x1024" width="750"></a></p></div>Market Snapshot August 3rdhttp://stockbuz.ning.com/articles/market-snapshot-august-3rd2014-08-03T20:30:52.000Z2014-08-03T20:30:52.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>Everyone knows our beloved five year rally seems to be weakening of late. The big question<a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290846?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290846?profile=RESIZE_1024x1024" height="273" width="750"></a> is just "how" weak will it become. If anyone tells you they know that answer, stop reading that website. Certainly more and more sectors are now exhibiting profit taking even as fund managers lounge sipping Mai Tai's from their catamarans off the coast. Indeed selling can beget more selling, however that doesn't mean we may not see a few days of buying to test overhead resistance and see if it holds; if the "top" is truly in.</p>
<p>Now is not a time (imo) to add to a long position.</p>
<p>Now is a time to be hedged or flat in a long portfolio.</p>
<p>Now is the time for day trades or brief swing trades.</p>
<p>Now is a time to let the charts show you direction.</p>
<p>A second enormous week of earnings lies before us. While thus far companies are largely beat (which should be the case if they're well run), forward guidance hasn't been all that impressive from a sales growth perspective.</p>
<p>Buybacks and dividend increases are helping buoy many names however this is a fools game which cannot go on indefinitely. Imagine where those names would be if they had <em>not</em> been buying back their shares?</p>
<p>Homebuilder (XHB) numbers were down again in July and retail (XRT), while it made a new high, rolled right over and gave up those gains. Numerous sectors are now below their 50d. Will the 100d or 200d pose as support? We shall have to see but even if they do, will we be able to take out overhead resistance? Many in the blogisphere seem skeptical.</p>
<p>The consumer may be getting tapped out here. That could translate into a point ahead where we will begin to see wages or hours worked per week in the U.S. <em>increasing</em> and if so, put further pressure on margins. Meanwhile things over the pond don't appear to be any better. Geopolitical tensions in Russia and Argentina's default certainly don't encourage risk either.</p>
<p>SPX is near it's 100d EMA (low) which has been prior support quite a bit the last few years. Will it be once again? Only time will tell.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290897?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290897?profile=RESIZE_1024x1024" width="750"></a></p>
<p></p>
<p></p>
<p></p>
<p></p></div>Negative January Effect. Real or Mumbo Jumbo?http://stockbuz.ning.com/articles/negative-january-effect-real-or-mumbo-jumbo2014-02-08T16:45:26.000Z2014-02-08T16:45:26.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290377?profile=original"><img class="align-left" style="padding: 5px;" src="http://storage.ning.com/topology/rest/1.0/file/get/1290377?profile=RESIZE_180x180" width="101"></a>Last week BTIG's <a href="http://www.businessinsider.com/10-corrections-are-not-that-ordinary-2014-2#ixzz2skKWW7HD" target="_blank">Dan Greenhaus</a> tried to dismiss the talk of the January effect (calm investors) stating <em>“Normal corrections” tend to be anywhere from 5-8%, which is basically what we had/are having. If that’s the case, and our underlying fundamental views have not shifted (they have not), then stepping into markets down more than 5% should prove rewarding over time. </em> Of course me, being a skeptic of MSM (and everything out there for that matter), caught the last two words "over time" and raised an eyebrow. Seriously? Over time? Most small investors won't risk more than 10% of any position. Many only $100 if possible and this prompted me to poke around a little further on this January effect *<em>thang*</em></p>
<p><a href="http://www.thestreet.com/story/12224583/1/the-january-effect-does-it-matter-in-2014.html" target="_blank">The Street</a> seems to buy the theory "<em>When the first five trading days of the new year are positive, the month of January ends positive 76% of the time. When the month of January is positive to start the year, the stock market <a style="font-weight: normal; font-size: 100%; font-style: normal; text-decoration: none; border: 0px none transparent; padding: 0px; background-color: transparent; background-image: none; display: inline;" class="itxtnewhook itxthook" href="http://www.thestreet.com/story/12224583/1/the-january-effect-does-it-matter-in-2014.html#" id="itxthook3" rel="nofollow" name="itxthook3"><span id="itxthook3w" class="itxtrst itxtrstspan itxtnowrap itxtnewhookspan" style="font-weight: normal; font-size: 100%; text-decoration: underline ! important; border-width: 0px 0px 1px; border-style: none none solid; border-color: transparent transparent #00cc00; padding: 0px 0px 1px ! important; color: #009900; background-color: transparent;"></span></a>finishes the year positive 82% of the time." </em> While <a href="http://www.ritholtz.com/blog/2014/02/is-the-january-barometer-worth-following/" target="_blank">Barry Ritholtz</a> is clearly more skeptical <em>Lots of analysts, including Ed Yardeni, note the data is statistically significant. But whether it should affect your strategy is an entirely different question. My conclusion is that it shouldn’t....."</em></p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290434?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290434?profile=RESIZE_320x320" width="300"></a>There's the nuance again "affect your strategy"<em>. </em> Of course we still want to be long in our 401k and IRA accounts Barry but come on.........we'd prefer to have some <span style="text-decoration: underline;">hedges</span> if we're in for more pain. Not just sit and wait it out. We know how well that worked out in 2001 and 2008. Big funds can afford to "wait it out" and have huge draw downs while fully hedged with Puts but us little guys...........were all but wiped out.</p>
<p>My strategy? Buy low and sell high so at this point I'm still curious about this January barometer.</p>
<p>Historically how has it performed? I don't mean since 1990...........but going way back; say to 1950. Enter the market historian, <a href="http://blog.stocktradersalmanac.com/post/SPX-January-Barometer-Results-Are-In" target="_blank">StockTradersAlmanac.</a></p>
<p>Historic work like this blows me away. (click on image to enlarge) Not only did they determine that a negative January had a 80% effective rate of forecasting full year returns, but if Dow took out the December low AND closed negative in January, the forecast jumped to an 88% accuracy rate. Now that's the sh**</p>
<p>The "why" could be any number of things. Currency changes causing funds to liquidate some holdings to meet margin calls. Fears over BRIC stability (which come and go). Fear of Fed tapering, economic data, bad retail sales (blame the weather!), spike in natural gas possibly hitting balance sheets and triggering a recession or maybe the five-year bull run simply needs a breather. As <a href="http://empowerinvestors.ning.com/profiles/articles/bull-market-shelf-life" target="_self">Art Cashin</a> pointed out, bull markets tend to have a five-year shelf life and we're dangerously close. Throw a dart and take your pick but it doesn't much matter to me.</p>
<p>I'm personally placing more weight into historical performance and 88% accuracy is pretty damn impressive if you ask me. Go ahead and back fill S&P. Test that 50day SMA and even the highs. I'll be waiting and placing more hedges, expecting another leg down. If they're right, my portfolio will be somewhat protected. If they're wrong, I'll still sleep better at night and at my age.......that's tough to come by.</p>
<p>Full disclosure: My port is heavily long with a few hedges. I am looking to protect those longs (unless stopped out on those recently added).</p></div>Bull Market Shelf Life (When E.F. Hutton Talks....)http://stockbuz.ning.com/articles/bull-market-shelf-life-when-e-f-hutton-talks2014-02-02T22:53:51.000Z2014-02-02T22:53:51.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_blank" href="http://www.youtube.com/watch?v=gX0X9i7J_JE"><img class="align-left" style="padding: 5px;" src="http://storage.ning.com/topology/rest/1.0/file/get/1290437?profile=RESIZE_320x320" width="240"></a>"<em>When E.F. Hutton talks, people listen</em>" was the mantra in the 1970's and 80's where commercials typically featured an business man at a holiday party or casual get together and when asked what his broker, E.F. Hutton said, everyone in the room froze, heads turned..........hanging on his every word. Nowadays there's no doubt in my mind that when Art Cashin, the seasoned, ice cube-marinating stock market veteran talks, Chicago traders such as myself listen. </p>
<p>Bull markets have a maximum shelf life of five years, and Wall Street may soon approach the end of this one, UBS' Art Cashin told CNBC on Friday. If the <a class="inline_quotes" data-gdsid="593933" data-inline-quote-symbol=".SPX" href="http://data.cnbc.com/quotes/.SPX" target="_blank">S&P 500</a> drops below 1,770, he added, the markets could see a wave of secondary selling.</p>
<blockquote>
<p>"It's a little bit of catch-up for 2013," he said on <a class="inline_asset" href="http://www.cnbc.com/id/15838381" data-nodeid="15838381" target="_self">"Squawk on the Street."</a> "We've gone for an awfully long time without a correction. Bull markets tend to have a maximum life of five years. We're getting awfully close to that."</p>
</blockquote>
<p>What do your tea leaves tell you? Is it time for some safety? </p>
<p>Full CNBC article <a href="http://www.cnbc.com/id/101380857#_gus" target="_blank">here</a> and Art's video <a href="http://video.cnbc.com/gallery/?video=3000241781" target="_blank">here.</a></p>
<blockquote>
<p></p>
</blockquote>
<p></p>
<p> </p></div>