Posts Tagged ‘crowds’

What’s the Shape of Your Recession?

What’s the Shape of Your Recession?

Courtesy of Tim at Psy-Fi Blog

Man Using Binoculars

Clueless Commentators

Over the past few years we’ve had endless economic experts opining on the nature of the recession. From initial hopes of a bouncy V shaped recovery we moved onto a sluggish U and then a very droopy looking L before a dose of government pump-primed financial Viagra re-erected the idea of the V. More pessimistic predictors – mainly those who originally plumped for a U or an L – are now hopefully suggesting that we’ll get a double-dip W or a triple-dip VW in an attempt to save their remaining credibility.

Of course, the reality is that none of them have the faintest clue because none them possibly can have the faintest clue. We are, as always, in the uncharted waters of the future. The only letter that needs apply is the X that marks the spot where we bury the commentators and their useless predictions.

Blithe Ignorance

Right Idea! Wrong Planet! with trash can

As we’ve sailed on through the treacherous shoals of economic uncertainty people have naturally looked to the world’s experts for advice. Occasional suggestions by central bankers, who actually have the real data to analyse, that they don’t have a clue what’s going to happen have resulted in shudders across world markets. Meanwhile commentators have happily carried on making essentially random predictions based on their thirty years or so experience of largely benign economic times. It’s like watching a weather forecaster from Hawaii trying to make predictions for the Mid-West: amusing, but not terribly helpful.

In fact, as economies have uncertainly recovered we’ve seen the standard reactions by experts who’ve been caught out (see You Can’t Trust The Experts With Your Investments). Many have simply ignored the fact that they were wrong and have blithely continued to make further predictions; presumably on the grounds that yesterday’s media makes tomorrow’s lining for kitty litter trays. Others have opted for the standard “I was right, but not yet” or “I was wrong, but for the right reason” responses as though getting your timing wrong about the world economy and causing people to flee into overpriced government bonds just as the biggest stockmarket rally in history kicked off is a normal sized mistake.

The highly respected John Authers of the Financial Times is…
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Overly Optimistic Consensus Plays Greater Fools’ Game Once Again

Overly Optimistic Consensus Plays Greater Fools’ Game Once Again

bigger foolCourtesy of Mish

The crowd is often right except at market turns. After the turn, the crowd tends to holds on until most previous gains vanish. In a secular bull market, such optimism works out acceptably well. In a secular bear market, rampant optimism is severely punished.

David Rosenberg is discussing the overly-optimistic consensus in a Special Report: A “V”-Shaped Recovery.

One Overvalued Market

There has been plenty of debate over whether equities are overvalued or not, and certainly we would assume that many investors know where we stand on the topic.

On an operating (“scrubbed”) basis, the trailing P/E multiple on the S&P 500 has expanded a massive 10 points from the March lows, to stand at 27.6x.

While we will not belabour the point, when all the write-downs are included, the trailing P/E on “reported” earnings just widened to its highest levels in recorded history of nearly 140x, which is three times the levels prevailing during the height of the tech bubble.

PE Expansion

It is interesting to hear market bulls talk about how distorted it is to be using trailing multiples that include ‘recession earnings’ (even though using ‘forward’ earnings means relying on consensus forecasts on the future and these are rarely, if ever, correct). It is also interesting that the last time the multiple was this high was back in March 2002, again after a huge countertrend rally that deployed ‘recession earnings’ from the 2001 downturn. If memory serves us correctly, this was right around the time that the bear market rally started to roll over and in fact, six months later, the S&P 500 was hitting new lows and 34% lower than it was when the multiple had expanded to … today’s level!

Even On A Forward Basis, The Market Is Overvalued

Bullish analysts like to dismiss the actual earnings because they are “depressed” and include too many writeoffs, which, of course, will never occur again.

The consensus is usually overly-optimistic, which is why so many analysts love to do their analysis on “forward” earnings since the market almost always looks “attractively priced” on that basis. The reality is that the forward P/E multiple is now at 16.2x after bottoming at 11.7x at the market lows. The multiple has not been this high since February 2005


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Phil's Favorites

Paper-based electronics could fold, biodegrade and be the basis for the next generation of devices

 

Paper-based electronics could fold, biodegrade and be the basis for the next generation of devices

A foldable, biodegradable battery based on paper and bacteria opens a new opportunity in electronics. Seokheun Choi/Binghamton University, CC BY-ND

Courtesy of Seokheun Choi, Binghamton University, State University of New York

It seems like every few months there’s a new cellphone, laptop or tablet that is so exciting people line up around the block to get their hands on it. While the perpetual introduction of new, ...



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Zero Hedge

One Of Australia's Biggest Banks Caught Committing Mortgage Fraud On Elderly Couple

Courtesy of ZeroHedge. View original post here.

An elderly couple in Western Australia found themselves to be victims of a mortgage fraud that ultimately cost them about $200,000 and their marriage, when a door-to-door salesman on behalf of a real estate developer pushed them toward an overpriced home purchase – and one of Australia's "big four" banks, Westpac reportedly modified the couple's disclosed income in order to get them ...



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ValueWalk

Blackstone President Jon Gray Talks About C Corp Status

By Jacob Wolinsky. Originally published at ValueWalk.

CNBC Transcript: Blackstone President Jon Gray Speaks with CNBC’s David Faber Today

WHEN: Today, Friday, September 21, 2018

WHERE: CNBC’s “Power Lunch

Image source: CNBC Video Screenshot

The following is the unofficial transcript of a FIRST ON CNBC interview with Blackstone President Jon Gray on CNBC’s “Power Lunch” (M-F 1PM – 3PM) today, Friday, September 21st. The following is a link to video of the interview on CNBC.com:

Blackstone president Jon Gray says company is open to, but still studying whether it should become a C-c...

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Members' Corner

Why obvious lies still make good propaganda

 

This is very good; it's about "firehosing", a type of propaganda, and how it works.

Why obvious lies still make good propaganda

A 2016 report described Russian propaganda as:
• high in volume
• rapid, continuous and repetitive
• having no commitment to objective reality
• lacking consistency

...

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Kimble Charting Solutions

Doc Copper breaking out after large decline, says Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Doc Copper over the past few months has been hit hard, as sellers drove it down nearly 25%.

This decline brought it to the price point (2), where four different support lines came into play, which looks like a support cluster. As the decline was taking place, momentum was hitting oversold levels.

Joe Friday Just The Facts Ma’am– This week Doc Copper is experiencing its strongest rally this year, as it breaks above steep falling resistance.

Should Doc Copper contin...



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Insider Scoop

Cantor Fitzgerald's 7 Buys For 7 Biotechs

Courtesy of Benzinga.

Cantor Fitzgerald has high hopes for patients with rare and orphan diseases. 

“We believe that biotech has entered a golden age of innovation and productivity across many therapeutic areas,” the firm said in a Friday note. Cantor expanded its portfolio with seven new neuro-innovator and platform-enabled therapeutics companies.

The ...

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Digital Currencies

Mania to Mania

 

Mania to Mania

Courtesy of 

“Russell rarely played the stock market and had little investing experience when he put around $120,000 into bitcoin in November 2017.”

This comes from a CNN money article, Bitcoin crash: This man lost his savings when cryptocurrencies plunged. From January 2017 through the peak in early 2018, Ethereum gained 16,915%.

Any time you have something go vertical, you just know that some peopl...



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Chart School

Weekly Market Recap Sep 16, 2018

Courtesy of Blain.

Slow and steady drip up all this past week in a very quiet news environment.  A gap down top open the day Tuesday (which was recovered quickly) and a gap up Thursday (which held) were the highlights!

The latest on TRADE WARS!(tm):

Tuesday, news hit that China vowed to retaliate and plans to ask the World Trade Organization next week for permission to impose sanctions on the U.S. for Washington’s noncompliance with a ruling in a dispute over U.S. dumping duties, Reuters reported. That’s part of a dispute that goes back to 2013.

“Trade wars are certainly a concern, but I don’t know that they’re a one...



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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

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

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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 ...



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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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All About Trends

Mid-Day Update

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

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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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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