Posts Tagged ‘Cyclically adjusted price-earnings forecasts’

Investing With a Time Machine

Investing With a Time Machine

Courtesy of Tim at The Psy-Fi Blog

time machineAn Obvious Approach?

Always and everywhere the market timing argument resurfaces in multifarious forms. The idea is simple: sell high and buy low: what could be more obvious? Well, there’s a problem. It’s not necessarily insurmountable but it’s definitely a bit tricky.

You may need a time machine to implement the concept successfully.

Market Timing

The idea behind market timing is easy to state. Sell stocks when they’re high and buy them when they’re low. It’s the basic idea the lies behind all investment in stocks so it’s hard to see why anyone should object. The difficulty lies in the impossibility of implementing the technique accurately in the timescales generally envisaged. Which, to be precise, tends to mean any timescale you can envisage at all. Mostly we have no idea ahead of time whether any given stock has peaked or troughed. Most guesses – let’s not dignify these with the term “forecast” – turn out to be wrong.

Unfortunately the idea is seductive and apparently easy to implement, in hindsight. Looking back everything seems so obvious that the untrained human brain finds it almost impossible to believe that the future isn’t equally predictable.

Buy and Hold

A recent study from the CFA shows that markets go up twice as much as they go down. Their recommendation, if you have cash to invest, is to invest everything now: the research shows that this will maximise your returns over an investment lifetime.

However, this is a pretty unnerving suggestion: had you thrown your money into the market back in the middle of 2006 you’d be sitting on a very nasty loss. Of course, you’d have been appallingly unlucky to get your timing that wrong, but inevitably some people did and the fact that the odds were against them doing so will be no consolation. The alternative suggested by the authors is to feed your money into the markets gradually – averaging your costs. This is a form of insurance, ensuring that you don’t put all your cash in at the market top or, of course, the market bottom.

However, the research also shows that there’s a limit to the value of averaging. After eighteen months there’s no discernable benefit to spreading the timescale of your investments. The vast majority of the benefit comes


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Zero Hedge

In The Fed, We Trust?!

Courtesy of ZeroHedge View original post here.

Authored by Michael Lebowitz and Jack Scott via RealInvestmentAdvice.com,

Part one of this article can be found HERE.

President Trump recently nominated Judy Shelton to fill an open seat on the Federal Reserve Board. She was recently quoted by the Washington Post as follows:

“(I) would lower rates as fast, as efficiently, and as expeditiously...



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The Technical Traders

Market Trend Change Triggered Today

Courtesy of Technical Traders

CLICK HERE TO GET REAL TIME TRADE ALERTS!

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Phil's Favorites

How gambling built baseball - and then almost destroyed it

 

How gambling built baseball – and then almost destroyed it

A team photograph of the 1919 Chicago White Sox squad, many of whom would be implicated in throwing that year’s World Series. Heritage Auctions

Courtesy of Rebecca Edwards, Rochester Institute of Technology

Imagine if, after watching the thrilling victory of the Chicago Cubs in Game 7 of the 2016 World Series over the Cleveland Indians – a game in which the Cubs won their first championship in over a century – you learn...



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Kimble Charting Solutions

High Times Going To Return For Pot Stocks?

Courtesy of Chris Kimble

High times for pot stocks do not come to mind when looking at this 6-pack!

On average, these stocks have declined nearly 50% since recent highs.

Are pot stocks about to experience “High Times” again?

The large declines since recent highs has each of these stocks testing support at each (1).

If the pot stocks are to move higher, these key support lines need to hold.

Out of these six stocks, ABBV is reflecting relative strength to the others, as it has been moving higher off support the past 60-days.

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Insider Scoop

44 Stocks Moving In Wednesday's Mid-Day Session

Courtesy of Benzinga

Gainers
  • Viveve Medical, Inc. (NASDAQ: VIVE) shares climbed 139.1% to $9.08 after surging 16.21% on Tuesday.
  • Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN) shares climbed 69.2% to $6.18 after Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) reported the purchase of Achillion Pharmaceuticals in a $930 million deal.
  • Ideal Power Inc. (NASDAQ: IPWR) surged 55.6% to $3.50....


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Chart School

Review of Andrew CardWell RSI with Wyckoff price waves

Courtesy of Read the Ticker

RSI measures relative strength of price action of a set period versus prior set periods. It helps review the price swings or waves, the power of each price thrust into new ground, or lack of it. Price thrust like many things relies on energy, and energy is not a constant, it has a birth, a life and a death and relative strength helps us see that cycle. 

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Digital Currencies

Zuck Delays Libra Launch Date Due To Issues "Sensitive To Society"

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Facebook is taking a much more careful approach to Libra than its previous projects, CEO Mark Zuckerberg has confirmed. 

“Obviously we want to move forward at some point soon [and] not have this take many years to roll out,” he said. “But ...



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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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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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