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Eric Parnell, CFA  

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  • 2015 Outlook: Pain [View article]
    Hello AnonymousAlpha,

    Thanks for your comment. You raise a particularly good question. While Treasuries have been a most reliable hedge against the stock market over time and particularly in recent years, the fact that they rose together in 2014 raises some concerns. What is notable, however, is that despite the fact that both had upward sloping price charts in 2014, the negative correlation can still be seen in that Treasuries accelerated to the upside on stock sell offs and weakened on stock rallies. But the fact that yields have fallen so low raises the question as to whether Treasuries can continue to rise if stocks enter into a sustained correction. I suppose the fact that government bond yields in so many other parts of the developed world are so much lower provides reasons for optimism in this regard. It will be interesting to see.

    Thanks again.
    Jan 1, 2015. 09:04 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hello liusing,

    Thanks for your comment and great point. I agree completely that income and quality are very important and also spend a great deal of time focusing on this topic. But my primary concern in regards to market cycles is that many have been forced into investment markets in recent years, particularly retirees and those living on fixed incomes, in order to try to attain income and yield that they can no longer secure from principal guaranteed sources such as FDIC insured deposits and CDs. Unfortunately, these people cannot suffer and may not even be prepared for the potential for a -30% to -50% loss of the principal value of their investments at any given point in time. As a result, both a focus on income and quality stocks as well as how to navigate broader market cycles can have value.

    Good points and thanks for raising them in your comment.
    Jan 1, 2015. 09:26 AM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hello Mike,

    Thanks for your comment and for raising some good points.

    To the contrary, I have been out of my gold position for some time now given that sentiment has been so decisively negative on the metal and have written to this point on a number of occasions over time. I do believe that underlying fundamentals will eventually be rewarded in the metal particularly given the bear market in gold we have seen over the last three years, but it will require a change in sentiment that I believe could come sometime in 2015, hence the gradual approach suggested in reestablishing any such allocations. And to believe that gold has long-term upside potential does not necessarily imply that one is bearish on the economy or the market. After all, both stocks and gold rose in tandem from 2003 to 2007 and again from 2009 to 2011.

    As for the stock market, I remain genuinely concerned about the long-term fate of this market, as I believe the policies undertaken to try and resuscitate the market from the financial crisis will have negative long-term consequences. But as I have mentioned in this article and have repeatedly emphasized in my articles over time that the cyclical bull market remains fully intact and should be respected with net long positions in stocks until such time that the upward trend is broken. To your point about the eventuality of market peaks, this is why I have concentrated so much time in my writing on trying to identify market peaks, for conceding that it is simply a guess as to when this will happen is simply not acceptable in my view, as market history provides us with a multitude of evidence to help identify when these major inflection points are taking place. The next peak will certainly take on its own characteristics to be sure, but behaviors in and around it will likely look and feel like all of the other peaks that have preceded it. And the higher this market floats, the greater the downside risk becomes and all the more important it is to have a plan ready for when the turn finally arrives.

    Thanks again for your comment and for raising some good points. I enjoyed reading your latest article on the Dividend Growth 50 - I own a number of names on your list - and I look forward to reading your future posts on SA in the coming year.

    Happy New Year!

    Jan 1, 2015. 09:03 AM | 3 Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hello S Harding,

    Thanks for your comment and Happy New Year to you too!
    Dec 31, 2014. 11:30 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hello Michael,

    Thanks as always for your comments and for sharing your insights and perspectives. You have hit on a critically important point, as the path of the U.S. dollar will be critical in determining global equity returns in the coming year and beyond. This will be a very important factor to watch as 2015 begins to unfold.

    Excellent points and Happy New Year!
    Dec 31, 2014. 11:30 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Thanks Gtoz - I appreciate it!
    Dec 31, 2014. 11:28 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hello Michael,

    Excellent comment as always. Your commentary adds tremendous value and I look forward to reading more of your great thoughts in the coming year.

    Happy New Year to you and your family!
    Dec 31, 2014. 11:28 PM | 1 Like Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hello EyeBelieve - Thanks for your comment and I appreciate the follow. I look forward to exchanging ideas on future articles. Happy New Year!
    Dec 31, 2014. 11:26 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Thanks Monkeycat - I appreciate it!
    Dec 31, 2014. 11:25 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Thanks Tony! I appreciate it and Happy New Year!
    Dec 31, 2014. 11:24 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hi Rose,

    Thanks for your comment as always. And Happy New Year to you too! I look forward to exchanging more thoughts and ideas in 2015!
    Dec 31, 2014. 11:24 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hello Coolbluelake,

    Thanks for your comment and good points. My equity strategy has been almost exclusively U.S. focused for the last few years until very recently when I began allocating toward selected developed markets starting in mid-November. I do agree with the growth challenges that Europe faces, but the relative valuation has become increasingly attractive along the way even after factoring in these fundamental pressures. But your points are excellent and I appreciate your sharing them here.

    Thanks again
    Dec 31, 2014. 11:23 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hello Great Swami,

    Thanks for your excellent comment. In my articles on SA over the years, I have talked extensively about how deflation is the primary threat to the global economy and that it will likely persist as long as the financial system is not allowed to cleanse itself, so I agree with your point here. In fact, I have been long Treasuries for years under the same assumptions that caused you to make the bet with your friend over a year ago. But with all of that being said, I believe we have arrived at the point where the Fed is now determined to lift interest rates off of the zero bound. Whether they can get beyond the first 25 bps remains to be seen for the reasons that you have cited here.

    Great points and Happy New Year!
    Dec 31, 2014. 11:20 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Thanks Stephen! And Happy New Year!
    Dec 31, 2014. 11:15 PM | Likes Like |Link to Comment
  • 2015 Outlook: Pain [View article]
    Hello galicianova,

    Thanks for your comment and great question. While I mention SPLV in my article, USMV could easily be mentioned in its place. I know Gary Gordon is an advocate of USMV and the expense ratio at 0.15% is also attractive. So you are right that USMV merits discussion in the same context.

    Great point and thanks again.
    Dec 31, 2014. 11:15 PM | Likes Like |Link to Comment
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