Posts Tagged ‘asset correlations’

THE UNCORRELATED RETURN MYTH?

THE UNCORRELATED RETURN MYTH?

Courtesy of The Pragmatic Capitalist

Dragon painting

I came across this interesting paper (which can be found in its entirety below) the other day, while perusing Paul Kedrosky’s website, regarding uncorrelated returns.  The basic premise of the paper was that there is no such thing as uncorrelated assets. The author conveniently cherry picks the last 36 months to prove his point. Of course the last 36 months can easily be described as unique if not an outlier. Many have been quick to come to the conclusion that the last 36 months not only disprove the efficient market hypothesis, but also disprove the theory of uncorrelated assets.  This is highly flawed in my opinion.

Let me begin to dissect this issue from the beginning (without getting bogged down in too much mundane theory).  Anyone who is a regular reader has likely taken the time to read the “about us” section on the site.  If so, you know that my investment theories aren’t just some cookie cutter “fill the  Morningstar box” approach.  I believe the efficient market hypothesis is one of the greatest tricks ever played on the investment community.  Any market is nothing more than the summation of the decisions of its participants.   Markets, by definition are highly complex dynamic systems that are susceptible to chaos.  To assume that the summation of these decisions is somehow efficient would mean that the decision makers as a whole are efficient.   While this might be true to some extent, human beings (and even the algorithms written by humans) are guaranteed to be inefficient decision makers in a chaotic system.

The investment world is the civilized version of natural selection.  It cuts to the core of every emotion imaginable.  When Joe Schmo goes to work for 25 years straight in an attempt to create a better life for his family and suddenly sees his life’s savings going down the tube because Lehman Bros went bankrupt you can’t possibly expect him to react rationally in such an environment.  This is no different than the man whose family is attacked in the middle of the night.  Do you expect that man to react rationally when everything he lives for is suddenly in harms way? Do human beings make rational and efficient decisions in chaotic scenarios? Even more important, will 1 million humans working…
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Chart School

The Big Four Economic Indicators: April Nonfarm Employment

Courtesy of Doug Short's Advisor Perspectives.

Note: This commentary has been updated to include this morning's release of Nonfarm Employment for April.

Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:

  • Nonfarm Employment
  • Industrial Production
  • Real Retail Sales
  • ...


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ValueWalk

SpaceX completes another successful rocket launch and landing [CHARTS]

By Jacob Wolinsky. Originally published at ValueWalk.

SpaceX completes another successful rocket launch and landing [CHARTS]

On Friday, SpaceX successfully launched a Falcon 9 rocket, which delivered a television broadcast satellite into orbit and subsequently landed on an ocean platform. SpaceX was contracted by SKY Perfect JSAT Corp, a Japanese telecommunication company. Friday’s delivery was the fourth successful mission for SpaceX in 2016.

See the following visualizations which highlight relevant figures regarding SpaceX missions, as well as the company’s funding history.

SpaceX Missions by Year

SpaceX Missions by Customer

SpaceX Missions

Space Exploration Technologies Corporation’s Funding History

The post ...



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Zero Hedge

President Obama Explains What The "Fiction-Peddling" BLS Got Wrong - Live Feed

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Grab your popcorn. Having proclaimed his greatest achievement during his presidency as "saving the world from another Great Depression," we wonder what President Obama will have to say today when he discusses the economy. Following the decline in corporate profits, a manufacturing sector in recession, an auto industry which is shuttering production, minimum wage state job losses rising, and an equity market that is unable to make new highs, what cynical, skeptical, "fiction-peddlers" will he blame today's dismal jobs ...



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Kimble Charting Solutions

Crude Oil testing resistance, fear index testing support, says Joe

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Once Crude Oil started turning weak in 2014/2015, many stock markets around the world have struggled to move much higher.

Crude Oil hit support in February of this year and has rallied almost 50% off the lows and stocks have followed to the upside.

Joe Friday Just The Facts;  What Crude Oil does at resistance above, could have a large impact on stocks going forward, as Crude is testing resistance and its fear index is testing support.

...

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Phil's Favorites

EU Approves Deal With Turkey (Then All Hell Breaks Loose)

Courtesy of Mish.

On May 4, Brussels gave its approval to visa-free travel for Turks. That approval still needs to be ratified by a weighted average of ministers as well as the European parliament.

Just a few hours after the Brussels green light, Turkish president Recep Tayyip Erdogan sacked Ahmet Davutoglu, the prime minister who negotiated the deal with German chancellor Angela Merkel.

In between, Renzi and Merkel held a love fest with an extremely skeptical France on the sidelines.

Final result: Uncertain but is Merkel pulling her hair out as her scheme is set to collapse.

My, how things change in a day.

EU Set to Approve Deal With Turkey

Flashback May 4: ...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Oil Patch Bankruptcies Hit $34.3 Billion (Value Walk)

The number of oil patch bankruptcies continues to rise, and the number of companies filing for creditor protection is accelerating, that’s according to according to law firm Haynes and Boone LP’s May Oil Patch Bankruptcy Monitor.

Oil Price Drop Vanquishes Cutting-Edge Projects (Wall Street Journal)

The wo...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Digital Currencies

"I Can Only Say I'm Sorry" - Self-Professed Bitcoin "Creator" Can't Provide Proof, Backs Out

Courtesy of ZeroHedge. View original post here.

Two years after Newsweek wrote an inaugural article upon returning to print in which it "unmasked" bitcoin creator Satoshi Nakamoto and which turned out be a hoax (the author "found" Nakamoto using a white pages search), earlier this week the world was fixated on the story of another self-professed bitcoin "creator", this time Australian entrepreneuer Craig Wright, who &quo...



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Biotech

Cantor Says Relypsa's Veltassa Metrics Look Favorable

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Courtesy of Benzinga.

Relypsa Inc (NASDAQ: RLYP) shares have plummeted 51 percent year-to-date, under pressure from debt-financing related concerns. Cantor Fitzgerald’s Mara Goldstein reiterated a Buy rating for the company, while reducing the price target from $42 to $41. The analyst believes the 1Q16 results would be “a stabilizing force for the shares.”

Positive Data Points For Veltassa Launch

Veltassa metrics look favorable so far, including a low payer rejecti...



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OpTrader

Swing trading portfolio - week of May 2nd, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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Promotions

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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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