Posts Tagged ‘randomness’

W, V, U, L or Z: What Direction Is The Economy Going?

Mark Sunshine discusses the possible shape of the eventual economic recovery – pick a letter, any letter.  Welcome Mark!

W, V, U, L or Z: What Direction Is The Economy Going?

Economic Nostradamus, predictions on economyCourtesy of Mark Sunshine at The Sunshine Report

Almost every day I am asked about the economic recovery and whether or not it is sustainable.

People ask because there is a constant barrage of economic predictions by economists that pretend that they know what will happen in the future even thought they still can’t figure out what happened in the past. Listening to economists and TV talking heads it’s clear that while everyone has an opinion, no one really knows if the recovery will take the form of a “W”, “V”, “U”, “V” or “Z” (I am not really sure what a “Z” recovery is but some really confusing economists are predicting it).

This time around almost all of the TV pundits are going be able to claim that they are the economic Nostradamus of our time because sooner or later graphs of economic growth are going to have the profile of most, if not all, of the letters of the alphabet. For the foreseeable future, economic growth is going to be volatile and somewhat random and almost every prediction will be right.

Rorschach test There is going to be a level of randomness to the growth trajectory of the economy as it inevitably grows, then grows at a slower pace, then grows at a faster pace, then shrinks a little, and then grows again. Unfortunately, given the seriousness of the economy’s problems, I think it will be a while before the U.S. is back on a sustainable high growth trajectory that is sustainable (thereby making the L crowd right as well).

So, like a Rorschach Test, for the next few years there will be something for everyone in the economic statistics.

The U.S. economy is starting to bounce back because of the positive cumulative effects of (i) an inventory rebuilding cycle (i.e., production of new inventory is rising because inventory stocks in many industries are depleted and need to be replenished), (ii) a lot of fiscal and monetary stimuli and (iii) productivity growth (one tiny, positive side effect of layoffs). The bounce from inventory restocking will be temporary and, as a result, if all other things remain constant, growth will taper off to a much slower pace late in the 4th quarter
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The importance of investment process

Vitaliy: "This article I’ve shared before and will share it again; it is by far my favorite article I’ve ever written as it really highlights what investing is about – the investment process.  It is a true story, with very few magnifications on my part.  I hope you enjoy it."

The importance of investment process

investing, gamblingCourtesy of Vitaliy Katsenelson at Contrarian Edge

“Any time you make a bet with the best of it, where the odds are in your favor, you have earned  something on that bet, whether you actually win or lose the bet. By the same token, when you make a bet with the worst of it, where the odds are not in your favor, you have lost something, whether you actually win or lose the bet.” – David Sklansky, ‘The Theory of Poker’

Over a lifetime, active investors will make hundreds, often thousands of investment decisions. Not all of those decisions will work out for the better. Some will lose and some will make us money. As humans we tend to focus on the outcome of the decision rather than on the process.

On a behavioral level, this makes sense. The outcome is binary to us – good or bad, we can observe with ease. But the process is more complex and is often hidden from us.

One of two things (sometimes a bit of both) can unite great investors: process and randomness (luck). Unfortunately, there is not much we can learn from randomness, as it has no predictive power. But the process we should study and learn from.

casinoTo be a successful investor, all you need is a successful process and the ability (or mental strength) to stick to it.  Several years ago, I was on a business trip. I had some time to kill so I went to a casino to play blackjack. Aware that the odds were stacked against me, I set a $40 limit on how much I was willing to lose in the game.

I figured a couple hours of entertainment, plus the free drinks provided by the casino, were worth it. I was never a big gambler (as I never won much). However, several days before the trip I had picked up a book on blackjack on the deep discount rack in a local bookstore. All the dos and don’ts from the book were still fresh in…
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Phil's Favorites

Is This As Good As It Gets For the Stock Market?

 

Is This As Good As It Gets For the Stock Market?

Courtesy of 

Josh and I spoke recently  about the slow grind higher, the lack of volatility, and all the recent stock market records. The very first response in the comment section was, “market overdue for a pullback.”

This seems to be the prevailing narrative and I gotta be honest, I agree. I’m just as surprised as anyone that the market keeps grinding higher.

Here are a few data points, by way of the S&am...



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Zero Hedge

Neel Kashkari Appeals To "QE Conspiracists": Show Me How The Fed Is Moving Stock Prices... So Here It Is

Courtesy of ZeroHedge View original post here.

Things are starting to get surprisingly heated at the Fed, now that not only Wall Street strategists, and traders but also Fed presidents are starting to tell the truth about how the Fed's "NOT QE", which sorry but we will call it by its real name QE 4, is pus...



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The Technical Traders

Energy Continues Basing Setup - Breakout Expected Near January 24th

Courtesy of Technical Traders

After watching Crude Oil fall from the $65
ppb level to the $58 ppb level (-10.7%) over the past few weeks, we still
believe the energy sector is setting up for another great trade for skilled
investors/traders.

We are all keenly aware that Winter is still
here and that heating oil demands may continue to push certain energy prices
higher.  Yet Winter is also a time when
people don’t travel as much and, overall, energy prices tend to weaken
throughout Winter.

Over the past 37 years, the historical monthly breakdown for Crude Oil is as follows:

December: Generally l...



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Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga

  • Citigroup lifted Caterpillar Inc. (NYSE: CAT) price target from $145 to $170. Caterpillar closed at $147.87 on Thursday.
  • UBS cut Twitter Inc (NYSE: TWTR) price target from $37 to $35. Twitter shares closed at $34.19 on Thursday.
  • Morgan Stanley boosted the price target for Yum! Brands, Inc. (NYSE: YUM) from $113 to $118. Yum! Brands closed at $102.16 on Thursday.
  • Jefferies lifted the price target on Ventas, Inc. (NYSE: ...


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Kimble Charting Solutions

Tesla About To Run Out Of Energy Here? Short-Term Peak Possible?

Courtesy of Chris Kimble

Tesla (TSLA) has been screaming higher of late, as very impressive gains have taken place.

Is Tesla about to run out of energy/take a break/experience some selling pressure? A unique price setup is in play, that bulls might want want to be aware of.

This chart applies Fibonacci to the 2016 lows and 2017 highs at each (1). The impressive rally of late has it testing its 161% extension level, based upon those price points.

At the same time, it is hitting its 161% extension level, it finds itself at the top of a 7-year rising channel, with momentum hitting the highest ...



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Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker

The new year of 2020 has gold is poised to break out higher. Why is gold going higher? Maybe the FED's economists can explain .... or not.

Maybe these could be on the list:

- FED repo hundreds of billions a day.
- ECB made up tools to keep the European banks solvent.
- A sugar high stock market with Apple Inc and Microsoft looking like Bitcoin 2017.
- The US bond market is NOT confirming a strong stock market.
- Corporate profits have flat lined for 3 years while stocks soared each year.
- Knowing an US election year needs stimulus, and a lower US dollar is a first choice.
- China deal, will have a currency element to make it easier to do business. Lower US dollar.



Gold Gann Angle ...

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Members' Corner

Tobin Smith: Foxocracy, the 2020 Election, and the Stock Market

 

For decades, Fox News has been spreading false information and hooking its audience into an angry, xenophobic and paranoid worldview. It's no mystery that Fox was instrumental in the 2016 election -- but how did it do it? How did it gain so much influence? Tobin Smith, CEO of Transformity Research, Inc. and former Fox News contributor and talk show host, explores this phenomenon and discusses Fox News’ emotionally predatory and partisan propaganda media strategies and tactics in his new book, ...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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