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Eric Parnell, CFA

 
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  • Are Stocks Set For A Major Decline In The Fall? [View article]
    Hello Michael,

    Thanks as always for your comment and for sharing your wisdom. These are very good points, as I agree that the impact associated with the end of QE is likely to be far more nuanced than most skeptics are anticipating and the greater volatility is likely to come surrounding the prospects for the first rate hike in the months beyond. But also to your point, human behavior including the capricious decisions of policy makers has been notoriously challenging to predict in recent years.

    Thanks as always for your comment. I hope you are doing well and will follow up soon over e-mail.
    Aug 31 08:57 AM | 2 Likes Like |Link to Comment
  • Are Stocks Set For A Major Decline In The Fall? [View article]
    Hello dancing diva,

    Thanks as always for your comment. And to your point, my intent in this article is not to imply that we are setting up in 2014 for an event like we saw in 1929, 1987 or 2000. Instead, my point in raising it is that if we do end up seeing a correction in September and October, it would be joining this limited notable group in history and should be monitored in this regard as a result. With that being said, one point that warrants attention is that the only points in history where the 10-year CAPE for stocks was higher than it is today was in 1929 and 2000. Of course, this does not imply that a correction is imminent.

    Thanks again for your comment. Hope you are doing well.
    Aug 31 08:54 AM | 3 Likes Like |Link to Comment
  • Are Stocks Set For A Major Decline In The Fall? [View article]
    Hello slerickson01,

    Thanks for your comment. Your point is one that I see raised from time to time on various articles, but in many cases I think it misses the point.

    Of course, markets may go up or they may go down at any given point in time. This should always be assumed as given when evaluating capital markets or most anything else at any given point in time, for those that are speaking in absolutes and proclaiming 100% certainly about anything should be viewed with skepticism. This leads to the following important point - exactly what probability can we reasonably assign to either outcome.

    Certainly, markets can be analyzed in a variety of ways, but when focusing specifically on the performance of the market in the three months from June to August that precede what has historically been the worst two months on average in September and October, the take away is that in 86% percent of instances when we had a meaningful correction in September and October, stocks experienced at least some sort of measurable correction during the preceding June to August period. Since this condition does not exist in 2014, we are operating under a low probability that we will see a major correction over the next two months at least by this measure. With that being said, a low probability is still implies a possibility, and it is worth noting that in the 14% of instances where a fall correction took place following a strong summer, they ranked among the worst of market corrections. This does not suggest that it will happen, only that if it does the limited historical sample implies that the subsequent downside could become more severe.

    In short, not 50-50 as you suggest, but 86-14 based on this measure (which of course is one of very many).

    Thanks again for your comment.
    Aug 31 08:47 AM | 5 Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Thanks - I appreciate it!
    Aug 15 12:32 AM | 1 Like Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi Cory,

    Great comment and welcome to SA! TimmiesRegular makes some excellent points in response, for as long as you are focused on the rising income stream, the principal value will take care of itself over time assuming you have the time horizon to wait. This emphasizes the importance of due diligence in the stock selection process in an effort to make sure that the companies owned can continue to grow the dividend instead of freezing or cutting.

    Great discussion points and thanks again.
    Aug 15 12:31 AM | Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Thanks Mitch. I appreciate it!
    Aug 15 12:28 AM | Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi mobyss,

    Excellent points on many fronts. And I think your downside targets in the third downturn scenario are very realistic depending on how events play out.

    Thanks as always for your comment.
    Aug 15 12:28 AM | Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi Alan - Thanks as always for your comment and once again I think you have hit the nail on the head in terms of asking the key question about the markets in the years ahead. For if we were to enter into another meaningful and prolonged downturn similar to 2000-2003 and 2007-2009, I think it would have the potential to send many retail investors away from stocks and not to return for many, many years. It will be interesting to see. Thanks again!
    Aug 15 12:27 AM | 1 Like Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi Shoemouse - This is an excellent idea. I will explore this topic and may come back with an article depending on what I can turn up.

    Thanks again.
    Aug 15 12:25 AM | Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi Chris,

    Thanks a lot for your comment. I have been a follower of your outstanding articles on SA for many years now, so I genuinely appreciate your kind words on my article.

    I look forward to reading your latest articles and commentary on SA. Thanks again.
    Aug 15 12:24 AM | Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi Timmies,

    Thanks for your comment as always. I regret if I come across as overly bearish in this article, as it is not my intent. My priority is to try to maintain a balanced perspective, but sometimes it can come across leaning one way or another depending on the article (I've actually had a few articles where I have been called out for coming across as too bullish!!).

    I actually agree with many of the points that you have expressed in your comment a great deal. Your final two paragraphs in particular I think are very well said. My latest article on dividend growth investing also has the potential to come off as overly bearish, but it actually seeks to expand on some of the points that you've raised here.

    Thanks again for your comment and great points as always.
    Aug 15 12:21 AM | Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi Shoemouse - Really well said. Great points. Thanks for your comment.
    Aug 15 12:16 AM | Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi Michael,

    Thanks for your great comments as always. An excellent and very fitting quote too. Thanks again and I hope you are doing well.

    Eric
    Aug 15 12:15 AM | Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi Michael,

    I always enjoy reading your thoughts and perspectives, and this is a particularly outstanding comment. You make a number of very important points and your references to Night-Cycles is very interesting. Thanks for sharing your insights here.

    In regards to your Night-Cycles, do you think there is any merit to the idea that inflationary and deflationary cycles rotate with one another over time? What I am about to suggest disrupts the 18 year timing scheme that you have laid out here, but when looking back at the secular bear market from 1901 to 1921, a good deal of it was defined by considerable inflationary pressures. Is it possible that we rotate in terms of pricing instability from inflation to deflation to inflation to deflation between these cycles? I would be interested in your perspectives on this possibility.

    Thanks again Michael. I enjoyed reading your comment as always.
    Aug 15 12:14 AM | Likes Like |Link to Comment
  • A Crisis Less Extraordinary [View article]
    Hi i262666 - Well said on the errors associated with human judgement. I look forward to reviewing your model. Thanks again.
    Aug 14 11:54 PM | Likes Like |Link to Comment
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