Nobody knows the future, so the best we can do is strive for an open mind and flexibility in our thinking and responses.
In 1904, the "fact-based" consensus was that rising prosperity would stretch into the future as far as imagination allowed. The prosperity was so widespread that war, it seemed, had been abolished as bad for business.
In 1904, Imperial Tsarist Russia, though suffering from the usual spot of bother now and again, was stable and enduring. In 1904, Great Britain viewed France as its continental rival.
Ten years later, advanced, peaceful, hopeful Europe stumbled into the Great War, and three years into that war Tsarist Russia fell to revolution.
In 1928, permanent prosperity was again the consensus. Two years later, that hope was reduced to ashes.
In 1930, Germany and Japan were economically troubled, as were the other great nations of the world, but neither were seen as threatening. Less than ten years later, the two nations had declared war on the world.
In 1980, fear of a sudden massive Soviet tank attack on West Germany sparked a series of "what if" books and a push for short-range nuclear-armed missiles in Germany--a U.S. plan which galvanized the Western European peace movement.
Ten years later, the Soviet Empire had crumbled into dust and abandoned gulags.
In 1975, scholars and pundits confidently declared that the "cult of Mao" which fueled China’s Culutral Revolution was so entrenched, so pervasive and so central to China’s Communist regime that would outlast Mao the mortal and thus into the next century.
Three years later, Mao was dead and the Gang of Four lost power. Ten years after 1975, when the Cult of Mao was universally viewed as a permanent feature of China, that nation was four years into the state-controlled, limited-capitalist model of engaging the world that created its present-day pre-eminence.
I think you see my point: consensus predictions of what the future holds are generally wrong. The consensus in the U.S. about the world of 2020 is that it won’t be much different from the world of 2010. All the actuarial tables of Social Security run to 2040 and beyond, as if the road ahead will be an extension of the past sixty years of American global dominance and credit-based prosperity.
IT’S like remembering the future. Our brain generates predictions of likely visual inputs so it can focus on dealing with the unexpected.
Predictable sights trigger less brain activity than unfamiliar stimuli, bolstering the view that the brain is not merely reactive, but generates predictions based on the recent past. "The brain expects to see things and really just wants to confirm it now and again," says Lars Muckli at the University of Glasgow, UK.
The finding supports the "Bayesian brain" theory, which sees the brain as making predictions about the world which it updates when new information comes in.
(NEW YORK) — Few analysts forecast this year’s remarkable stock market rebound as major indexes were plunging to 12-year lows last March. Now, with most experts predicting the pace of stocks’ gains will slow in 2010, there’s reason to believe they will be proven correct.
Stocks began the dramatic turnaround in March after Citigroup Inc. and other big banks said they were making money again, and then climbed at a fairly steady pace as signs of an economic recovery from the Great Recession became more pronounced.
Investor fears about a potential financial system collapse played a big role in the early year slump in stocks. Once it was clear that wasn’t going to happen, the Standard & Poor’s 500 index roared back 64.8 percent from its early March low, the biggest move since the Depression. For the full year, the index rose 23.5 percent, its best showing since 2003.
But sustaining that momentum in the new year likely would require a big drop in the unemployment rate and strong corporate profit gains, along with stable borrowing costs--a combination few analysts are forecasting.
"The easy money has been made already," said Bill Stone, chief investment strategist for PNC Wealth Management. "You’re not going to see another 65 percent move in the next nine months."
In the last day of the year, more signs of healing first pleased investors, then had them concerned about the economy’s ability to thrive without government help. Light trading volume exaggerated the market’s moves, sending the Dow Jones industrial average down 120.46, or 1.1 percent, to 10,428.05.
The year’s stats tell an incredible story across the financial markets:…
Stock market gains often come months before economic recoveries are confirmed. That’s because investors tend to bet on how they think business conditions will be six to nine months in the future. In downturns during the past 60 years, the S&P 500 index hit its bottom an average of four months before a recession ended and about nine months before unemployment reached its peak…
Ron Kiddoo, chief investment officer at Cozad Asset Management in Champaign, Ill., said the market can continue its rally through 2010 only if investors see that companies are again hiring, bringing the unemployment rate down for its present 10…
The rally is going to continue into 2010 according to Wall Street’s most influential bank (Please see here for Goldman’s top 10 trades of 2010). Analysts at Goldman Sachs Europe and America have released their full year 2010 estimates and they are very bullish about the upcoming year.
Goldman sees very low rates, stronger than expected earnings, strong commodity demand and investor reallocation driving prices higher. Goldman sees no rate changes through 2011 – one of the most accommodative outlooks of any bank we have covered. Stronger than expected revenue growth and continued margin expansion will result in 15%+ equity returns in the upcoming year. Although they see a continuation in the rally some moderation is expected. As we previously mentioned, their analysts expect many similarities to 2004. David Kostin wrote:
“Continued profit margin resiliency from prior aggressive cost reductions should drive strong returns in early 2010 and push the S&P 500 towards 1,300.”
Their analysts in Europe are even more bullish. They see the DJ STOXX 600 rising 20% to 300 by the end of 2010.
Goldman argues that we are transitioning into the growth phase of the recovery from the hope phase. This period is generally characterized by stabilization in economic growth and lower equity returns than the hope phase. Nonetheless, doubt remains and catalysts for higher stock prices remain.
Perhaps most important, Goldman sees a continued influx of cash to the equity markets. Thus far, investors have been risk averse and either remain in cash or have moved into bonds. Goldman sees a substantial move into equities as investors become less risk averse.
How to play it? Thematically they focus on three key themes:
Dispersion – higher growth and higher sustainable returns companies.
It doesn’t seem possible that six months have passed under the bridge of time in 2009 yet, does it? Yet they have.
Let’s take a look at the scorecard first from my 2009 Prediction Ticker, remembering of course that I have six months left!
The economy will not recover in 2009. No sign of it yet, "green shooters" be damned. I predicted that U3 would reach 8% by the end of the year, it has exceeded that wildly, and is now 9.5%. U-6 also has exceeded my predicted value already.
Deflation, not inflation, will become evident well beyond housing. Already has. CPI and PPI have come in with negative prints as has capital goods pricing.
Housing prices will continue to decline. Yep.
The Fed’s attempt to "pump liquidity" will be shown to be an abject failure. I’ll leave this one on the table for now; I believe the evidence is in, but I’m in the minority. Score this one as a "no result" as of yet.
GDP will post a 12-month negative number. 12 months aren’t up yet, but we’re working on it!
The Stock Market has not bottomed. Remember, this was made with the market around the 900 level. Major check; we declined to 666. My secondary prediction was a 50% trading range and a 5xx low; we missed that by 67 points, but I still have six months left. I’m sticking with this one.
Precious metals will not be a safe haven. Oh Jim Sinclair! Where’s my $1,600+ gold price? (Or for some, their $5,000+ gold price?) Missing, that’s where. I know, I know, its all manipulation (instead of debt deflation.) Check.
The Dollar will not collapse. Hasn’t yet.
The pound or euro will be where the FX dislocation originates if it occurs. I predicted Par for both being a possibility, not happening yet. We’ll see what the next six months bring.
The US Consumer will go from a negative savings rate to a seriously-positive one. I’m predicting 4% but it could go as high as 10%. Major double-check! We’re up close to 7% now. That’s a home run in any book.
Commercial Real Estate will effectively collapse. The REITs
After flirting with contraction for three months, the Manufacturing ISM fell into negative territory with a 48.6 reading, below the lowest Econoday estimate of 49.7. The Econoday Consensus guess was 50.5, an improvement over the October reading of 50.1 After skirting right at the breakeven 50 line since September, ISM's manufacturing index broke below in November to 48.6 which is more than 1 point below Econoday's low-end estimate for the lowest reading since June 2009. The decline includes a significant dip for new orders which are down 4.0 points to 48.9 and the lowest reading since August 2012. At 43.0, backlog orders are in a six-month streak of contraction. With orders down, ISM's sample cut back ...
Could one stock really tell you where the broad market heads? Joe Friday shared he thought so on November the 13th in the chart below. Bio-tech stock Valeant Pharma (VRX) had been slammed the prior few months and the broad market dipped along with it.
The chart below reflected the VRX was testing five support lines at one time at (3), along with oversold momentum at (1) and volume was sky high at (2), which could have reflected panic selling. All of these conditions would suggest this price point was key for the stock and maybe the broad markets.
Since the Joe Friday post, VRX is up over 28% in less than 3-weeks
It’s an unfortunate truth that, when people are worried about the future, they often put their faith in politicians to somehow make everything better.
Politicians, of course, are famous for promising panaceas for whatever is troubling voters, and they even invent new troubles to worry about, presenting themselves as the only ones who can solve these woes.
Not surprising then, that, over time, any nation may slowly deteriorate into a population of nebbishes who turn to their government to do their thinking for them and take responsibility for their futures.
Today offered a heavier than expected volume day post-holiday. The majority of this action was to the downside, but the Semiconductor Index bucked the trend. The latter index was able to push above its 200-day MA as it posted a relative advantage against the Nasdaq 100. While the Nasdaq and Nasdaq 100 suffered losses today, both will be helped by strength in the Semiconductor Index. All technicals for the Semiconductor Index are in the green, with a return of the MACD to a 'buy' trigger (above the bullish zero line - a bullish development).
The Nasdaq suffered a minor loss. It wasn't able to challenge the recent high, but it's close enough ...
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
As evidenced by the Greek, Chinese, and now Argentine 'jumps', the world remains increasingly aware of the inevitable worth of fiat currencies and fears the desperate acts of governments as the react to that reality (and is looking for alternatives).
This infographic explains the wide ranges of the Bitcoin universe, accompanied with quotes from some of its best-known business leaders.
Some weeks when I write this article there is little new to talk about from the prior week. It’s always the Fed, global QE, China growth, election chatter, oil prices, etc. And then there are times like this in which there is so much happening that I don’t know where to start. Of course, the biggest market-moving news came the weekend before last when Paris was put face-to-face with the depths of human depravity and savagery. And yet the stock market responded with its best week of the year. As a result, the key issues dominating the front page and election chatter have moved from the economy and jobs to national security and a real war (rather than police ...
1) The shares of one of my largest short positions (~3%), Exact Sciences, crashed by more than 46% yesterday. Below is the article I published this morning on SeekingAlpha, explaining why I think it’s still a great short and thus shorted more yesterday. Here’s a summary:
The U.S. Preventative Services Task Force’s Colorectal Cancer Screening Draft Recommendation issued yesterday is devastating for Exact Sciences’ only product, Cologuard.
I think this is the beginning of the end for the company.
My price target for the stock a year from now is $3, so I shorted more yes...
Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.
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.
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 email@example.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.
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.