Archive for April, 2012

Measuring the Performance of the Ivy Portfolio

Courtesy of Doug Short.

I’ve been posting a monthly moving average update for the five ETFs in featured in Mebane Faber and Eric Richardson’s Ivy Portfolio since the spring of 2009, when I featured my review of the book.

In addition to the monthly updates, I made a couple of generic studies of momentum investing with moving averages.

Learning from the S&P 500 Monthly MAs
Learning from the Nikkei Monthly MAs

Investing strategies are not the primary focus of my research, and I don’t personally track the performance of the Ivy Portfolio other than to highlight the monthly signals. For ETF performance tracking and backtesting, I use ETFReplay.com, an excellent website for analyzing the performance of individual ETFs and ETF portfolios based on customized moving-average strategies. There are many free tools on ETFReplay.com. However performance backtesting of portfolios does require a paid subscription.

The image below illustrates my research on the Ivy Portfolio since 2007. If you click the image, you’ll open a HUGE version that also shows the monthly performance over the complete range as compared to SPY (SPDR S&P 500 Index). For cash, I’ve used SHY (Barclays Low Duration Treasury (2-yr).

 

 

Now, the portfolio in this illustration doesn’t *exactly* match the Ivy five. I picked 2007 as my starting point to show the performance from before the market peak in the Fall of that year. Thus I was forced to make one substitution for the Ivy ETFs — EFA (iShares MSCI EAFE Index Fund) in place of VEU (Vanguard FTSE All-World ex-US ETF), which was launched in early 2007 and didn’t produce a 10-month signal until December of that year. But the substitution presumably understates the all-Vanguard IVY portfolio: I make this assumption because VEU monthly outperformed EFA from the March 2009 monthly close to the latest sell signal (64.9% versus 54.1%).

For anyone interested in researching momentum investing with ETFs, the ETFReplay.com website is an outstanding resource, one that I’m pleased to include in my dshort Favorites.


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The Decline And Fall Of Suburbia

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As Arch Daily notes, for decades the suburbs and the American Dream went hand-in-hand but the age-of-sprawl is ending; people are leaving the suburbs and once again flocking to cities in search of a better way of life. Whether Suburbia can be saved or not, this useful infographic looks at the key factors (from Poverty to Transportation costs to Generation Y’s preferences) with a view to reinventing Suburbia as a sustainable alternative to urban life.

(h/t Greg Fielding)





China Manufacturing Continues To ‘Contract-And-Expand’ Even As April PMI Misses Expectations

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The topsy-turvy world of Chinese macroeconomic data continues to provide the Schrodinger-prone unreality that we have come to expect in this keep-’em-guessing Central Bank-driven fiat-fest we are experiencing. For 9 of the last 10 months, HSBC’s China Manufacturing PMI has been in a contraction (sub-50) regime, while China’s own Manufacturing PMI saw only 1 dip below the apocryphal 50-level (in Nov11) and has miraculously expanded for the last six months. The latest data from China (HSBC reports their final number tomorrow – as opposed to the Flash data already reported) showed the highest level of expansion for Chinese manufacturing in 13 months but missed economist’s expectations – notably the first miss since November 2011 – as the divergence between HSBC and China remains near record levels. Of course, this makes perfect sense given this evening’s 2nd worst three-month plunge in Australian Manufacturing since January 2009 (which seems to fit with the HSBC data as opposed to the ‘strength’ of the Chinese data). It seems tough for anyone to try to justify expectations of a Chinese stimulus given the country’s own indication of its performance – check back to you Ben.

HSBC Manufacturing PMI vs China’s ‘special’ version…

The first miss of expectations (lower pane) for China’s version of the Manufacturing PMI since November 2011 (when the two series started to diverge)…

And perhaps tonight’s dismal miss and plunge in Aussie PMI is a better reflection of a real-time sensitive-to-China growth indicator…

 

Charts: Bloomberg





Biderman On The Fed: “They Control The Market, We Play With Their Money”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The pastel-wearing President of TrimTabs proffers an entirely non-perfunctory prose explaining why he believes we are now due for a stock market decline. Echoing our thoughts, Charles notes that "It's the Federal Reserve that controls the market, it's their money, they're the boss, we play with their money that they print or stop printing".

Sadly true (especially for all the highly-paid economists and strategists out there), the pre-2009 drivers of equity performance (specifically new or excess savings) are no longer so; since the initial QE1 this has not been the case and providing us with a thoughtful history of equity market valuations relative to the various QE-efforts over the past few years – especially when compared to income growth and/or macro-economic data – provides just the color required to comprehend this essentially a obvious thread of reality that merely  four years ago would have been denigrated to the tin-foil-hat-wearers of the world. Real-time data says that wages and salaries are barely growing above inflation, Europe is a disaster, and the emerging nations are seeing slowing growth; without the Fed's new money where will cash come from to drive stock prices higher?

 

 

And for a little more clarity – here is our overlay of the three stimuli from The Fed so far – showing the similar paths and the April tops in each series… It seems clear now that the self-limiting process of money-creation stalls out in the same periodicity as liquidity spills out into unintended places and 'governs' any real-economy growth expectations via margin compression for corporates (raw materials/energy) or consumer-spending (energy/food)… The similarities in both size and speed of move post Fed stimulus is incredible.

Chart: Bloomberg





Bin Laden: Everyone Is Missing the Big Picture

Courtesy of ZeroHedge. View original post here.

Submitted by George Washington.

 

Obama and Romney Are Both Ignoring the Real Issue with Killing Bin Laden

The anniversary of Bin Laden's death is big news.

Obama is bragging about how he whacked Bin Laden, accusing Romney of being too soft to take out bad guys.

Romney supporters accuse Obama of "spiking the football" and inappropriately showing off to score political points.

Both sides are missing the big picture.    Specifically, we noted last year:

I’m as happy as the next red-blooded American that Bin Laden is dead.

 

For more than a decade, the government has said that Bin Laden is the world’s worst terrorist, a terrorist kingpin, the head of the worst terrorist group in the world.

 

But if we captured and interrogated him, he could have spilled a lot of beans which would help prevent future terrorist attacks.

Right?

 

But as the Atlantic reports today:

There’s one option the administration appears to have never seriously considered: taking bin Laden alive.

 

***

 

The administration had made clear to the military’s clandestine Joint Special Operations Command that it wanted bin Laden dead, according to a senior U.S. official with knowledge of the discussions. A high-ranking military officer briefed on the assault said the SEALs knew their mission was not to take him alive. ***

And Gareth Porter reported yesterday that the U.S. didn’t even consider capturing Bin Laden as part of its Afghanistan war strategy:

The absence of any military planning to catch bin Laden was a function of Bush’s national security team, led by Vice-President Dick Cheney and Secretary of Defence Donald Rumsfeld, which had firmly opposed any military operation in Afghanistan that would have had any possibility of catching bin Laden and his lieutenants.Rumsfeld and the second-ranking official at the Pentagon, Paul Wolfowitz, had dismissed CIA warnings of an al Qaeda terrorist attack against the United States in the summer of 2001, and even after 9/11 had continued to question the CIA’s conclusion that bin Laden and al Qaeda were behind the attacks.

 

Cheney and


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Yale’s Shiller: World in a ‘Late Great Depression’

The global economy is mired in a "late Great Depression" despite central bank stimulus policies, says Yale economist and author Robert Shiller.

"Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now,” Shiller tells CNBC.

The Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England have propped up their respective economies via liquidity injections known as quantitative easing, tools designed to spur recovery but dubbed by critics as printing money out of thin air.

He says the world is in a “new age of austerity.” 

Keep reading:  Yale’s Shiller: World in a 'Late Great Depression'.





As Europe’s Most Pathological Liar Departs, Questions About Europe’s Band-Aid Union Reemerge

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

We doubt many tears will be shed over the now official departure of Europe’s most embarrassing political figurehead: the head of the Euro-area finance ministers, one Jean-Claude Juncker, whose presence did more documented damage to the credibility of Europe than… well, we would say virtually anyone else, but then again since everyone else in the European pantheon is a shining example of DSM IV-level sociopathology, we are kinda stuck. But anyway: Juncker is finally gone “he’s tired of Franco-German interference in managing the region’s debt crisis.” And while the decision was known for a while, the ultimate catalyst is rather unexpected, and exposes just how frail the entire Eurozone is: “They act as if they are the only members of the group,” Juncker said today at a podium discussion in Hamburg.” If this is coming from the man who admittedly lies for a living, we can’t imagine just how bad the truth about the internal fissures within the Eurozone must be. Actually, we can.

As a reminder, from exactly one year ago:

On Friday the misinformation floated about the Greek expulsion event hit a fever pitch: while we correctly speculated that nobody would be expelled from the Eurozone, the amount of conflicting info was at an all time record, with glaring inconsistencies between various quoted authoritarians. Now, courtesy of the WSJ blog, we learn that, for the first time in history, a spokesman for Jean Claude Juncker, the PM of Luxembourg, and the head of the Eurogroup council of eurozone finance ministers, admits openly to having lied to media outlets. “In a phone call and text messages with two reporters for Dow Jones and the Wall Street Journal, Mr. Schuller repeatedly said no meeting would be held. He apparently said they same to other news outlets; at least one more moved his denials on financial newswires. Of course, there was a meeting–although not, apparently, to talk about Greece quitting the currency, which would be an extreme step to say the least. Mr. Juncker even said a few words to reporters who had hustled to Luxembourg to stake out the gathering. So why the lie? “I was told to say there was no meeting,” said Mr. Schuller, reached by telephone Monday. “We had certain necessities to consider.”


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Stiglitz – Politics Is At the Root of the Problem

Courtesy of Jesse's Cafe Americain 

Where Stiglitz refers to 'free markets' here, he means the 'efficient markets hypothesis.' That is, if markets are left entirely to their own devices they will manage themselves, honestly and efficiently.

Government and regulation are the problem, and they distort markets. Therefore if you 'free' markets from the influence of imperfect supervision, the natural efficiency of the market will prevail. 

This model of the markets assumes that most market participants, people, are naturally good and almost perfectly rational, that information disperses equally among those participants, and that fraud becomes quickly known to all and is shunned, so that no participant will be encouraged to engage in it. 

One of the things that will be reconsidered in the aftermath of this crisis, besides the perennial tendency of academic theories to act as handmaidens to thugs and gangsterism, is how to maintain a market based economy with effective regulation, so that when the unscrupulous come to tear down the protections erected by previous generations, to lure the foolish and gullible with their siren songs of progress and freedom, they might be seen for what they really are: the old familiar frauds come back to rob again.

I am a strong believer in a market based economy, where the rules encourage fairness and transparency, and decision making is broadly dispersed amongst a large number of well-informed participants.  Monopolies, corruption and fraud are inimical to such a system.  

An excess of planning and regulation, on the other hand, leads to a concentration of power in few hands, which is a form of monopoly or cartel which is the same abuse that occurs with too little transparency and regulation.  

It takes hard work and an alert public to maintain the balance of justice, and it is hardly natural.   For the affairs of all men do not naturally tend to virtue, alas, but from a minority of the lawless there is the tendency to selfish and short term thinking, and entropy from temptation, and the concentration of power in unworthy hands.  

Such is the tendency of the world as it is, not naturally good, but imperfect and fallen.  And this is not only the theme, but the force of history, the recorded actions of people,  the continuing struggle between moderation and excess, between good and evil.  Without it, history would be merely the progression of happiness and contentment, and that is not the condition of this world, but…
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The Market Calls BS on Spain’s Efforts to Cover Its Toxic Banking Debt

Courtesy of ZeroHedge. View original post here.

Submitted by Phoenix Capital Research.

In a previous article I began delving into the toxic sewer that is the Spanish banking system. At the root of the problem is the previously unregulated Spanish cajas or regional/ local banks which own as much as 56% of all Spanish mortgages.

To give you an idea of how bad things are with the cajas, consider that in February 2011 the Spanish Government implemented legislation demanding all Spanish banks have equity equal to 8% of their “risk-weighted assets.” Those banks that failed to meet this requirement had to either merge with larger banks or face partial nationalization.

The deadline for meeting this capital request was September 2011. Between February 2011 and September 2011, the number of cajas has in Spain has dropped from 45 to 17.

Put another way, over 60% of cajas could not meet the capital requirements of having equity equal to just 8% of their risk-weighted assets. As a result, 28 toxic caja balance sheets have been merged with other (likely equally troubled) banks or have been shifted onto the public’s balance sheet via partial nationalization.

The markets are well aware that this policy has only spread the toxic garbage, not fixed it. Case in point, take a look at the chart for Banco Sabadell which was merged with toxic Caja de Ahorros del Mediterráneo or CAM for short.

The merger increased Banco Sabadell’s size by 75%… and the market saw this as a good thing for a total of two weeks: shares are now down 30% from their merger levels.

Banco Popular, which acquired failing caja Banco Pastor, has experienced a similar fate, falling to a new low soon after the merger:

My point with all of this is that merging one garbage bank with another larger slightly less garbage bank doesn’t solve anything. The market knows this, which is why we see these banks continuing to collapse despite being merged.

Having addressed all of this, I firmly believe that no one, not even the Spanish Government has a clue how much toxic garbage debt exists in the Spanish banking system.

Moreover, it’s not as though the Spanish Government is heavily incentivized to come clean about the true nature of the Spanish banking system even if it did know the facts.

Case in point, the Government just admitted that…
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Spain’s Idea of Merging One Garbage Bank With Another Won’t Stop Its Banking System From Collapsing

Courtesy of ZeroHedge. View original post here.

Submitted by Phoenix Capital Research.

In a previous article I began delving into the toxic sewer that is the Spanish banking system. At the root of the problem is the previously unregulated Spanish cajas or regional/ local banks which own as much as 56% of all Spanish mortgages.

 

To give you an idea of how bad things are with the cajas, consider that in February 2011 the Spanish Government implemented legislation demanding all Spanish banks have equity equal to 8% of their “risk-weighted assets.” Those banks that failed to meet this requirement had to either merge with larger banks or face partial nationalization.

 

The deadline for meeting this capital request was September 2011. Between February 2011 and September 2011, the number of cajas has in Spain has dropped from 45 to 17.

 

Put another way, over 60% of cajas could not meet the capital requirements of having equity equal to just 8% of their risk-weighted assets. As a result, 28 toxic caja balance sheets have been merged with other (likely equally troubled) banks or have been shifted onto the public’s balance sheet via partial nationalization.

 

The markets are well aware that this policy has only spread the toxic garbage, not fixed it. Case in point, take a look at the chart for Banco Sabadell which was merged with toxic Caja de Ahorros del Mediterráneo or CAM for short.

 

 

The merger increased Banco Sabadell’s size by 75%… and the market saw this as a good thing for a total of two weeks: shares are now down 30% from their merger levels.

 

Banco Popular, which acquired failing caja Banco Pastor, has experienced a similar fate, falling to a new low soon after the merger:

 

 

My point with all of this is that merging one garbage bank with another larger slightly less garbage bank doesn’t solve anything. The market knows this, which is why we see these banks continuing to collapse despite being merged.

 

Having addressed all of this, I firmly believe that no one, not even the Spanish Government has a clue how much toxic garbage debt exists in the Spanish banking system.

 

Moreover, it’s not as though the Spanish Government is heavily incentivized to come clean about the true nature of the Spanish banking system even…
continue reading





 
 
 

Zero Hedge

Explosion Hits Russia's Largest Virus Lab Which Houses Plague, Smallpox, Ebola And Other Deadly Viruses

Courtesy of ZeroHedge View original post here.

A sudden explosion at a Siberian virus research center on Monday reportedly left the facility engulfed in flames, according to several Russian news outlets. 

Firefighters and other emergency personnel were dispatched to the "Vector Institute" located several miles from Novosibirsk - an emergency which was upgraded "from an ordinary emergency to a major incident," a...



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Phil's Favorites

The future of work will still include plenty of jobs

 

The future of work will still include plenty of jobs

Even though the future is unknown, Canada’s employment rate has risen steadily from 53 per cent in 1946 to more than 61 per cent today. (Shutterstock)

Courtesy of Wayne Simpson, University of Manitoba

There is now widespread anxiety over the future of work, often accompanied by calls for a basic income to protect those displaced by automation and other technological changes.

As a labour economis...



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Lee's Free Thinking

Is The Drone Strike a Black Swan?

Courtesy of Lee Adler

Pundits are calling yesterday’s drone strke a “black swan.” Can a drone strike on a Saudi oil facility, be a “black swan.”

According to Investopedia:

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

I seriously doubt that no one expected or could have predicted a drone strike on a Saudi oil facility.

Call Me A B...

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Insider Scoop

New Relic Cuts 2020 Sales Guidance, Announces Changes In Management

Courtesy of Benzinga

New Relic (NYSE: NEWR) has reaffirmed its second-quarter guidance and cut its sales guidance for fiscal year 2020 from $600 million-$607 million to $586 million-$593 million.

The company’s chief technology officer, Jim Gochee, and chief revenue officer, Erica Schultz, have resigned. New Relic also named board member Michael Christenson as its chief operating officer. Christenson joins from his ...



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The Technical Traders

Metals are following downside sell off prediction before the next rally

Courtesy of Technical Traders

It is absolutely amazing how the precious metals markets have followed our October 2018 predictions almost like clockwork.  Our call for an April 21~24 momentum base below $1300 followed by an extensive rally to levels above $1550 has been playing out almost like we scripted these future price moves.

Now that the $1550 level has been reached, we are expecting a rotation to levels that may reach just below the $1490~1500 level before attempting to set up another momentum base/bottom formation.  And just like clockwork, Gold has followed our predictions and price is falling as we expected. Just look at our October 2018 chart where we forecasted the price of gold...



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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Kimble Charting Solutions

Bond Yields Due For Rally After Declining More Than 1987 Stock Crash

Courtesy of Chris Kimble

U.S. Treasury Bond Yields – 2, 5, 10, 30 Year Durations

The past year has seen treasury bond yields decline sharply, yet in an orderly fashion.

This has spurred recession concerns for much of 2019. Needless to say, it’s a confusing time for investors.

In today’s chart of the day, we look at a longer-term view of the 2, 5, 10, and 30-year treasury bond yields.

Short to long term bond yields are all testing 7 to 10-year support levels as momentum is at the lowest levels in a decade.

A yield rally is likely due across the board after a recent decline that was bigger than the stock crash in 1987!

If yields fail to ral...



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Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...



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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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