It’s time again for the weekend update of our "Real" Mega-Bears, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high.
This chart is consistent with my preference for real (inflation-adjusted) analysis of long-term market behavior. The nominal all-time high in the index occurred in October 2007, but when we adjust for inflation, the "real" all-time high for the S&P 500 occurred in March 2000.
Here is a nominal version to help clarify the impact of inflation and deflation, which varied significantly across these three markets.
David Tice, chief portfolio strategist for bear markets at Federated Investors Inc, talks about the outlook for the U.S. economy. He sees a double dip coming and argues against stimulus to prevent it, saying policy makers shouldn’t act as “Good Time Charlie” preventing the deleveraging of U.S. households.
Bull markets, it is said, climb a wall of worry. Smart investors buy in early when worries about profits or inflation or wars scare away the faint of heart. Latecomers then bid up stocks as each worry becomes unfounded, until there is nothing left to worry about. Once there is only good news, the market peaks as there is no one left to buy.
Bear markets, on the other hand, fall into what I like to call the pit of doom. Forget about worries—actual bad stuff happens, until nothing bad is left to happen and the market bottoms as there is no one left to sell.
From early May through last week, the market dropped 1500 points into the pit, on the backs of gushing BP oil, riots in Europe, a 30% drop in pending home sales and the news that maybe your next door neighbor is a Russian spy. But now we’ve seen 680 Dow points added over seven straight up days before a slight decline yesterday. What the heck is going on?
Market Bears – what sub-species are you? "Outwardly concerned with the instability of economies and markets yet cannot resist the urge to speculate in gold stocks"--if that rings true, you’re a David RosenBear. Now you know. – Ilene
(read the below in an exaggerated Australian accent, like that guy who took bubble baths with great white sharks and electric eels but for some strange reason died in a freak animal incident.)
Krikey! This landscape is litrelly filled with Market Bears! But wait just a tick – there appear to be many different types of bears running about…all with different attributes and markings to help us tell them apart.
Let’s have a peak through the binoculars and see what we’ve got:
The Born-Again Bear (Ursus Scottradeum) - this creature was horribly wounded during two prior market crashes while remaining long and margined to the hilt. Has since sold entire portfolio at the bottom, subscribed to RGE Monitor and delights in telling the members of his old investment club what morons they are. Can be found roaring "bwahaha" at other investors on the Yahoo Finance message boards.
The Perma-Bear (Ursus Abelsonious) – the very definition of "creature of habit", Perma-Bears are right 2% of the time but tedious and pedantic 100% of the time. By never conceding the fact that anything could even possibly be a positive, they render themselves irrelevant, even during actual bear markets. Many, however, are brilliant and lovable, despite their unwillingness to change or concede.
The Conspiratorial Bear (Ursus Tinfoilicon) – A highly adaptive sub-species of the Perma-Bear. These animals are known for their over-perspicacity and have foreseen 11 of the last 3 market corrections due to a light social calendar and a fondness for Data-mining & Dragons. They are, however, always the most interesting bears to behold in the forest and serve the important role of keeping the other woodland creatures on their toes and alert.
The David RosenBear (Ursus Aurum Minotur) – a species that is outwardly concerned with the instability of economies and markets yet cannot resist the urge to speculate in gold stocks. He will justify his "playing" of precious metals with myriad warnings of inflation, deflation, mega-flation, Gaga-flation etc, but in reality, he is banking on the greater…
For modelling 10Y ACGB yield, usage of market rates such as the 10Y UST yield and relative front-end pricing would be preferred rather than a model based on Australian domestic economic fundamentals, believe analysts at Deutsche Bank AG (NYSE:DB) (ETR:DBK) (FRA:DB). David Plank suggests in his July 29 report titled “Australia: Modeling the 10Y ACGB” that the China/U.S. growth gap would be more a reasonable forward ind...
For a long time, the conservative mortgage lending standards in Canada, including a slew of new ones since 2008, have been touted as one of the reasons why Canada’s magnificent housing bubble, when it implodes, will not take down the financial system, unlike the US housing bubble, which terminated in the Financial Crisis.
Canada is different. Regulators are on top of it. There are strict down payment requirements. Mortgages are full-recourse, so strung-out borrowers couldn’t just mail in their ke...
American companies had a rough start to 2015 as they watched profits from overseas subsidiaries slide. Exactly how much blame should we assign to the currency markets? Two economists at the Federal Reserve have an idea.
U.S. corporate profits fell about 1.4 percent in the fourth quarter last year before plummeting 5.2 percent in the first quarter this year, partly driven by a plunge in the amount American companies' foreign affiliates earned. Of the decline in overseas subsidiary profits caused by the appreciating currency and cheaper oil imports, about a third probably came specifically from the gre...
Tech indices finished strong after they overcame the opening half hour of selling. The Fed statement was greeted favorably, although market breadth is not looking pretty. The Nasdaq still has a distance to travel to make back all of its losses, but has done well to hold up against Semiconductor weakness.
The Semiconductor Index is struggling to make inroads against past losses as the Nasdaq and Nasdaq 100 push respectable gains. I find it hard to see how this scenario can continue, ...
No one knows to what still crazier level this stock market is headed, or what kind of decline – if any ever, the bulls say – it will experience. But we all have our signs and signals that we keep our eyes on, hoping to get the drift in time.
No one wants to go through another crash like the last three (1987, 2000, and 2008 which all occurred during my investing years) with any significant amount money tied up in stocks (not to speak of bonds).
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the top-ranked sectors.
Corporate earnings reports have been mixed at best, interspersed with the occasional spectacular report -- primarily from mega-caps like Google (GOOGL), Facebook (FB), or Amazon (AMZN). Some of the bul...
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene
The replay is now available on BNN's website. For the three part series, click on the links below.
Part 1 is here (discussing the macro outlook for the markets)
Part 2 is here. (discussing our main trading strategies)
Part 3 is here. (reviewing our pick of th...
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 firstname.lastname@example.org 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.
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