John Mauldin believes we have just seen a pretty amazing trading rally aka cyclical bull/bear market rally. Stocks are more than 60% above March lows. But many stocks are at “nosebleed” valuation levels and that makes him suspect this is not an opportune entry point for stock market investors.
He counsels utilities (like Bill Gross) or fixed income (like me). Gold is another market I like (though the run-up of late and the violent pullback should have you concerned).
See the video below for John’s comments in full (Hat tip Barry Ritholtz).
How long, O Lord, how long? It’s always good to remember that the stock market is not the economy. Every day I come into the office to find literally dozens of emails complaining that the market is ignoring the relentlessly bearish news flow. But that doesn’t bother me. What will bother me is when we start getting good news. Markets tend to reach exhaustion on good news, not bad. And these days it’s hard to discern between what’s merely bad and what’s actually disastrous. So, let’s take a look at what the difference between the two really is, and what it means going forward.
A recently released Societe Generale report outlined a "Worst-Case Debt Scenario," one which they believe is a very low probability. Their central scenario assumes a slow global recovery, with private debt being transferred to governments. Fair enough. We’re well on our way there.
Comparing US and Japan, albeit from SocGen’s more sanguine standpoint, there’s some reason to believe the US could feasibly accommodate a Japan-esque 200% of GDP debt burden, which would essentially double 2010′s projected 100% of GDP debt burden. The reason this might not collapse the dollar is because there are no attractive alternatives. Government debt is a global problem, and when you look at the US government debt on a comparative basis, the figures, while high, aren’t extraordinary — at least within that context. More on this momentarily.
As a brief digression, I don’t believe that all government debt is bad by definition. Some are dogmatic on that point. While I do find a framework for understanding economics through the Austrian school, the reality is that no one is going to be able to squeeze pure, free-market toothpaste back into the tube. In fact, Ron Paul’s quixotic quest to end the Federal Reserve could actually succeed… only I can promise you it would soon be replaced by a similar central bank mechanism with a different name, slightly altered agenda, and new cast members. In other words, more of the same; let’s be realistic.
Also, remember that governments worldwide have a long history of supporting failed industries only to turn around and re-privatize them at a later date. It’s the government version of the private-equity game (buy ‘em, repackage ‘em, sell…
The six-month long global stock market is losing steam, which begs the question: how low can we go?
Is this a new Bull market or just another typical Bear Market rally? Let’s look at two charts for clues.
First, read the HUGE GIANT BIG FAT DISCLAIMER below: these are the free rantings of an amateur ignoramous, etc. etc.
Before we glance at the charts, let’s ask: has anything really been fixed in the global financial markets and economy, or have all the problems just been papered over with trillions in central bank bail-outs, loan guarantees, stimulus and bogus accounting/statistical lies?
The VIX is one measure of volatility or what is sometimes called "the fear index." When confidence reigns supreme (with an emphasis on the "con") then the market players see no reason to bid up options to protect themselves from potential drops into the abyss. So when confidence is high then the VIX is low and stable:
When the wheels finally fell off the MSM/central bank fantasy that "subprime is under control" then fear sprouted wings and the VIX soared.
Judging by the VIX’s return to the low-to-mid 20s, then confidence has returned in full force and the fears of a global meltdown have vanished.
Nice, but what if nothing has really been fixed? What if market participants sniff out that everything’s just been swept under the rug? What if the $7 trillion commercial real estate market in the U.S. is about to slip into the abyss of domino defaults?
The Shanghai market’s sudden 10% drop in only two days suggests not all global players are convinced.
The MACD on the VIX is crossing at a very low level, suggesting a lengthy period of rising volatility could be upon us. The stochastic has been rising for awhile now, having made a bullish cross last month.
In sum: the VIX seems to be warning us low volatility may be giving way to higher volatility.
Here’s a chart of the Dow Jones Industrial Average:
One fairly predictable pattern in any market chart is that price tends to oscillate between the upper and lower Bollinger band. I’ve marked this trait with small blue lines.
When markets are trending strongly, they can ride the Bollinger bands up or down. But if this is once again…
In early July, Steven gave a presentation at the Value Investing Seminar in southern Italy, where he talked about the current investing climate which is stranger than fiction. Given today’s investment environment looks like a wonderland which only Lewis Carroll could have imagined prior to the most recent decade, the title of the presentation was Through the Quantum Glass, in deference to his great work Through the Looking Glass.
The surprise vote in favor of the U.K. leaving the European Union on June 23 unleashed shockwaves across the global economy, wiping trillions off the value of global assets. The referendum reshaped the British political landscape, and genera...
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
"When you let the free market take over, the little people get screwed and bankers get rich. Chile tried privatizing retirement plans and surprise, surprise, fund manager ate the profits… Pretty sure the results would be the same here..." ~ Jean-Luc
I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer. One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."
Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.
Genetic components are the DNA sequences that are 'inherited.' Some of these genes are stronger than others in their expression (e.g., eye color). Yet, some genes turn on or off due to external factors (environmental), and it is und...
Note: The material presented in this commentary is provided for
informational purposes only and is based upon information that is
considered to be reliable. However, neither PSW Investments, LLC d/b/a PhilStockWorld (PSW)
nor its affiliates
warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Site owned and operated by PSW Investments, LLC. Contact us at: 403 Central Avenue, Hawthorne, NJ 07506. Phone: (201) 743-8009. Email: firstname.lastname@example.org.