One of the arguments made by bottom-fishers is that not only are stocks “oversold” (a technical notion that reflects recent trading activity, such as trading volumes, price in relationship to various moving day averages) but are also cheap based on fundamental notions of value. We have been somewhat leery of any long-term valuation notions given […]
Read more...A year ago, major endowments, like Yale, Harvard, and Princeton were seen as the ne plus ultra of sophisticated private investors, regularly posting 20%+ annual returns. Now they are dumping big chunks of their private equity holdings at distressed prices. What gives? The reason this is odd is that the last thing you want to […]
Read more...Two of the most accurate forecasters of the credit crisis anticipate that economic conditions will deteriorate further. Nouriel Roubini, who has been consistently been on the dire end of the opinion spectrum, characterizes our current situation as stag-deflation. Meredith Whitney, who was the first banking analyst to call the crisis in financials, and has made […]
Read more...I am puzzled by some recent market anomalies, which are breakdowns of established patterns: 1. Long dated Treasuries rising (a deflation signal) as stocks stage a dramatic rally 2. Dollar weakening while long dated Treasuries rise (the dollar and bonds usually go together) 3. Oil stocks rallying more than the S&P (28% versus 18%) when […]
Read more...There is a rather odd article up on Reuters with the headline, “Short selling declines as U.S. stocks scrape new lows” It is mainly concerned with the issue of whether shorts are culprits in the recent price declines of automaker and certain financial shares. The declining short interest says the attempts to implicate them are […]
Read more...Some have argued that stocks are cheap because S&P dividend yields are higher than Treasury yields. That presupposes dividend stay at present levels or increase. They are being cut, and with lousy to no profits in the offing, it’s reasonable to assume that in aggregate, dividend payments will continue to shrink. Right now, the cuts […]
Read more...After opening down (the Nikkei was down over 2.5%, the Hang Seng over 4%, Singapore over 1%), the specter of the US stock market blasting through two support levels in two days was treated, for now, as a thing of the past. In particular, the markets seemed to take cheer from the idea that Citigroup […]
Read more...Asian markets are keying off the ugly day in the US, with deflation fears at the fore and equity markets having broken through the lows of last month, which had been widely touted as support levels. The Nikkei is down 570 points, or nearly 7%.. The Hang Seng is down 5.5%. Mainland Chinese indexes are […]
Read more...As of this writing, the Nikkei is down nearly 500 points. Singapore is least trashed, down 3%, the Hang Seng is down over 6%. The apparent triggers are first, a lousy industrial output report out of China, confirming the various informal indicators of economic weakening there we have tallied, and second, a vote no confidence […]
Read more...Famed hedge fund investor and round-the-world motorbiker Jim Rogers is not very keen about financial assets these days, which is not entirely surprising given that he runs a commodities fund. Maybe the bearish outlook has to do with the view of the world from Singapore. Marc Faber, who makes most of his TV appearances from […]
Read more...A Wall Street Journal article, “Japan Worries It Faces the Return of Deflation,” contained an argument I found unconvincing: In the U.S., some economists say deflation may occur if market conditions deteriorate much further and job losses proliferate. But Teizo Taya, an adviser for Daiwa Institute of Research and a former policy board member of […]
Read more...A front page story in the Wall Street Journal discusses how continued forced selling by hedge funds was the proximate cause of the sharp selloff of the last two days (um, the simply lousy economic news. such as lousy payrolls, horrific retail sales, no sales of credit card bonds in the last month, and similarly […]
Read more...I am leery of formulaic approaches to investing and this New York Times article confirmed my prejudices. Conventional wisdown says forget market timing (you are bound to get it wrong and lose out). However, today Mark Hulbert advocates an anti-market-timing strategy: go into cash when markets become volatile. But that seems as difficult to execute […]
Read more...As the economy weakens, a predictable result is an increase in corporate defaults. In the early 1990s, the default rate on high-yield bonds peaked at 12+% (note some define the universe differently and come up with somewhat lower figures) The most recent Standard & Poor’s forecast, while noting a marked deterioration in the economy and […]
Read more...Over the last few weeks, and accelerating late last week and early this week, it looked as if a full bore run on emerging markets was in progress. Now with the yen taking its biggest dive in two decades and carry trade unwinds a temporary thing of the past, emerging market and currencies are staging […]
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