Eddy Elfenbein

Eddy Elfenbein
Contributor since: 2005
The stock dropped sharply after-hours, then u-turned and closed about $1 higher. Let's see what tomorrow brings.
The last four splits were all 2-for-1. 1989 at $95, 1992 at $90, 1996 at $100 and 2001 at $101. Also, in 1981 they split 3-for-1 at $108.
Historically, JNJ has split when it's gotten near $100 a share.
Economists like to look at core inflation because food and energy prices can be highly volatile and impacted by transient events like supply shocks which may not give an accurate picture of overall prices trends.
Goldman recently raised their 2010 estimate to $75.
The article compensates for that by only looking at data from the first and third quarters. You really ought to read a study before you criticize it.
I don't blame the book on him, and he criticized the book as well. But G&H based their idea on Siegal's mistake.
The spelling has been corrected in the original post. Thanks.
David & Prudent,
Thanks for the comments! Actual both numbers are right but slightly different series. Mine is the trailing four-quarter per-share total. The numbers David lists are the quarterly dollar totals. That's why the drop off on my blue line isn't as severe.
Incidentally, S&P just updated the numbers so the Q2 numbers are my chart are 919.32 for the black line, and 25.59 for the blue line. I should add that the blue line will most likely continue to fall for a few more quarters.
Thanks for your thoughtful feedback. This is how Seeking Alpha helps clarify issues for investors. - Eddy
Wrong Rob. Just because the indexes are calculated differently doesn't negate the importance of comparisons. Different sets of data are always compared, from debt ratios to price/earnings ratio. The important lesson is what kinds of inferences can you draw from these comparisons.
Tuj, the point is that the Dow would be 3,000 points higher if it had kept pace with the S&P 500. Dude! Also, you can see that the normal relationship broke down during the tech bubble and its deflating. These relationships don't always hold up so well.
Leucadia is spelled correctly.
Also, a preposition is something you shouldn't end your sentences with.
That's not correct. The line on the chart is of long-term corporate bonds. The source is Ibbotson Associates. I've stretched it out by 2% a year to see how well that level of premium competes with stocks. In my opinion, it does fairly well.
My article is corrected.
Sorry Mister Bill, the chart is correct.
Given the volatility of the premium for stocks, I don't think 2.1% is much of a reward. Over the last 10 years, corporate bonds have still outperformed stocks.
The Fed Funds rate is at 3%. Despite the cuts, the three-month and five-year rate are still will below the Fed.
Thanks for the comments. A number of you pointed out that it isn't that difficult to spot bubbles. I agree with two caveats. One is that you can spot bubbles based on historical comparisons. What if those have changed? The markets dividend yield was often higher than long-term interest rates, now it never is. Going by the old metrics, we've been in a bubble for decades.
That brings me to my second point that even if we're in a bubble, that doesn't mean the bubble won't continue to get worse (or better depending on your point of view). Alan Greenspan's famous "irrational exuberance" comments came years before the market reached its peak. The market may revert to the mean, but it may time a long time getting there. Spotting a bubble is a lot easier than spotting a top.
Thanks again for these very astute comments!
I don't believe it's a long-term change, but these cycles aren't always in sync with the economy. Large-caps had their day from 1994 to 1999 when the economy did very well. There's also a currency impact since larger companies, as a whole, are more internationally focused.
I used the CPI from the government. I know there are many criticisms of this index, but it's the only one I have.
I apologize for any confusion about the chart but there's no easy way to graph it. The blue line shows the cumulative gain of the S&P 500 going by the rate of inflation (low to high being left to right).
In the deflationary period at the beginning, the market drops. Then between -5% and +5%, it rises very dramatically, Then it levels off and falls dramatically.
Wow, I guess I did! That's ok. Reading my post is a matter of choice. Understanding it is apparently determined by intellect.
The same goes for the use of the word "albeit."
Sorry for the confusion, it's a weird chart I admit. Think of it this way. I took all the days and rescrambled them, not according to their calendar order but according to the previous day's performance.
The blue line show the cumliative gain. So investing just after bad days is bad for you, but the effect gradually improves as the previous day's move improves.
Not reversals, but continuations of the day before.
Your line: "Stock prices "remember" what happened yesterday, but "can't remember" what happened the day before that?" sums it up nicely.
Today, I'm going for both mediocre!
A weak very comment Mike. You're the one who needs to read. Do some homework before giving such weak comments.
All that's true. As I've said on my blog, it would be interesting to see if a synthetic momentum strategy could closely mimic a momentum strategy with much lower costs. Such as, using many sector ETFs.
The turnover is high, but not that high. Many of the best-performers stay in the following months. According to Dr. French, the yearly turnover is 91%.
I honestly don't know. I wasn't sure if I had that so that led me to call Dr. French and he confirmed it.
That's a constructive point. I wish you had said that the first time.
What the hell are you talking about? That was the dumbest comment I've ever seen on Seeking Alpha.
ikkyu: According to the article, the figure was an average over several weeks, not from one day. It helps to read an article before you criticize it.
Uncle Bill: Follow the link for the full story. It was written by Jeff Kearns and Michael Tsang of Bloomberg. Here's more:
Mason says implied volatility, a measure that calculates expected price swings of an underlying asset and is used as a barometer for options prices, shows many investors are betting that stocks may fall.
Since Aug. 15, the implied volatility of put options that lock in gains should the S&P 500 drop at least 10 percent in six months has averaged 24.08 percent, according to data from Morgan Stanley, the second-largest U.S. securities firm by market value after New York-based Goldman Sachs Group Inc.
The implied volatility on puts is 8.1 percentage points higher than for call options, enabling investors to profit if the index rises at least 10 percent in the same period. The so-called implied volatility skew climbed as high as 8.53 points since mid- August. That's steeper than 99 percent of all readings since the start of the decade, Morgan Stanley said. The median difference is 5.9 percentage points.
The gap shows there's "an awful lot of nervousness," said Mason. "A lot of investors don't want to get caught out."
He may be an economist but he has routinely made comments about the stock market and he's been mostly wrong about it. I repear: He hasn't been "spot on."
NoFate: I don't claim to discredit him. I have no idea where you get that from. Do you even read what you comment on? Please. If you don't even read the posts, don't comment! It makes you look silly. The facts speak for themselves. Shiller was a bear back in 1996 and he's been a bear all along. He's been wrong.
Quaker: Your comment is one of the silliest things I've ever read on Seeking Alpha. Since you didn't address anything in the post, I'll simply dismiss your comments as irrelevant.