Courtesy of Lance Roberts via STA Wealth Management
This weekend's reading list is a smattering of articles to enjoy between your favorite beverage, grilled meat and really fattening desert. Just remember to go back to the gym on Monday.
1) Grantham: Stocks Will Continue Upward Until The Election by Justin Kermond via Advisor Perspectives
"Jeremy Grantham says equity valuations are heading toward the "two-sigma" level that is the requisite threshold for a true bubble. At some point – which is not imminent – he said a "trigger" will precipitate the reversion back to mean levels. The market will continue to deliver positive returns until the next election, according to Grantham.
Grantham cited two major causes for the looming bubble: post-Bernanke U.S. Federal Reserve policy and a "stock-option culture" that has both elevated corporate margins and stifled normal levels of capital expenditure investment required to grow the economy."
Read Also: The Last Crisis May Cause The Next One by Robert Samuelson via Real Clear Markets
2) Why This Chinese Bubble Is Different by John Authers via FT
"Whatever else, the incident demonstrated that China's market remains dominated by liquidity. It also showed how badly the authorities want an overextended stock market. So, to adapt an old market saw, perhaps everyone should buy A-shares on the basis of "don't fight the PBoC".
Bulls, led by GaveKal Dragonomics, say for global investors, keeping out of China is "the world's most crowded trade". Ever since metals prices turned down four years ago, suggesting slower Chinese growth, western institutions have been wary. They missed out on last year's boom, explaining their reluctance to see A-shares suddenly appear in their benchmarks."
Read Also: Putting The China Drop Into Perspective by Malcolm Scott via Bloomberg Business
Read Also: Maybe It's Not So Different by Streettalklive.com
3) Private Equity Is "Cashing Out" by Leslie Picker and Ruth David via Bloomberg
"When financier Leon Black said his Apollo Global Management LLC was exiting "everything that's not nailed down" amid rising valuations, he made headlines. Two years later, other private-equity firms are following suit — dumping stakes into the markets at a record clip.
Firms including Blackstone Group LP and TPG Capital Management have been capitalizing on record stock markets around the world to sell shares, mostly in their companies that have already gone public. Globally, buyout firms conducted 97 stock offerings in the second quarter, more than in any other three-month period, according to data compiled by Bloomberg."
Read Also: Smart Money Is Cashing Out, What About You? by Tyler Durden via ZeroHedge
4) 15 Problems With Real World Portfolios by Ben Carlson via A Wealth Of Common Sense
"Investment strategies have a tendency to look beautiful on paper and in marketing pitch books. You get to see return numbers, risk-adjusted results and pretty looking graphs that show how great things were in the past. I've yet to come across a strategy that couldn't be dressed up and made to look appealing by a skilled sales team or portfolio manager.
While there's nothing wrong with trying to present your investment process so it stands out from the crowd, investors have to remember that the markets are never quite as easy as they look on paper or with the benefit of hindsight. Here are 15 reasons portfolios are always harder in the real world than what you'll see in a marketing pitch or back-test:"
Read Also: When Market Returns Are Reliant On A Single Word by Jeff Erber via Real Clear Markets
5) The Roseanne Roseannadanna Market by Dr. John Hussman via Hussman Funds
"Much of the investment world seems to view present conditions as a "Goldilocks market" where economic growth is positive enough to avoid recession, but not fast enough to provoke the Federal Reserve to hike interest rates. Even if these views on economic growth and Federal Reserve policy are correct, it hardly follows that stock prices will advance. S&P 500 returns are only weakly correlated with year-over-year GDP growth and have near-zero correlation with year-over-year changes in earnings. Likewise, the stance of the Federal Reserve has much less power to distinguish investment outcomes than investors seem to believe, which they might realize even by remembering that the Fed was easing aggressively and persistently throughout the 2000-2002 and 2007-2009 market collapses.
In contrast, we find profound differences in market outcomes across history depending on the combined status of valuations, market internals, and broader measures of market action (which include, for example, overvalued, overbought, overbullish syndromes)."
Read Also: The Single Most Important Element To Successful Investing by Jesse Felder via The Felder Report
Have Another Slice Of Pie
6 Conditions For A Global Bond Crisis by Bill Gross via Janus Funds
A Compendium Of Tweeted Research by Meb Faber via Meb Faber Research
The Current Oil Price Slump Is Far From Over by Arthur Berman via OilPrice.com
The Whole Story Of Factors + Asset Classes by Jason Hsu via Research Affiliates
"Perhaps it's fate that today is the Fourth of July, and you will once again be fighting for our freedom… Not from tyranny, oppression, or persecution…but from annihilation. We are fighting for our right to live. To exist. And should we win the day, the Fourth of July will no longer be known as an American holiday, but as the day the world declared in one voice: 'We will not go quietly into the night!' We will not vanish without a fight! We're going to live on! We're going to survive! Today we celebrate our Independence Day!" – Pres. Thomas Whitmore, Independence Day
Have a great 4th of July holiday.
