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
continue reading


Tags: , , , , , , , , ,




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…
continue reading


Tags: , ,




 
 
 

Phil's Favorites

Signs of a Bottom

 

Signs of a Bottom

Courtesy of 

The S&P 500 gained 6.4% last week, the second-best post-pandemic performance for the large-cap index.  For a moment there, we were out of bear-market territory, bouncing to an 18.5% decline from all-time highs. Now, it’s a bear market again ¯\_(?)_/¯

All silliness aside, calls for a bottom appear premature.

Michael Cembalest and his team did some work on what you want to be on the lookout for, and we’re not there qui...



more from Ilene

ValueWalk

Let General Mills Command A Position In Your Defensive Portfolio

By MarketBeat. Originally published at ValueWalk.

Recession Resistant General Mills Rockets Higher Outlook

We’ve been interested in General Mills (NYSE:GIS) for some time now and we couldn’t be happier with the FQ4 2022 results. The company not only beat on the top and bottom line but issued favorable guidance in the face of mounting economic headwinds. The takeaway here is that defensive consumer staple stocks like General Mills are among the best positioned for today’s times and General Mills is among the best picks. Trading at only 18.5X it’s earnings outlook the stock is undervalued relative to its peers while paying an ...



more from ValueWalk

Zero Hedge

Why Is The VIX So Low? A Surprising Answer Emerges In The Market's Microstructure

Courtesy of ZeroHedge View original post here.

One of the most frequent questions tossed around Wall Street trading desks (and strip clubs), and which was duly covered by Bloomberg recently in "Fear Has Gone Missing in Wall Street’s Slow-Motion Bear Market", is why despite the crushing bear market and the coming recession, does the VIX refuse to rise sustainably above 30, or in other words, why is the VIX so low?

As Goldman's Rocky Fishman wrote in a recent note "Option Markets Ta...



more from Tyler

Politics

Putin's propaganda is rooted in Russian history - and that's why it works

 

Putin’s propaganda is rooted in Russian history – and that’s why it works

Courtesy of Julia Khrebtan-Hörhager, Colorado State University and Evgeniya Pyatovskaya, University of South Florida

Russia’s war against Ukraine is pressing into its fifth month – despite several rounds of failed peace talks, and Western countries’ issuing severe economic sanctions against Russia.

The war isn’t happening just on Ukrainian soil. President Vladimir Putin’s propaganda is propelling...



more from Politics

Kimble Charting Solutions

Doc Copper Pattern Suggesting Another Huge Decline Is To Be Expected?

Courtesy of Chris Kimble

Looks like the historic run higher in copper prices may be taking a breather.

While we cannot say that the LONG-term rally is over. It definitely has put in an intermediate top.

Back in March, we wrote about this possibility in our article, “Is Copper Repeating Historic Double Top Price Pattern?” There have been two other historic double tops that have taken place in the past 20 years.

Well, here we are today and the double top pattern is breaking down and Doc Copper is on the ropes. Below is an updated ...



more from Kimble C.S.

Chart School

Gold Stocks Review

Courtesy of Read the Ticker

Gold miners do well when gold is higher, and borrowing and gasoline costs are lower.

Lets start with a question: Why do governments own gold?

1) The need it to support their economy during an energy crisis. If their currency is collapsing oil producers will not take fiat for settlement, but they will accept gold.
2) While the US prints money the purchasing power of the US dollar is declining, hence gold is a hedge.

A particular market action which forces traders to move gold higher is when oil moves higher while the US dollar falls. This means the US dollar is losing purchasing power against oil, therefore gold will go higher as the demand for (1) above explodes. Some history, gold moved higher sharply in these years 2007, 2011, 2016, 2020. All ...

more from Chart School

Digital Currencies

Scams and cryptocurrency can go hand in hand - here's how they work and what to watch out for

 

Scams and cryptocurrency can go hand in hand – here’s how they work and what to watch out for

The anonymous nature of cryptocurrency transactions is ideal for con artists. seksan Mongkhonkhamsao/Moment via Getty Images

Courtesy of Yaniv Hanoch, University of Southampton and Stacey Wood, Scripps College

When one of our students told us they were going to drop out of college ...



more from Bitcoin

Biotech/COVID-19

At last, COVID-19 shots for little kids - 5 essential reads

 

At last, COVID-19 shots for little kids – 5 essential reads

Millions of U.S. children between the ages of 6 months and 4 years will soon be eligible for COVID-19 shots. FatCamera/E+ via Getty Images

Courtesy of Amanda Mascarelli, The Conversation

For many parents of kids under age 5, a safe and effective COVID-19 vaccine could not come soon enough. A full year and a half after shots first became available for adults, their wait is nearly over.

On June 17, 2022, the Food and Drug Administration ...



more from Biotech/COVID-19

Promotions

Phil: Be the House Not the Gambler at the Fintech Conference in Vegas

 

Phil gave an excellent, educational presentation called "Be the House Not the Gambler: Using Stock Options to Significantly Boost Your Portfolio Performance" at the FinTwit Conference hosted by Lupton Capital and Benzinga on May 14 in Las Vegas. The video is set to start playing at 5:30:45, when Phil takes the stage (but you can see previous presentations by backtracking).

AGENDA 
9:00 AM Opening Remarks with Jonah Lupton, Entrepreneur & Investor
9:05 AM Wagging the Dog: How to Profit From Derivative Driven Moves in the Market with Steven Place, Founder, Investingwithoptions.com
10:00 AM The MarketWebs & The Path of Least Resistance, Christian Fromhertz, CEO, The Tribeca Trade Group
10:55 AM Fireside Chat with Gareth Mann, Founder & CEO, AlphaStream & Spencer Israel, Executive Producer, Benzinga
11:25 AM Sponsor Pitch: Carolyn Bao, VP of Marke...



more from Promotions

Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



more from M.T.M.

The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



more from Tech. Traders

Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



more from Lee

Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

http://www.insidercow.com/ more from Insider





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...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.