Why the Countertrend Rally Can't Be Stopped
By James Kostohryz May 29, 2009 2:40 pm
Ten fundamental and technical indicators that this market will go higher. Much higher.
In this article, I'd like to update the case for what I believe will be stage II of the countertrend rally.
Fundamental Drivers
1. A series of announcements of decisive and increasingly coherent policy actions by governments and central banks around the world.
I think that there can be little doubt that this has occurred. While there are still policy measures that are yet to be announced, I believe this factor has pretty much played itself out. At this point, the risk of governments messing things up may be fairly equally balanced against any further upside from policy initiatives.
2. A dramatic turn in the economic growth dynamic.
Of all of my predictions, this has always been the most important. My proprietary statistical work has thus far proven prescient, and it's strongly indicating that we'll continue to see very strong momentum in the economic data through June and possibly July. Economists' and analysts’ numbers are still too low, and so the surprises throughout the second quarter will continue to be to the upside.
Indeed, as I've pointed out in several articles, such as in Op-Ed: Surprises Continue to Drive the Rally, many indicators aren’t just going to show turns in the second derivative, several are actually going to show positive growth! The blue-chip economists haven’t figured this out yet. This is going to be a shocker and will keep the rally going.
3. Consensus economic views are far too bearish.
This is still the case. The media is filled with pundits talking about the “certain collapse of the dollar,” “currency debasement that will inevitably lead to inflation,” and “crushing debt levels.” Most of the arguments in favor of these apocalyptic views are based on discredited ideological precepts that have become urban legends and have very little empirical evidence to support them.
I haven’t written in detail on debunking these urban legends for a reason: The market isn’t ready for it. I've virtually been lynched by readers for merely suggesting that things might not be as bad as the consensus thinks. It makes little sense to make arguments that nobody's ready to listen to.
However, in the coming weeks, as the market rises, many are going to develop doubts about the bearish consensus. Many will start to wonder whether the celebrity Cassandras really have it all figured out.
In coming weeks, I'll be writing about bearish urban legends popularized by bearish commentators and suggesting possible ways out of this crisis. Many are going to be surprised to find that behind the confident proclamations of doom, there's precious little substance to back it up.
The final stage of this rally will be characterized by a breakdown of the bearish consensus and the development of narratives throughout the financial press that would have been unthinkable just a few weeks ago.
4. Valuations are inexpensive.
In my article Your S&P Roadmap, I laid out a framework that demonstrated that equity prices had massively overshot to the downside and were extremely undervalued. Valuations had reached a point that reflected “irrational despondence,” and will only begin to enter into a “normal range when the S&P 500 crosses above 950." The midpoint of the “normal” valuation range is 1,100. My target for the countertrend rally has been for the S&P to reach between 950 and 1,100. I now believe that the 1,100 is most likely. However, under certain circumstances, I believe it is possible for the S&P 500 to reach the upper end of its normal valuation range - which would place it at 1,350.
No positions in stocks mentioned.
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2009-05-29 14:42:57
Alot of good points
and 6 months ago, I'd probably have believed you. Maybe even 4 months ago. But once the Fed and the government turned on the spigots, it was inevitable that the trend would reverse and shorts would get caught out...driving markets higher.
And while you can't dump close to $8 trillion into the market and have nothing good happen...you also have to be prepared about the potential negative consequences, too. Of which there are many.
What the government is doing WILL have negative repercussions. Certainly not in the next 6 months, but further down the line.
We are not out of the woods, and in fact we may have set a forest fire in an attempt to burn our way out. Let's hope it doesn't catch us by "surprise".
And while you can't dump close to $8 trillion into the market and have nothing good happen...you also have to be prepared about the potential negative consequences, too. Of which there are many.
What the government is doing WILL have negative repercussions. Certainly not in the next 6 months, but further down the line.
We are not out of the woods, and in fact we may have set a forest fire in an attempt to burn our way out. Let's hope it doesn't catch us by "surprise".
2009-05-29 15:04:57
Thanks for the in-depth report
Great article! The negative feedback you've been receiving reminds me of the feedback many writers got last year for stressing caution before the market decline. No matter what anyone's opinion is on the direction the market takes from here, I believe your accuracy speaks for itself. So..... until proven otherwise here's to being long (with stops of course).
2009-05-29 15:18:52
Plenty you haven't mentioned
1. Higher expected taxes for corporations and individuals.
2. Lower than expected government revenues, leading to bigger budget deficits.
3. All the numbers that are still coming in below expectations, like today's Chicago PMI.
4. Most importantly, nobody knows where foreign governments' tolerance for lending to us begins to end.
2. Lower than expected government revenues, leading to bigger budget deficits.
3. All the numbers that are still coming in below expectations, like today's Chicago PMI.
4. Most importantly, nobody knows where foreign governments' tolerance for lending to us begins to end.
2009-05-29 15:20:59
Coppock indicator
My calculation of the Coppock indicator says a major buy signal will be given end of May.
Buying when the coppock turns up and selling when the yield curve goes flat has given good returns.
It did give 2 signals after the 2000 bear, but the 1st would have worked, just needed to wait a little longer.
This indicator does not work well for the Nikkie, so some caution is needed, I think we are turning Japanese
Buying when the coppock turns up and selling when the yield curve goes flat has given good returns.
It did give 2 signals after the 2000 bear, but the 1st would have worked, just needed to wait a little longer.
This indicator does not work well for the Nikkie, so some caution is needed, I think we are turning Japanese
2009-05-29 16:26:16
Good article. Well reasoned. I think James is spot on regarding investor psychology. The retail investor will test the water slowly and if not immediately burned, will progressively re-enter the market. Money market and treasuries will not provide the growth that will lead to recovery of losses.
ECRI recently quoted A.C. Pigou as follows: A. C. Pigou writing in 1920, âThe error of optimism dies in the crisis but in dying it âgives birth to an error of pessimism. This new error is born, not an infant, but a giant; for (the) boom has necessarily been a period of strong emotional excitement, and an excited man passes from one form of excitement to another more rapidly than he passes to quiescence.'â We are now transitioning out of the error of pessimism and when done, the market will move up further.
ECRI recently quoted A.C. Pigou as follows: A. C. Pigou writing in 1920, âThe error of optimism dies in the crisis but in dying it âgives birth to an error of pessimism. This new error is born, not an infant, but a giant; for (the) boom has necessarily been a period of strong emotional excitement, and an excited man passes from one form of excitement to another more rapidly than he passes to quiescence.'â We are now transitioning out of the error of pessimism and when done, the market will move up further.
2009-05-29 16:31:08
after the fact prescience
"I've virtually been lynched by readers for merely suggesting that things might not be as bad as the consensus thinks. It makes little sense to make arguments that nobody's ready to listen to."
Real leaders call it like they see it when they see it, not cry "oo, someone didn't like me saying it, so I didn't, but that was my position all along."
Real leaders call it like they see it when they see it, not cry "oo, someone didn't like me saying it, so I didn't, but that was my position all along."
2009-05-29 16:43:11
S&P Undervalued? What are u smoking?
Dude,
On what basis do you think the S&P is undervalued? On a P/E basis, S&P trades at roughly 20 times 2009 earnings and I am being generous. You must be valuing S&P based on 2013 earnings perhaps? Nice going. Also, much of the gains in the financial sector earnings can be attributed to the suspension of mark to market. In other words, when you tweak accounting rules to make numbers look good, how can you ever value companies based on fraudulent numbers. You keep beating your chest that the S&P is undervalued without bothering to explain your rationale. You owe the readers that much. If not, you are yet another commentator just talking his book and wants the market to go higher.
On what basis do you think the S&P is undervalued? On a P/E basis, S&P trades at roughly 20 times 2009 earnings and I am being generous. You must be valuing S&P based on 2013 earnings perhaps? Nice going. Also, much of the gains in the financial sector earnings can be attributed to the suspension of mark to market. In other words, when you tweak accounting rules to make numbers look good, how can you ever value companies based on fraudulent numbers. You keep beating your chest that the S&P is undervalued without bothering to explain your rationale. You owe the readers that much. If not, you are yet another commentator just talking his book and wants the market to go higher.
2009-05-29 17:04:05
S&P Undervalued? What are u smoking?
S&P is definitely NOT undervalued, consensus forecast is for earnings to come in at $42-$45 for 2009, thats a 20x multiple (based on S&P @ 900). S&P at 1100-1200 can only be justified if earnings recover to $60-$70 in 2010, anyone think thats possible with the economy in its current state?
2009-05-29 17:12:26
You're correct on one point...S&P up to 970ish...then down we go...hedge accordingly.
You're correct on one point...S&P up to 970ish...then down we go...hedge accordingly.
2009-05-29 17:16:55
Unstoppable
Yes it is true it can't be stopped until the next one is ready to blow up..
The US can no longer exist without a bubble of some sort in the economy.
Dot com bubble, then oops....
Housing bubble, then oops....
No-earnings but better than expected lack of earnings mania, then....
I suppose it should be shortened a bit easier to hmmm say,
Fundamentals-less bubble,
Or Earn Nothing bubble
Any got a better line for this mania we are in?
Looks like going to be on a par with Tulipmania and South Sea, so we better get a good catch phrase!
The US can no longer exist without a bubble of some sort in the economy.
Dot com bubble, then oops....
Housing bubble, then oops....
No-earnings but better than expected lack of earnings mania, then....
I suppose it should be shortened a bit easier to hmmm say,
Fundamentals-less bubble,
Or Earn Nothing bubble
Any got a better line for this mania we are in?
Looks like going to be on a par with Tulipmania and South Sea, so we better get a good catch phrase!
2009-05-29 17:17:55
S&P Undervalued? What are u smoking?
I read your previous article and using normalized earnings is like creating a discounted cash flow model to justify buying overpriced commercial real este in the late 1980's. You must assume future growth rates and financing rates and that consumer spending will come back significantly. We are facing a muti year downtrend in our standard of living due to massive debt destruction. Yes, eranings will modestly increase over the next few years but enough to justify 1000 on the S&P using a "stabilized" 12 x earnings. I tend to agree with Bill Gross who, when talking his book, sees slower growth and lower growth rates for stocks. As such, I have shifted 60% of my portfolio into intermediate corporate debt, Ginnie Mae's and muni's. My stocks are concentrated in energy and natural resources.
I agree fund managers will follow the herd and push money into stocks until we see second quarter earnings. Bar market rallies have a way of reverting to a lower mean. As we all know, time will tell!
I agree fund managers will follow the herd and push money into stocks until we see second quarter earnings. Bar market rallies have a way of reverting to a lower mean. As we all know, time will tell!
2009-05-29 17:23:37
Unstoppable
I would suggest the next one be named the "Hopium Bubble". After all, somebody did ask what was being smoked.
2009-05-29 17:52:04
short term thinking, long term wording
What do Bagdad Bob and Robert Gibbs have in common?
James Kostohryz and his I Am Certain I'm Right Because Those Who Disagree Are (fill in the exaggeration or smear). Thus are known truly disregardable pundits, a.k.a. cheerleaders.
Boy, you can opine that governments' and banks' policies and actions (particularly here and in the UK) are "decisive and coherent", but wipe the lipstick off that pig before kissing it.
Kostohryz' invariable approach to "the other side of the trade" is to set up and knock down straw men, to dismiss with name-calling such as
"based on discredited ideological precepts" - WTF? Nationalization of industries, intimidation of dissent, running a deficit that eclipses productivity, disregarding bankruptcy laws, contracts and the oath to uphold the Constitution in order to spread the wealth around - in my eyes, THESE are discredited ideological precepts.
"the bearish consensus...almost universal consensus amongst analysts -- and technicians in particular...that the market âneedsâ a correction." - Oh, is that the F?
It is a demonstrably a false and insulting statement for anyone who reads MV, sees Fast Money or Bloomberg, or otherwise pays attention. See for instance the analyses over the last several weeks of Gartman, Najarians, Jeffmacke, Sedana, Depew, Tatro, Fitzpatrick, etc.
A lot of truth in this article, but always spun breathlessly to the tune of Nothing Is Going Wrong. Yeah, there might be more bounce coming. Or not. I'll play the tape that comes.
"As the VIX reverts from high levels above 40% toward normal levels below 20%, this is a clear indication of a dramatic decline in risk aversion. This will almost certainly be followed by a decline in another risk-aversion indicator: cash allocations...The massive flow of cash into equities will be a primary driver of the market."
No doubt. And I'm sure that many reached the same conclusion, given similar market and data in June 2001. Lather, rinse, repeat.
"Flow of cash into equities will drive market..." um, er, when is that NOT true?
"When this sort of stampede gets started, valuations will, to some extent, cease to matter."
LOL!! They already do not matter. And that'll be me selling it to them.
Duh. Can you spell "bubble"?
James Kostohryz and his I Am Certain I'm Right Because Those Who Disagree Are (fill in the exaggeration or smear). Thus are known truly disregardable pundits, a.k.a. cheerleaders.
Boy, you can opine that governments' and banks' policies and actions (particularly here and in the UK) are "decisive and coherent", but wipe the lipstick off that pig before kissing it.
Kostohryz' invariable approach to "the other side of the trade" is to set up and knock down straw men, to dismiss with name-calling such as
"based on discredited ideological precepts" - WTF? Nationalization of industries, intimidation of dissent, running a deficit that eclipses productivity, disregarding bankruptcy laws, contracts and the oath to uphold the Constitution in order to spread the wealth around - in my eyes, THESE are discredited ideological precepts.
"the bearish consensus...almost universal consensus amongst analysts -- and technicians in particular...that the market âneedsâ a correction." - Oh, is that the F?
It is a demonstrably a false and insulting statement for anyone who reads MV, sees Fast Money or Bloomberg, or otherwise pays attention. See for instance the analyses over the last several weeks of Gartman, Najarians, Jeffmacke, Sedana, Depew, Tatro, Fitzpatrick, etc.
A lot of truth in this article, but always spun breathlessly to the tune of Nothing Is Going Wrong. Yeah, there might be more bounce coming. Or not. I'll play the tape that comes.
"As the VIX reverts from high levels above 40% toward normal levels below 20%, this is a clear indication of a dramatic decline in risk aversion. This will almost certainly be followed by a decline in another risk-aversion indicator: cash allocations...The massive flow of cash into equities will be a primary driver of the market."
No doubt. And I'm sure that many reached the same conclusion, given similar market and data in June 2001. Lather, rinse, repeat.
"Flow of cash into equities will drive market..." um, er, when is that NOT true?
"When this sort of stampede gets started, valuations will, to some extent, cease to matter."
LOL!! They already do not matter. And that'll be me selling it to them.
Duh. Can you spell "bubble"?
2009-05-29 18:20:19
not an answer
Your response is wholly off the mark. I am aware of all your postings here and of your bullish case, and did not refer to it. To answer as if I did, given the context of the quote from your article I used to preface my remark, is straw-manning.
In order to avoid another Romper Room level response, let me recall to you the fullness of the relevant section:
"The media is filled with pundits talking about the âcertain collapse of the dollar,â âcurrency debasement that will inevitably lead to inflation,â and âcrushing debt levels.â Most of the arguments in favor of these apocalyptic views are based on discredited ideological precepts that have become urban legends and have very little empirical evidence to support them.
I haven't written in detail on debunking these urban legends for a reason: The market isn't ready for it. I've virtually been lynched by readers for merely suggesting that things might not be as bad as the consensus thinks. It makes little sense to make arguments that nobody's ready to listen to.
However, in the coming weeks, as the market rises, many are going to develop doubts about the bearish consensus. Many will start to wonder whether the celebrity Cassandras really have it all figured out.
In coming weeks, I'll be writing about bearish urban legends popularized by bearish commentators and suggesting possible ways out of this crisis. Many are going to be surprised to find that behind the confident proclamations of doom, there's precious little substance to back it up."
My beef with this screed is the same as it was with your infamous "Gold Bugs" piece. NAME what are the "discredited ideological precepts." NOW. You can explicate more fully later, as you say you will, but just as you would never name any of the so-called "Gold Experts" who were so unremittingly bullish on gold a few months back, you offer here nothing but innuendo.
In order to avoid another Romper Room level response, let me recall to you the fullness of the relevant section:
"The media is filled with pundits talking about the âcertain collapse of the dollar,â âcurrency debasement that will inevitably lead to inflation,â and âcrushing debt levels.â Most of the arguments in favor of these apocalyptic views are based on discredited ideological precepts that have become urban legends and have very little empirical evidence to support them.
I haven't written in detail on debunking these urban legends for a reason: The market isn't ready for it. I've virtually been lynched by readers for merely suggesting that things might not be as bad as the consensus thinks. It makes little sense to make arguments that nobody's ready to listen to.
However, in the coming weeks, as the market rises, many are going to develop doubts about the bearish consensus. Many will start to wonder whether the celebrity Cassandras really have it all figured out.
In coming weeks, I'll be writing about bearish urban legends popularized by bearish commentators and suggesting possible ways out of this crisis. Many are going to be surprised to find that behind the confident proclamations of doom, there's precious little substance to back it up."
My beef with this screed is the same as it was with your infamous "Gold Bugs" piece. NAME what are the "discredited ideological precepts." NOW. You can explicate more fully later, as you say you will, but just as you would never name any of the so-called "Gold Experts" who were so unremittingly bullish on gold a few months back, you offer here nothing but innuendo.
2009-05-29 18:24:39
short term thinking, long term wording
Straw Men Employed Here:
"certain collapse of the dollar,"Â "currency debasement that will inevitably lead to inflation,"Â and "crushing debt levels."
None of which have anything to do with what the market might do in the next month.
"certain collapse of the dollar,"Â "currency debasement that will inevitably lead to inflation,"Â and "crushing debt levels."
None of which have anything to do with what the market might do in the next month.
2009-05-29 18:36:56
not an answer
Sorry, you did name one thing, although it is hardly a "discredited ideological precept." Nor, in my eyes, is it "conventional wisdom" that increasing the monetary base makes high inflation inevitable. Depew has written here extensively on why high inflation will not soon, and may not ever, result from the current printing of money. Related comments by Finerman, Gross and several economists can be found on Bloomberg and CNBC.
2009-05-29 19:41:49
Unbelievable
As someone that has traded this market very successfully over the past 18 months, I find these predictions crazy. This is the first article that I've read on minyanville, and it will most likely be my last. 1,350 on the S&P, normalized earnings? Give me a break, no where in your genius analysis have you discussed the deterioration of the real economy. You need to get out from behind that desk and talk to some real people out there. Has you model factored in what higher gas prices will do to non-energy related retail sales. Gasoline is up over $1/gallon in the past few months, which more than eats up the $20/paycheck tax rebate being handed out. If this rally is so real and nobody should be worried about the dollar, then why is gold nearing $1,000/oz. The market won't turn down substantially again until late summer early fall, but it will make new lows. I really hope people don't listen to perma-bulls like you when making investment decisions.
2009-05-29 19:48:43
Unstoppable
what ever it is that's being smoked here - I want some of that stuff.
2009-05-29 19:56:47
who or what does this refer to? source?
<<3. Consensus economic views are far too bearish.
This is still the case. The media is filled with pundits talking about the âcertain collapse of the dollar,â âcurrency debasement that will inevitably lead to inflation,â and âcrushing debt levels.â Most of the arguments in favor of these apocalyptic views are based on discredited ideological precepts that have become urban legends and have very little empirical evidence to support them. >>
<<3. Consensus economic views are far too bearish.
This is still the case. The media is filled with pundits talking about the âcertain collapse of the dollar,â âcurrency debasement that will inevitably lead to inflation,â and âcrushing debt levels.â Most of the arguments in favor of these apocalyptic views are based on discredited ideological precepts that have become urban legends and have very little empirical evidence to support them. >>
2009-05-29 20:00:09
sorry, but these two paragraphs in direct succession are almost comical.
first the market doesn't need to behave conforming to technicians but then it should correct the over-correction in a symmetrical fashion. because - what exactly?
<<First, the idea that the market âneedsâ a pullback is nonsense. The market doesn't âneedâ anything. And it certainly doesn't need to behave in a fashion that technicians are comfortable with. On the contrary, the market will tend to move in ways that confound the consensus.
Second, the market didn't pause much on the way down, so why should one expect it to pause on the way up? The technical principle of symmetry would suggest that the recovery will mirror the fall. >>
first the market doesn't need to behave conforming to technicians but then it should correct the over-correction in a symmetrical fashion. because - what exactly?
<<First, the idea that the market âneedsâ a pullback is nonsense. The market doesn't âneedâ anything. And it certainly doesn't need to behave in a fashion that technicians are comfortable with. On the contrary, the market will tend to move in ways that confound the consensus.
Second, the market didn't pause much on the way down, so why should one expect it to pause on the way up? The technical principle of symmetry would suggest that the recovery will mirror the fall. >>
2009-05-29 20:35:56
Thestreet.com has Jim Cramer. Minyanville.com has James Kostohrzy.
When are you getting your own TV show, Mad Minyan? Hehe
2009-05-29 21:09:15
fundamental risks
james, i'm glad you included two reasons your thesis might fail: interest rates and predictive error, i appreciate the self-check
all in all, though i disagree with some of your features (one example: i myself tend to see almost relentless bullishness in the media), they're interesting (and probably necessary) things to take into acct...
probably the whole notion of cash flows over-whelming fundamentals, is something i feel most strongly about, that also supports your view of an inevitable powerful rally - though i imagine this is, like the downside potentials, a "risk" to the upside, and also not "guaranteed" ;-)
what i also realized, as i read your thought processes, was the striking similarity, in regard to the rally's upside psychological potential, leading to an altered view of the economy and market, to elliott wave's views
today i received both their (ew) june financial forcast, and friday's (today's) short term update -
both issues spoke of how there'd be a full accepted expectation and view that the bear market was over, and that a new bull market had begun, before this rally would be over...
that there were indicators that would warn, as you say, that "all bets are off" -
and that you, like ew, also view "risk" into 2010
and finally, that they, like you, also don't see any outcome as "guaranteed," but rather as probabilities...
i respect that in both of ya'll, even when i've seen them goof up (their probability expecation) occasionally ;-)
my own disclosure: i own both uwm & twm, alternately, simultaneously, and sometimes alone, depending on what i (think i) see
and as toddo says (paraphrasing), depending on one's time horizon, something things are just a trade...and the journey is far more important than the destination...
having you in the mix promises to make this an even more interesting ride on an already bumpy road ;-)
but really, don't you think the kind of spike we had the last few minutes (again) today, endears more distrust than hope?
all in all, though i disagree with some of your features (one example: i myself tend to see almost relentless bullishness in the media), they're interesting (and probably necessary) things to take into acct...
probably the whole notion of cash flows over-whelming fundamentals, is something i feel most strongly about, that also supports your view of an inevitable powerful rally - though i imagine this is, like the downside potentials, a "risk" to the upside, and also not "guaranteed" ;-)
what i also realized, as i read your thought processes, was the striking similarity, in regard to the rally's upside psychological potential, leading to an altered view of the economy and market, to elliott wave's views
today i received both their (ew) june financial forcast, and friday's (today's) short term update -
both issues spoke of how there'd be a full accepted expectation and view that the bear market was over, and that a new bull market had begun, before this rally would be over...
that there were indicators that would warn, as you say, that "all bets are off" -
and that you, like ew, also view "risk" into 2010
and finally, that they, like you, also don't see any outcome as "guaranteed," but rather as probabilities...
i respect that in both of ya'll, even when i've seen them goof up (their probability expecation) occasionally ;-)
my own disclosure: i own both uwm & twm, alternately, simultaneously, and sometimes alone, depending on what i (think i) see
and as toddo says (paraphrasing), depending on one's time horizon, something things are just a trade...and the journey is far more important than the destination...
having you in the mix promises to make this an even more interesting ride on an already bumpy road ;-)
but really, don't you think the kind of spike we had the last few minutes (again) today, endears more distrust than hope?
2009-05-29 21:09:33
short term thinking, long term wording
James, you continue to conflate the nonconflatable, and continue to answer charges not leveled, while avoiding the actual content of my posts. Here you conflate two unrelated calls to back up your unsubstantiated statements.
1. Long ago I challenged you to name Permabull Gold Experts because you asserted that the media was full of them. You never did, and your contention that the media is full of them remains as straw-mannish now as it did then. Indeed, your position was further self-eroded when you specifically exempted MV's own Permabull Lewis from the category.
2. This time I challenged you to name the "discredited ideological precepts" that you claim underly a bearish consensus that would cost one money over the next few weeks if blindly positioned bearishly.
"Finally, it is of no use to attempt to satisfy your demand to name the purveyors of these false views. If I were to name 3 or 10 you could rightly say that I cannot claim that 3 or 10 constitute a consensus or a majority. A scientific count is not possible."
Where did I ask (much less demand!) you to name bears who purvey "false" apocalyptic views? Reread my posts, and you will find that I asked you to name the "discredited ideological precepts," not those who purvey views based on them.
The reason I challenge your innuendo now, as over the Gold Bugs: so that an intelligent reader might rationally evaluate the case you make. Since you have finally revealed precisely to what you allude, one can rationally conclude that you are attempting to sell apples as oranges.
You are arguing that a number of factors will lead to a VERY remarkable further rally in the SPX to 1100-1350 (20-48% up from 915!!) in a matter of weeks. In an earlier reply, you specifically distance yourself from any prognostication beyond July. However, the "discredited ideological precepts" you claim underlie and thereby undermine the bear case are longterm, and are therefore unrelated to your thesis.
Finally, you offer no basis, empirical or otherwise, to justify the rather sweeping characterizations of dollar debasement or the other "precepts" as either "discredited" or "ideological."
1. Long ago I challenged you to name Permabull Gold Experts because you asserted that the media was full of them. You never did, and your contention that the media is full of them remains as straw-mannish now as it did then. Indeed, your position was further self-eroded when you specifically exempted MV's own Permabull Lewis from the category.
2. This time I challenged you to name the "discredited ideological precepts" that you claim underly a bearish consensus that would cost one money over the next few weeks if blindly positioned bearishly.
"Finally, it is of no use to attempt to satisfy your demand to name the purveyors of these false views. If I were to name 3 or 10 you could rightly say that I cannot claim that 3 or 10 constitute a consensus or a majority. A scientific count is not possible."
Where did I ask (much less demand!) you to name bears who purvey "false" apocalyptic views? Reread my posts, and you will find that I asked you to name the "discredited ideological precepts," not those who purvey views based on them.
The reason I challenge your innuendo now, as over the Gold Bugs: so that an intelligent reader might rationally evaluate the case you make. Since you have finally revealed precisely to what you allude, one can rationally conclude that you are attempting to sell apples as oranges.
You are arguing that a number of factors will lead to a VERY remarkable further rally in the SPX to 1100-1350 (20-48% up from 915!!) in a matter of weeks. In an earlier reply, you specifically distance yourself from any prognostication beyond July. However, the "discredited ideological precepts" you claim underlie and thereby undermine the bear case are longterm, and are therefore unrelated to your thesis.
Finally, you offer no basis, empirical or otherwise, to justify the rather sweeping characterizations of dollar debasement or the other "precepts" as either "discredited" or "ideological."
2009-05-29 21:12:58
suffering from hornet stings james :-)
Sure know how to stir the masses huh? I can see a lot of what you write about James, and I do agree with some of it, but it is tempered by a few things that will not necessarily fit into your analytical world view. I am one of those blue collar workers in a large manufacturing plant ( pulp n paper ). Here is what I see going on with the people I have worked with for most of my adult live. MAJOR debt aversion. Talk of owning a new this or that but no follow thru. Turning down overtime offered so they can "work to live" rather than "living to work". Selling off of assets to eliminate debt even though few are debt stressed. A reevaluation of all things material, and the belief systems behind those material possessions. And, perhaps most importantly, NO TRUST. It may have been lost for an entire generation. Believe what you will, but be cautious brother.
I believe some of your optimism is well founded, but I see it being worked out by TIME not PRICE. I believe the world is going thru a major shift in perspective that basically makes a lot of the analytical tools you use, sound but baseless. Perhaps I am wrong, and I know you will beleive that I am, but I just don't see it.
I believe some of your optimism is well founded, but I see it being worked out by TIME not PRICE. I believe the world is going thru a major shift in perspective that basically makes a lot of the analytical tools you use, sound but baseless. Perhaps I am wrong, and I know you will beleive that I am, but I just don't see it.
2009-05-29 21:19:54
justification for characterization
Actually, that last sentence is premature and hereby retracted. You will justify (or not) those sweeping characterizations in the future post(s) wherein the urban legends are demythified.
2009-05-29 22:10:40
Because few are on board
and it (they) can.
Justification doesn't matter, this is political/market machination that is just more of the same for capitalism. Let me ask this seemingly irrelevant question of Coach K. Will sustainable jobs with viable compensation be generated in America (the nucleus of capitalism) as part of this market and earnings recovery?
When it is not...will it be war or the flu that changed the outcome?
Justification doesn't matter, this is political/market machination that is just more of the same for capitalism. Let me ask this seemingly irrelevant question of Coach K. Will sustainable jobs with viable compensation be generated in America (the nucleus of capitalism) as part of this market and earnings recovery?
When it is not...will it be war or the flu that changed the outcome?
2009-05-29 23:51:58
Behind the eight ball James?
"I think unemployment will continue to rise for quite some time. In addition, wages should stagnate.
Are not wages dropping now and have been in our recent past? Regionally (Midwest) we have seen an across the board voluntary wage decrease anywhere from 3 to 10%. With this comes increased foreclosure rates, lower retail sales which ties into lower production (couple that with the never ending printing of our currency and the issue is enhanced) and imports.So, why would the market not react? I agree with a prior post that foresees new lows in the first or second quarter of 2010,
Either chalk this up to the bears or naivete, but I am hedging against the dollar.
Pardon or excuse my brevity here, i do not want to forestall a nice exchange ideas....
Are not wages dropping now and have been in our recent past? Regionally (Midwest) we have seen an across the board voluntary wage decrease anywhere from 3 to 10%. With this comes increased foreclosure rates, lower retail sales which ties into lower production (couple that with the never ending printing of our currency and the issue is enhanced) and imports.So, why would the market not react? I agree with a prior post that foresees new lows in the first or second quarter of 2010,
Either chalk this up to the bears or naivete, but I am hedging against the dollar.
Pardon or excuse my brevity here, i do not want to forestall a nice exchange ideas....
2009-05-29 23:57:13
Because few are on board
Thanks Mr. K for the timely response as well as your views.
Would you agree that the economic data is skewed in
1. all sorts of ways and 2.the improvement is as a result of global stimulus
and in many instances the public taking on private debt?
How long can Mr. Market neglect that the improvement is in the areas of or correlated to massive capital injections? Is there not a cost here or is that an unrelated time frame?
With the American consumer and their home formerly being the borrower of last resort for the sake of market driven consumption and your job and wage assumption being what it is, to continue to sprout green-shoots in a wilting summer makes for agreement...delta is exactly the key.
Would you agree that the economic data is skewed in
1. all sorts of ways and 2.the improvement is as a result of global stimulus
and in many instances the public taking on private debt?
How long can Mr. Market neglect that the improvement is in the areas of or correlated to massive capital injections? Is there not a cost here or is that an unrelated time frame?
With the American consumer and their home formerly being the borrower of last resort for the sake of market driven consumption and your job and wage assumption being what it is, to continue to sprout green-shoots in a wilting summer makes for agreement...delta is exactly the key.
2009-05-30 01:22:28
Good piece!
Wow, what a comment string. I don't trade much. I do own two businesses and all last year taught me is that the 'powers that be' have no idea what they are doing. So, I am working to squeeze what profitability I can out of my businesses and get rid of the relatively small debt I still have, Nothing that happens in the stock market or in the economy in the next few years will alter my course. I simply don't have the confidence.
Still when real estate, something I know a good deal about, kept going up and up I was astonished at how far it went and how long it stayed up. And, where I still own real estate the valuations remain quite high, historically speaking. As to PE's, weren't profit margins much higher than long term trends? Cap rates on quality real estate and PE's both seem fairly generous to me. And I've owned commercial real estate since 1966. I'm not a trader, but all the big money I've ever made has come from buying things when they were really cheap. I've watched many chaps ride markets as they went into orbit. Sometimes they got out (smat fellas) and somtimes they stuck around too long.
The bull case doesn't persuade me here, but James you make it quite convincingly. It is good to challenge your assumptions once in a while. Thank you.
Still when real estate, something I know a good deal about, kept going up and up I was astonished at how far it went and how long it stayed up. And, where I still own real estate the valuations remain quite high, historically speaking. As to PE's, weren't profit margins much higher than long term trends? Cap rates on quality real estate and PE's both seem fairly generous to me. And I've owned commercial real estate since 1966. I'm not a trader, but all the big money I've ever made has come from buying things when they were really cheap. I've watched many chaps ride markets as they went into orbit. Sometimes they got out (smat fellas) and somtimes they stuck around too long.
The bull case doesn't persuade me here, but James you make it quite convincingly. It is good to challenge your assumptions once in a while. Thank you.
2009-05-30 01:23:01
why the countertrend will end
very insightful analysis James and high degree of integrity as you acknowledge that your hypothesis is iffy and are continuously tracking indicators to validate.
My main hypothesis why the countertrend will end in Q3 is that economists will then see economic data that will confirm that the stimulus / bailout package are crutches to support a badly injured economy that will take a couple years for debt levels to either be paid down or destroyed through inflation and a change in corporate tax rates to supplant government infrastructure investment. If 70% of the economy is consumer driven and the consumer is struggling under heavy mortgage and cc debt, the stimulus will barely show up in economic data except what we're already seeinng that the freefall has stopped and the economy is getting worse at a slower rate. The stimulus will serve to bottom out the economy, a backstop of sorts, but not until the corporate tax rate is competitive with China and India and other places where massive amounts of private capital are being invested, i.e., 10%, that the US economy attract capital investment that will turn the economy up. The massive capital drain that has been ongoing for the last ten years will continue until the tax rate is competitive. The US Government can not reverse globalization, but it can be smart enough to compete globally. But I think this administration thinks that Obama's victory was a vote for big spending liberal government when it was really a vote for change of leadership. It will probably take three years for them to realize this and then they'll do something about it in time for Obama's re-election campaign. So the countertrend will end in Q3 2009 and the market will resume its downward trend although not in a freefall. It will then bottom when the Obama Administration realizes that a globally competitive corporate tax rate will go a lot further to generate infrastructure investment than will the US government and those who buy our debt.
My main hypothesis why the countertrend will end in Q3 is that economists will then see economic data that will confirm that the stimulus / bailout package are crutches to support a badly injured economy that will take a couple years for debt levels to either be paid down or destroyed through inflation and a change in corporate tax rates to supplant government infrastructure investment. If 70% of the economy is consumer driven and the consumer is struggling under heavy mortgage and cc debt, the stimulus will barely show up in economic data except what we're already seeinng that the freefall has stopped and the economy is getting worse at a slower rate. The stimulus will serve to bottom out the economy, a backstop of sorts, but not until the corporate tax rate is competitive with China and India and other places where massive amounts of private capital are being invested, i.e., 10%, that the US economy attract capital investment that will turn the economy up. The massive capital drain that has been ongoing for the last ten years will continue until the tax rate is competitive. The US Government can not reverse globalization, but it can be smart enough to compete globally. But I think this administration thinks that Obama's victory was a vote for big spending liberal government when it was really a vote for change of leadership. It will probably take three years for them to realize this and then they'll do something about it in time for Obama's re-election campaign. So the countertrend will end in Q3 2009 and the market will resume its downward trend although not in a freefall. It will then bottom when the Obama Administration realizes that a globally competitive corporate tax rate will go a lot further to generate infrastructure investment than will the US government and those who buy our debt.
2009-05-30 03:25:47
exactly what is wrong with our country
good piece on why the usa is rapidly loosing it wealth. if all we ever focus on is how wall st. is doing then we are doomed.
your thesis is based on the stock market rally being correct but the dallor decline being wrong and this relationship is going to change how.
by people getting rid of their cash and buying something else because they are missing out on the rally. which rally are they missing out on the most. the emerging market rally, the commodity rally or the usa equity rally.
you maybe right and the stock market will continue to go higher but only at the expense of the dallor which has already fallen 11% since march.
and you seem to believe that the treasury bonds will somehow miraculously stablize in value while everyone liquidates their cash holdings for some other asset that does not decline in value almost on a daily basis.
what fool left on the planet is going to buy 30 year t-bills for a country whose currency is rapidly declining at an interest rate of 3.5%. the only fool left buying that trash is bernacke and the usa taxpayer since they really have no choice.
it is ridiculous on the surface to borrow from yourself to pay yourself back in the future unless you yourself believe you will be paying yourself back with an asset that has a much lower value (like the future usd).
so if our fed chairman believes the usd is trash why would anyone want to hold onto them
that is really the reason why all assets other than the usd are rising in value.
it is not at all based on the belief things are getting better, just that we have a fool who believes the way to prosper in the future is to completely debase the currency where all our assets are priced in.
that is why so many people who are not tied to the idea that higher stock prices are good and lower prices are bad are so mad about the direction our counry is heading in.
that being said you are definitely right about one thing. those holding onto usd as though this is a safe strategy are completely wrong and are missing out on multiple speculative rallies in gld, slv, eem, dba, dbc, tbt, and that my friend is the problem not the solution
your thesis is based on the stock market rally being correct but the dallor decline being wrong and this relationship is going to change how.
by people getting rid of their cash and buying something else because they are missing out on the rally. which rally are they missing out on the most. the emerging market rally, the commodity rally or the usa equity rally.
you maybe right and the stock market will continue to go higher but only at the expense of the dallor which has already fallen 11% since march.
and you seem to believe that the treasury bonds will somehow miraculously stablize in value while everyone liquidates their cash holdings for some other asset that does not decline in value almost on a daily basis.
what fool left on the planet is going to buy 30 year t-bills for a country whose currency is rapidly declining at an interest rate of 3.5%. the only fool left buying that trash is bernacke and the usa taxpayer since they really have no choice.
it is ridiculous on the surface to borrow from yourself to pay yourself back in the future unless you yourself believe you will be paying yourself back with an asset that has a much lower value (like the future usd).
so if our fed chairman believes the usd is trash why would anyone want to hold onto them
that is really the reason why all assets other than the usd are rising in value.
it is not at all based on the belief things are getting better, just that we have a fool who believes the way to prosper in the future is to completely debase the currency where all our assets are priced in.
that is why so many people who are not tied to the idea that higher stock prices are good and lower prices are bad are so mad about the direction our counry is heading in.
that being said you are definitely right about one thing. those holding onto usd as though this is a safe strategy are completely wrong and are missing out on multiple speculative rallies in gld, slv, eem, dba, dbc, tbt, and that my friend is the problem not the solution
2009-05-30 04:14:20
Provocative? Yes. Sound Financial Advice? No
I could agree with the technical indicators, but fundamentally flawed. I will stick with the fundamentals and believe in economic turnaround when jobs are created rather than destroyed even at a slower rate. When the Fed and Treasury stops printing funny money to inflate more bad debt. When the Government no longer run financial, insurance, and auto companies. When the US becomes a manufacturing nation again rather than a consumption nation. When US companies beat analyst expectations with higher sales and operational efficiency rather than layoffs, wage reductions, and funny accounting. And when America can compete globally without the need to debase the US currency. That is when the S&P deserves to be at 1350 or higher. At this time any advice or predictions on the direction of the market is purely speculation. But the article is much appreciated.
2009-05-30 04:20:03
S&P Undervalued? What are u smoking?
James,
Your estimate of normalized earnings is based on S&P earnings for the "past" 4-7 years. Of course you end up with an undervalued S&P when you look at earnings from 03 - 08. Isn't Valuation supposed to be based on discounted "future" cash flows, which in turn is driven largely by revenue growth. In a debt-averse deflationary environment companies don't have any pricing power and consumers would rather save than spend. So, where is the
growth going to come from? The only way you are going to get growth is by manufacturing it i..e by changing accounting rules, increasing your dividend with tax payer money and other gimmicks. I also don't buy the argument that since interest rates are near zero, S&P deserves a higher multiple. The nominal rates maybe zero but real rates are much higher. Moroever the credit spreads are wide as ever and fed's credit creation has simply not jumpstarted the velocity of money - we need people and businesses to start borrowing and investing again. That's simply not happening. Most people I know just want to get out of debt or just get out of this country for opportunities elsewhere.
Your other reasons may or may not be correct. You are spot on regarding the "equity culture" that permeates this country. Everybody wants to catch the bottom. My biz school prof canceled a class in March so that he could be in front of his computer to catch the bottom. My buddies are all itching to go "all-in", This piece of anecdotal evidence validates your claim that there is cash on the sidelines. Is there enough cash to launch a stamepede? I don't know. My point is there is no way a secular bear will end when fearing of missing a rally far exceeds the fear of losing money.
Your estimate of normalized earnings is based on S&P earnings for the "past" 4-7 years. Of course you end up with an undervalued S&P when you look at earnings from 03 - 08. Isn't Valuation supposed to be based on discounted "future" cash flows, which in turn is driven largely by revenue growth. In a debt-averse deflationary environment companies don't have any pricing power and consumers would rather save than spend. So, where is the
growth going to come from? The only way you are going to get growth is by manufacturing it i..e by changing accounting rules, increasing your dividend with tax payer money and other gimmicks. I also don't buy the argument that since interest rates are near zero, S&P deserves a higher multiple. The nominal rates maybe zero but real rates are much higher. Moroever the credit spreads are wide as ever and fed's credit creation has simply not jumpstarted the velocity of money - we need people and businesses to start borrowing and investing again. That's simply not happening. Most people I know just want to get out of debt or just get out of this country for opportunities elsewhere.
Your other reasons may or may not be correct. You are spot on regarding the "equity culture" that permeates this country. Everybody wants to catch the bottom. My biz school prof canceled a class in March so that he could be in front of his computer to catch the bottom. My buddies are all itching to go "all-in", This piece of anecdotal evidence validates your claim that there is cash on the sidelines. Is there enough cash to launch a stamepede? I don't know. My point is there is no way a secular bear will end when fearing of missing a rally far exceeds the fear of losing money.
2009-05-30 10:39:14
you nailed it bottom line. I did not read your original article and have only recently read it. All that came to my mind when i was reading it was check, check, and check mate. I've been trading this market with the idea that this was a countertrend rally, but did not grasp how far a countertrend rally can go. Great call I will be looking forward to your future insights
2009-05-30 13:09:21
Good addition to MV
I was bearish before the crash, but also too bearish after the crash. Reading James K would have made you money in the last few months. He may be right, he may be wrong, but I like to hear the other side, and I welcome him to MV. Keep it up!
2009-05-30 15:48:27
But how?
Can the economy recover based purely on psychology, money left over from a bubble and fantasy finance pumped in by the government to keep spending at unsustainable levels?
Here in the UK we have government debt running at 1.5 trillion (GDP 1.3) and individual debt almost as high. It's logic to say THIS individual debt has fuelled our economy over the last few years and that the vast coffers of cash on the sidelines in institutional bank accounts is actually the debt taken on board by all these individuals. What is actually going to happen is that yes, there might well be a sustained rally in shares for the forseeable future but that over a period of time, maybe 3-5 years, we're going to realise that the level of the S&P500 and the DOW/FTSE is unsustainable because companies can't possibly make the same kind of profit they've been making through the 80's and 90's. To me you're speaking the language of a child who expects to be able to turn the TV on every morning to watch his favourite programme, until one day the power runs out. Our power has run out and we must return to sustainable levels of growth or the future will indeed be catastrophic.
Steve
Here in the UK we have government debt running at 1.5 trillion (GDP 1.3) and individual debt almost as high. It's logic to say THIS individual debt has fuelled our economy over the last few years and that the vast coffers of cash on the sidelines in institutional bank accounts is actually the debt taken on board by all these individuals. What is actually going to happen is that yes, there might well be a sustained rally in shares for the forseeable future but that over a period of time, maybe 3-5 years, we're going to realise that the level of the S&P500 and the DOW/FTSE is unsustainable because companies can't possibly make the same kind of profit they've been making through the 80's and 90's. To me you're speaking the language of a child who expects to be able to turn the TV on every morning to watch his favourite programme, until one day the power runs out. Our power has run out and we must return to sustainable levels of growth or the future will indeed be catastrophic.
Steve
2009-05-30 18:10:34
WOW!
So many comments.
I disagree with you completely, but thanks for the viewpoint.
"Most of the arguments in favor of these apocalyptic views are based on discredited ideological precepts that have become urban legends and have very little empirical evidence to support them."
No doubt there were people in Spring of 1930 saying similar things.
Long term government bond rates will go above 4%.
People without jobs don't buy things or pay bills.
Rising oil prices will soak up any tax "stimulus" effect; besides, is $40 a month going to make people run out and buy stuff or might they put it under the mattress?
A million millionaires will never have the impact that 100 million median wage earners can have.
Your everyday American is either going to be prudent and cut back and pay down debt, or speculate and spend on credit until they go bust. Put those two together and you get inflation at 5% or higher, devalued dollar, Great Depression II.
Step away from the data and formulas and go back and look at the economic and societal patterns of the great depression and the 1970's.
Cheers,
Eric
I disagree with you completely, but thanks for the viewpoint.
"Most of the arguments in favor of these apocalyptic views are based on discredited ideological precepts that have become urban legends and have very little empirical evidence to support them."
No doubt there were people in Spring of 1930 saying similar things.
Long term government bond rates will go above 4%.
People without jobs don't buy things or pay bills.
Rising oil prices will soak up any tax "stimulus" effect; besides, is $40 a month going to make people run out and buy stuff or might they put it under the mattress?
A million millionaires will never have the impact that 100 million median wage earners can have.
Your everyday American is either going to be prudent and cut back and pay down debt, or speculate and spend on credit until they go bust. Put those two together and you get inflation at 5% or higher, devalued dollar, Great Depression II.
Step away from the data and formulas and go back and look at the economic and societal patterns of the great depression and the 1970's.
Cheers,
Eric
2009-05-30 18:19:49
WOW
So many comments, you are really taking a leap here.
I disagree with you completely, but thanks for the viewpoint.
You said:
"Most of the arguments in favor of these apocalyptic views are based on discredited ideological precepts that have become urban legends and have very little empirical evidence to support them."
No doubt there were people in Spring of 1930 saying similar things.
Would those discredited ideological precepts be things like: over-printing money devalues the currency, you can't solve a debt crisis with more debt, and "fool me once shame on you, fool me twice shame on me?"
"Cash on the sidelines" is cash you can use to buy food and pay for essentials.
People without jobs don't buy things or pay bills.
Rising oil prices will soak up any tax "stimulus" effect; besides, is $40 a month really going to make a difference?
A million millionaires will never have the impact that 100 million median wage earners will.
Your everyday American is either going to be prudent and cut back and pay down debt, or speculate and spend on credit until they go bust. Put those two together and you get inflation at 5% or higher, devalued dollar, Great Depression II.
Long term government bond rates will go above 4%, it is inevitable, it is like the tide.
Step away from the data and formulae and go back and look at the economic and societal patterns of the Great Depression and the 1970's. This ain't 1974, 1981, 1987, or 2001; it is Spring 1930.
Cheers,
Eric
I disagree with you completely, but thanks for the viewpoint.
You said:
"Most of the arguments in favor of these apocalyptic views are based on discredited ideological precepts that have become urban legends and have very little empirical evidence to support them."
No doubt there were people in Spring of 1930 saying similar things.
Would those discredited ideological precepts be things like: over-printing money devalues the currency, you can't solve a debt crisis with more debt, and "fool me once shame on you, fool me twice shame on me?"
"Cash on the sidelines" is cash you can use to buy food and pay for essentials.
People without jobs don't buy things or pay bills.
Rising oil prices will soak up any tax "stimulus" effect; besides, is $40 a month really going to make a difference?
A million millionaires will never have the impact that 100 million median wage earners will.
Your everyday American is either going to be prudent and cut back and pay down debt, or speculate and spend on credit until they go bust. Put those two together and you get inflation at 5% or higher, devalued dollar, Great Depression II.
Long term government bond rates will go above 4%, it is inevitable, it is like the tide.
Step away from the data and formulae and go back and look at the economic and societal patterns of the Great Depression and the 1970's. This ain't 1974, 1981, 1987, or 2001; it is Spring 1930.
Cheers,
Eric
2009-05-31 02:47:50
whatever
what was your success in 2008? calling short term bottoms is easy in this bear market. You have not backed up your calls with previous successful calls in 2008. So why should I believe your thesis.
2009-05-31 13:47:55
bullish or bs-ish?
one point concerns me " Consensus economic views are far too bearish.
other than that, this seems like typical over optimistic propaganda!
how much did goldman sachs hedge fund manager pay you to write this rubbish?
other than that, this seems like typical over optimistic propaganda!
how much did goldman sachs hedge fund manager pay you to write this rubbish?
2009-05-31 14:10:03
a stock-picker's market
I have it on good authority (Toddo) that, although and as market averages are likely to be lackluster in the next few years, certain issues will surely prosper - in other words, we arrive at a time in the cycle that is called "a stock-picker's market". I suspect this is a consensus view; at any rate, I find it credible.
Now - as word of this analysis gets out to the civilian populace, you'd think the indexed-mutual-fund trend would dry up, in favor of those funds with impressive recent track records (and yes, I know that is a lousy way to pick a fund - we're discussing marketing here, not giving investment recommendations). So: if were a stock picker, NOW would be a good time to bolster that track record - this adds a string to your bow, James, when you need to argue the "cash on the sidelines" thesis. Toddo refers to the impulse as "performance anxiety" - I think that term is borrowed from elsewhere, and meant humorously...
postscript: On behalf of the Minyan community, sir, thanks for engaging in a dialogue with us.
Now - as word of this analysis gets out to the civilian populace, you'd think the indexed-mutual-fund trend would dry up, in favor of those funds with impressive recent track records (and yes, I know that is a lousy way to pick a fund - we're discussing marketing here, not giving investment recommendations). So: if were a stock picker, NOW would be a good time to bolster that track record - this adds a string to your bow, James, when you need to argue the "cash on the sidelines" thesis. Toddo refers to the impulse as "performance anxiety" - I think that term is borrowed from elsewhere, and meant humorously...
postscript: On behalf of the Minyan community, sir, thanks for engaging in a dialogue with us.
2009-05-31 14:13:20
Provocative? Yes. Sound Financial Advice? No
Accepting your analysis, sir, I'd be looking at investing overseas - you know, where they make stuff.
2009-05-31 14:33:29
whatever
Thanks for response James. What I ment by easy is determination of a oversold market. I keep flipping from all cash to small long in certain financials (low risk, cost average in) when market was deeply oversold and make the quick trade. Also did some shorts but not much. Of course determining how long oversold conditions remain is not easy even in quick trade ;-) Also, thanks for your track record response in 2008. Why would I listen to a person who might have lost 20%-50% last year, then all of sudden comes up with a call that could be correct. I understand track records should be taken with grains of salt, but it can speak volumes when making calls that are especially countertrend, as in your case.
2009-06-01 00:22:18
See both sides Minyans...
I do not need to tell anyone to whom that quote belongs to. Thanks James for your views. Seems there is enough stimulus to move the market, quite easily, higher. Moving the economy forward will take much longer. If your thesis plays out, it will usher in the first of several false dawns. I do not see the false dawns ending until the banks are truly healthy.
2009-06-01 11:02:51
question
James,
When you say long-term rates over 4%...do you mean the 10 or 30 yr bond rate? I assume you are talking the 10yr as it is below 4 right now and is the more important for housing rates (one epicenter for this fiasco).
Thanks,
Charles
When you say long-term rates over 4%...do you mean the 10 or 30 yr bond rate? I assume you are talking the 10yr as it is below 4 right now and is the more important for housing rates (one epicenter for this fiasco).
Thanks,
Charles
2009-06-01 16:11:21
Some of these posts remind me of why I sometimes hate the internet. Mr. Kostohryz is making a reasoned argument for a currently very unpopular opinion. That many disagree with him does not justify snide remarks or childish barbs.
I believe Toddo likes to talk about repect, especially for other Minyans who are trying to make this a better place.
I know that this ia a coarse and uncomfortable time for many, but it is important to remember that in the end, all we may have is our name and our words.
Arguing can add a great deal of value to these posts as I learn a lot from both sides in any given debate. Save the flaming for elsewhere.
I believe Toddo likes to talk about repect, especially for other Minyans who are trying to make this a better place.
I know that this ia a coarse and uncomfortable time for many, but it is important to remember that in the end, all we may have is our name and our words.
Arguing can add a great deal of value to these posts as I learn a lot from both sides in any given debate. Save the flaming for elsewhere.
2009-06-05 00:12:05
Why not ...we are seeing
unprecedented moves up and down.Has there ever been a larger "wall of worry to climb"?The only reason we are not above 4% now is where else are you gonna go? Once there is somewhere else to go 4% will seem great. The market feels like it wants to run,short term higher is the path of maximum frustration for most .Very soon,I think the fed sponsored bank pump and raise will turn into a pump and dump ,which will lead the market lower enough for the technicals to kick down the resistance.
2009-11-23 21:00:28
fitch
People all over the world know the <a title="abercrombie and fitch" href="http://www.anfworld.com/" rel="dofollow"><strong>abercrombie and fitch</strong></a>,but not everyone really knows how fashion the abercrombie is,hollister is the Legend maker. Everybody wears the hollister clothing would be the abercrombie mensand the abercrombie womens, if you want know you can search the Ruehl No.925 or abercrombie outlet in the www.google.com .
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