Posted May 7, 2013 at 1:36 pm
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by Doug Robertson
Guest Commentator
“It was the best of times, it was the worst of times” – Charles Dickens, A tale of two cities (1859)
Despite being written by Dickens in 1859, these words seem to be amazingly descriptive of the markets right now.
Every day, I am being inundated with contradictory messages. Just by flipping between the financial news networks, I can be told in one breath that the markets are ready to crash down and in another, that the current run is going to keep going forever.
We’re continuing to hear the extremists claiming, ‘the world is falling, the world is falling’, yet the markets (most notably, the S&P 500) are as high as they’ve ever been.
{ EDITORS NOTE: To remind you of our view on these Chicken Little extremists, click here for an article written by M4 Research Co-Founder, Barry Goss… }
So what is it, the best of times or the worst of times?
It certainly can’t be both; and if the market is going to crash, I want to get out before it does.
Given the crazy way the markets are behaving, this is a good question to be asking.
The hard part is giving a worthwhile answer without just becoming another opinion in the crowd. Instead of telling you that I think the market is going to crash or the Dow is going to 20,000, I am going to walk you through some data and hopefully get you thinking.
As a smart self-directed investor, I am going to leave you to make up your own mind about what it means – perhaps with the help of your qualified financial advisor.
I first want to look at the basic ‘things’ that make up the price of a share of stock – or, the stock’s value. Each share of stock gives you a small piece of ownership in two things: company assets and future cash flow.
The assets are easy to understand; just add up all the value in the company, the cash, inventory, buildings, etc… and subtract out the liabilities.
The cash flow is a little trickier. This relies on people making assumptions about what will happen in the future and often determines if a stock price is over- or undervalued.
By looking at these basic pieces of information, we can get a sense of the current relative value of the market and where it has room to move, either up or down.
So, let’s take a look at the general valuation of the S&P 500 Index in two different ways. We want to see how the market measures up today against historical markets…
NOTE: The above is a preface of a guest editorial contribution shared with Wealth Vault members on Tuesday, May 7, 2013. To get the full review of this particular resource, either login, or become a member
Posted November 19, 2012 at 5:44 pm
From MarketFolly
A WSJ interview with Greg Zuckerman highlights how hedge funds such as Appaloosa Management, Lone Pine Capital, and Tilden Park Capital are faring this year.
Zuckerman of course wrote the popular book, The Greatest Trade Ever and has covered hedge funds for some time now.
Hedge Fund Returns Thus Far This Year
Appaloosa Management: Up 25% this year. Zuckerman points to manager David Tepper’s ability to pivot correctly around bull/bear calls in the market. While investors often consider him a distressed debt guy, he’s also made money on airline stocks and various equities. Apparently he’s leaning bullish currently.
Lone Pine Capital: Up around 25% this year as well. Zuckerman points to traditional stockpicking as Lone Pine’s main success with Steve Mandel owning winners such as Apple (AAPL) and Gap (GPS).
Tilden Park Capital: Up around 30% ytd due to a wager on the housing market improving by manager Josh Birnbaum.
CQS LLP: Up around 27% in their flagship fund. Michael Hintze’s firm has been playing both debt and equity.
[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Greg Zuckerman on Prominent Hedge Fund Returns This Year" ]
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Posted September 19, 2012 at 3:50 pm
by Morgan Housel
What a mess.
More than 20 million Americans are unemployed or underemployed. Millions of them have been out of work for six months or longer.
Millions are underwater on their mortgages. Student loan debt is ballooning. American’s credit was downgraded last summer. The Census Bureau now counts nearly one in six Americans as living in poverty.
You can go on and on.
But, as Oscar Wilde said, “We’re all in the gutter, but some of us are looking at the stars.” Take off the doom goggles and look around, and you might see that America still has a lot going for it.
Here are 19 examples:
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Posted September 19, 2012 at 2:55 pm
by Michael Tarsala
Citigroup stock strategist Tobias Levkovich sees the S&P 500 rising another 12 percent to reach an all-time high of 1,615next year.
He still sees “substantive challenges”for the markets, including a shrinking European economy and the looming U.S. fiscal cliff.
Yet his reasons for optimism seem to rest on five key factors:
1) The economy and earnings will expand
Levkovich sees coming improvements in capital investment, industrial production, as well as employment. That should make for modest corporate earnings growth and sustained GDP growth.
2) Washington will find a way to play nice
There will be agreements to address the current fiscal imbalances, pretty much no matter who is in the White House next year.
3) Valuations are OK
Levkovich thinks that valuations support further index gains. His assumption is for forward PEs to rise to 14.9. See a related story on forward PEs that provides a different perspective as to why forward PEs may not stay near that mutliple.
4) The U.S. will remain the relative economic leader
Levkovich sees continued U.S. energy sector expansion, leadership in mobile devices, positive demographic factors and a continued housing recovery.
5) Pessimism reigns
One of the best times to be optimistic is when everyone else is pessimistic. As Warren Buffett likes to say, be greedy when others are fearful. Levkovich sees no shortage of worries, but he also thinks that many are already priced in.
[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "5 Reasons Citi is Bullish for 2013"]
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Posted September 6, 2012 at 2:59 pm
by James Altucher
Jimmy Stuart @JStuartTweets: Facebook has an extremely uncertain future, with the outcome teetering from good extremes to bad ones. How does it end?
Answer:
Only the headlines say Facebook has an uncertain future. The headlines also said Fukishama radiation was going to hit San Francisco within days of the tsunami. The headlines also said Avian Flu was going to wipe out the world, or at least be a major epidemic? Well, where is Avian Flu?
And where are the apologies? How come the people who write the headlines never apologize when they are wrong? Thousands of people in San Francisco and the rest of Japan were scared to death because of the headlines created after the tsunami? Where are the apologies to those people? Where is Swine Flu? Where are the weapons of mass destruction?
Ok, and now people are saying a company with a billion addicted users that is also the website that people spend the most time on (compared with a billion other websites) is “teetering” on self-destruction.
I’ll tell you from my perspective. Not only do I spend a lot of time on Facebook but I advertise on Facebook and I am an advisor or investor in several social media agencies that focus on Facebook and I was also an investor in the largest social media agency.
Facebook is an enormous success and is going to continue to be. I am seeing them unveil new sources of revenue on a weekly basis. Do you notice the ad that is now there on the login page? It wasn’t there last week. Or the fact that brand pages with over 100,000 fans can now promote specific posts. That’s about a month old. Or the fact that there will be realtime bidding on Facebook ad units. That was mentioned on the conference call but I don’t think has been released yet. And then there’s mobile. Facebook is not going anywhere.
But I still see people saying “Mark Zuckerberg is not ready to be a CEO”. Are you kidding me? How many users did he build the site up to? Has anyone else ever done that in the history of the planet Earth? Let’s look at his latest achievement. The IPO. People say the IPO was a failure. Very funny.
He raised the great amount of money at the highest possible amount, with the lowest dilution, and paid a lower percentage of fees to Wall Street than any IPO before him. That’s a pretty amazing success. If you bought the IPO for a quick flip, sorry. You lost. But if you bought for the long run, you’re going to be a big winner. Even bigger if you buy now.
[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Ask James: Failure, Success, Facebook, and How to Survive Your Darkest Moments"]
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Posted August 19, 2012 at 2:02 pm
by James Quinn
The member of the banking dynasty has taken the position through RIT Capital Partners, the £1.9bn investment trust of which he is executive chairman.
The fact that the former investment banker, a senior member of the Rothschild family, has taken such a view will be seen as a further negative for the currency.
The latest omen follows news in The Daily Telegraph late last week that the government of Finland is already preparing for the euro’s break-up.
Sources close to RIT suggested that the position was not a dogmatic negative view on the euro as a currency, but rather a realistic approach on a currency that remains relatively weak.
Lord Rothschild is not alone in seeing value in shorting – or selling down – the euro. At a conference organised by business news channel CNBC in July, Mary Callahan Erdoes, head of JPMorgan Asset Management, said “shorting the euro” when asked for her single best investment idea.
[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Lord Rothschild takes £130m bet against the euro"]
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Posted July 19, 2012 at 4:19 pm
by William Sellers
It was good while it lasted, but if you’ve gotten used to not paying sales tax on your online purchases, prepare for change. After a long fight, Amazon is now moving to settle the issue once and for all.
With brick and mortar retailers losing out to online competitors and states estimating a loss of up to $11.5 billion in annual sales tax receipts, it’s not surprising to see Amazon bending, if from nothing more than simply being outnumbered.
Currently Amazon collects sales tax in six states and eight more states are working through the details now. Check out the map below to find out what to expect in your neck of the woods…
[ Source: Here Comes the Sales Tax: Reality Catches Up with Amazon.com ]
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Posted July 13, 2012 at 12:29 am
by Matthew Boesler
The latest research note from Citi’s Richard Schellbach includes the firm’s “Multi-Asset Investment Clock.”
“Our place on the investment clock sits at 8 o’clock given we are now clearly past the period of falling interest rates, yet still not overly mature into the earnings recovery,” he writes. “Even as deep concerns remain over the developed world’s medium term growth outlook, risk assets should outperform.”
According to Citi, we are in the “sweet spot” for stocks.
Print this one out and maybe swap it with the clock on your wall if you’re not already on Citi time.
[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Citi: It's Time To Buy Stocks... "]
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Posted July 11, 2012 at 12:22 am
via The Mercenary Trader
Gold stocks, meanwhile, are behaving as one might expect — like a leveraged play on gold. The prospect of further weakness in the yellow metal is keeping gold stock valuations depressed.
Many gold bugs, er, bulls are being pushed to wits’ end. To quote Blazing Saddles, they are asking: What in the Wide, Wide World a’ Sports is a Goin’ On Here?
Not finding an answer, some content themselves with assurances that the market is being manipulated… that there are nefarious forces at work keeping the gold price depressed. But this isn’t necessarily the case.
There are simpler explanations for why gold is behaving so poorly.
Here are a few quick refreshers:
- The market does not believe in the inflation / reflation case. The bedrock argument for gold is runaway inflation, in the form of monetary velocity gone wild, with nervous central banks refusing to tighten prematurely for fear of the 1937 scenario (killing a nascent recovery). There is no evidence this is happening. If anything evidence for the opposite is mounting. For ex. see “Americans squeezed by higher rents, tight credit”.
- The market does not believe in the deflationary “nuclear stimulus” case. Gold is portrayed as an asset that does well at “fire and ice” extremes. The fire is inflation; the ice is deflation. Gold can theoretically do well in “ice” conditions – deflation conditions – if emergency stimulative policies amount to rapid currency debasement, causing gold to look attractive as the one “alternative currency” not subject to the ravages of the printing press. Market is not buying this either.
- The market is putting us somewhere between “Ugly Goldilocks” and “Politically Constrained.” In April we discussed “The Return of Ugly Goldilocks” — the idea that things still look bad, but not so bad as to induce a true “fire” or “ice” scenario… and in the middle, gold gets no traction. As far as “politically constrained” goes, the idea here is that the major central banks (Europe, US, China etc) do not have carte blanche to go “nuclear”… and in fact may be forced to continue doing too little in the face of synchronized global slowdown.
The euro, too, works against gold
Euro weakness is also having a negative impact on gold, via follow-on dollar strength.
There are still legitimate questions as to whether the euro will survive. And even if the euro DOES survive, there are legitimate questions as to whether it will ever regain sufficient credibility to be considered a genuine “world reserve currency” alternative.
China’s currency, meanwhile, is just not ready for primetime.
[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Gold Looks Terrible Part III: The Mass Capitulation Thesis... "]
* For more critical thinking on gold, click here…
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Posted May 25, 2012 at 1:52 am
by Stephen Gandel
On Thursday, the FDIC said that bank profits were the highest they have been in nearly five years. U.S. banks earned $35.3 billion in the first three months of the year. That was up $6.6 billion from the same quarter a year ago, and nearly double what they earned two years ago.
Still, bottom lines have yet to return to pre-crisis levels. Banks earned $1.4 billion less than they did in the second quarter of 2007, which is about the time the sub-prime mortgage market began to bust.
What’s clear is that banks are continuing to heal from the financial crisis. The number of banks that the FDIC says are in jeopardy of failing dropped to 772. That was the fifth quarter in a row that number has dropped.
Stability of the banking sector is clearly a positive for the U.S. economy. It’s always one of the talking points you hear from strategists when they reel off the reasons they think stocks are headed higher.
But bank profits alone are really only one of those things that are not a negative. The only reason banks profits really matter to you and me and the economy is that it should lead to more lending, and in turn more jobs and higher housing prices.
[ Details / Source: Above is our hand-picked KEY excerpt(s) from this full article: "Bank profits are highest in nearly 5 years" ]
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