There are some simple lessons from all this. The Dominique Strauss-Kahn case hammers them home.
We should never assume the crowd, or "everyone else," or the market is right or even rational. Five hundred ill-informed opinions don’t amount to a hill of beans.
We should always listen to what contrarians have to say especially when they sound most ridiculous, and especially when they are being shouted down. We should never trust any judgments reached quickly.
In reaching our own conclusions, we should fight the urge to join the crowd. We should take our time, do our own homework and make up our own minds. There is no hurry.
We should always be willing to change our minds if need be. This is the hardest thing to do. We constantly have to remind ourselves that we could be wrong.
In a unorthodox piece by the WSJ, which goes direct to discussing some of the less than pleasant possible outcomes of central planning, Brett Arends asks "could Wall Street be about to crash again? This week’s bone-rattlers may be making you wonder" and says: "way too many people are way too complacent this summer. Here are 10 reasons to watch out." And without further ado…
The market is already expensive. Stocks are about 20 times cyclically-adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That’s well above average, which, historically, has been about 16. This ratio has been a powerful predictor of long-term returns. Valuation is by far the most important issue for investors. If you’re getting paid well to take risks, they may make sense. But what if you’re not?
The Fed is getting nervous. This week it warned that the economy had weakened, and it unveiled its latest weapon in the war against deflation: using the proceeds from the sale of mortgages to buy Treasury bonds. That should drive down long-term interest rates. Great news for mortgage borrowers. But hardly something one wants to hear when the Dow Jones Industrial Average is already north of 10000.
Too many people are too bullish. Active money managers are expecting the market to go higher, according to the latest survey by the National Association of Active Investment Managers. So are financial advisers, reports the weekly survey by Investors Intelligence. And that’s reason to be cautious. The time to buy is when everyone else is gloomy. The reverse may also be true.
Deflation is already here. Consumer prices have fallen for three months in a row. And, most ominously, it’s affecting wages too. The Bureau of Labor Statistics reports that, last quarter, workers earned 0.7% less in real terms per hour than they did a year ago. No wonder the Fed is worried. In deflation, wages, company revenues, and the value of your home and your investments may shrink in dollar terms. But your debts stay the same size. That makes deflation a vicious trap, especially if people owe way too much money.
People still owe way too much money. Households, corporations, states, local governments and, of course, Uncle Sam. It’s the debt, stupid. According to the Federal Reserve, total U.S.
It was almost a year ago when I said to members on Dec 30th: "AAPL just announced a deal to do Ebooks on IPhones and ITouch and that is the intermediate step towards the IPad, which should be a 2-3x size version of the IPhone that takes the place of a Kindle or a laptop or a notepad or…"
At the time AAPL was trading at a paltry $86 a share and we were BUYBUYBUYing. The context of that chat comment was AAPL had been under attack on the Steve Jobs health concerns and Jim Cramer was "fomenting" a rumor that AAPL was going to issue a warning on Q4, which I referred to as "typical pre-holiday BS…. Day before a holiday, little chance of getting a confirmation or denial from AAPL as key execs aren’t reachable." As AAPL continued to fall, we continued to buy because IT DID NOT CHANGE OUR FUNDAMENTAL OUTLOOK ON THE COMPANY. I went on to say:
Notice the timing of this article that hit the Mac Daily News at 12:09, just ahead of the rumors. This way, the hyenas who plant the rumors cause GOOG to bring up a "legitimate" news story concerning Jobs’ health to make the whole thing seem legitimate. Don’t forget MacWorld is next week and these attacks often occur ahead of AAPL events.
Here’s some real news on AAPL, IPhone browser share jumped 36% Christmas week. 57% of all mobile browser requests came from IPhones, up from 42% the week before Xmas so either a lot of people opened up IPhones under the tree or they are just so darn usesful that people who are home for the holidays use their IPhone like a computer.
If you want the real lowdown on the Cramer conspiracy, don’t take my word for it, Apple Insider got the goods on him by March 13th of this year but, by then Apple was back at $95 and on it’s way back to $170 already. As fundamental investors, you just have to know when to put your foot down! Apple Insider is a great read but here is the part you MUST know if you want to understand why we love to go against what the Crookmeister General says to his sheeple on TV. This is a great view of how the guy "who…
With Ukraine, Germany, and France all expressing their concern this morning about "conflict escalation" between pro-Russian separatists and the Ukraine military, the so-called "truce" appears to be hanging by a thread of semanticism (despite OSCE's please for respect of the cease-fire and the demarcation line). Today's triple whammy of 'escalation' appears more focused on the non-Russian side as first, France begins sending tanks into Poland; second, Ukraine shifts its tanks to the front-line; and third - and potentially most inflammatory for Putin - NATO has confirmed plans to create permanent command centers in Eas...
Just as AAPL stock hits record highs and single-handedly rescues Q4 earnings from the doldrums, it appears President Obama is bringing his own brand of 'middle-class-economics' Robin-Hood-iness to crush the 'wealth generating' machine that has served America's 1% so well for so long. As AP reports, The White House plans a six-year half a trillion dollar public works program financed with a one-time mandatory tax on profits that U.S. companies have amassed overseas. Under current law, profits only face federal tax...
Please review a collection of WWW browsing results.Date Found: Friday, 16 January 2015, 09:55:47 PM
Click for popup. Clear your browser cache if image is not showing. Comment: Volatility Is back across all asset classes. Price discovery reverting to the mean.
Date Found: Saturday, 17 January 2015, 04:18:13 PM
Click for popup. Clear your browser cache if image is not showing. Comment: US Velocity of money, historic lows. $4.8 trillion on Fed balance. None of it getting to the masses. Deflation is at the door.
Date Found: Sunday, 18 January 2015, 10:44:09 PM
Click for popup. Clear your browser cache if image is not showing. Comment: Gold teasing...
(ETFTrends.com by Todd Shriber): "Betting on insider buying is again proving to be an efficacious strategy as the Direxion All Cap Insider Sentiment Shares (NYSEArca: KNOW) has been noticeably less bad than the S&P 500 to start 2015. Add to that, investors are warming to the merits of KNOW's insider sentiment strategy." [Editor's note: KNOW tracks the Sabrient Multi-cap Insider/Analyst Quant-Weighted Index (SBRQAM)]. Read article
Suppose you had the technical ability and raw materials to print up counterfeit dollars, euros or yen that were identical to the real things. Assume you could spend them as fast as you could create them with no fear of any repercussions.
Would you prudently print up only as much fresh currency as you needed for your current lifestyle? Would you create just a bit more than that to help relatives or those in need?
It is most likely you’d have your printing press running 24 hours a day, seven days a week. Becoming the richest person in the world would confer great power upon you.
You could rationalize this action because you plan to use the money for good purposes. Imagine the warm feeling you’d get by giving every person in America one million do...
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So as I was saying yesterday (Bitcoin: The Biggest Clown Show In History?), Bitcoin has several obstacles on the path to potential success as an alternative currency. But I forgot to mention hacking and theft at Bitcoin exchanges and other technical problems. This is related to the lack of government backing and the fact that the value of Bitcoins is based entirely on confidence.
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PSW Members - well, what a year for biotechs! The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down! The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months. What could go wrong?
Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.
Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies. A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...
Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...
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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