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Eric Parnell, CFA  

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  • Where In The QE Have We Seen This Before? [View article]
    Hello Michael,

    Thanks as always for your comment. I hope that you are doing well. And you are absolutely correct - it will be interesting to see the long-term effects that will result from these ongoing policies.

    Thanks again!
    May 8, 2015. 08:56 AM | 1 Like Like |Link to Comment
  • Where In The QE Have We Seen This Before? [View article]
    Hello Josh B - Once again, excellent points and observations. Thanks for your great comments!
    May 8, 2015. 08:50 AM | 2 Likes Like |Link to Comment
  • Where In The QE Have We Seen This Before? [View article]
    Hello Josh B - Excellent points. Well said. Thanks!
    May 8, 2015. 08:49 AM | 2 Likes Like |Link to Comment
  • Where In The QE Have We Seen This Before? [View article]
    Hello pumpkins3,

    Thanks for your comment. I think this may have been true at one time, particularly during the early years of QE from 2009 to 2011. But as evidenced by gold and commodities prices over the last several years among other factors, it seems that it has been widely concluded at this point that QE is likely to do little in the way of moving the needle on the inflation front. This is not to say that QE won't eventually lead to inflation at some point down the road, but the market has not seemed to view it this way for some time.

    Great point and thanks for raising it.
    May 8, 2015. 08:48 AM | 5 Likes Like |Link to Comment
  • The Madness Of Mr. Market [View article]
    Hello munibill,

    This is an excellent series of questions and are point that I plan on addressing directly in an upcoming article. Thanks for raising these points here. Using history as a guide, whether it was the financial crisis, the bursting of the tech bubble, the oil crisis in the 1970s or the stock market crash to start the Great Depression, the stock market did not plunge to the downside all at once. Even the recent drop in oil prices can be included on this list. Instead, in each case the market provided warning signals and opportunities to get out, but for those not watching for them they can easily be missed. This does not necessarily mean that you can exit at the absolute peak of the market, but enables one to continue participating to the upside and then exit without sustaining too much in the way of losses to the downside (example: if the market falls -10% after peaking at 2500 on the S&P 500 Index a year from now in providing exit confirmation, one would still be higher in value from where they are today).

    But to your point, these are unprecedented times we are operating in today, so we should all hold out the possibility that things could play out differently this time. It is for this reason in part that I hold a meaningful allocation to cash. But I consider such an outcome with no advance warnings a low probability event.

    Thanks again for your comment and great questions.
    Apr 26, 2015. 08:20 AM | 1 Like Like |Link to Comment
  • The Madness Of Mr. Market [View article]
    Hello Packer Man,

    Thanks for your comment. You raise an important point that has repeatedly dogged the bears since the calming of the financial crisis several years ago, for once it seemed that the market was set to break to the downside, monetary policy makers would intervene with yet another asset purchase program. It has been "Fed put" to the extreme. For bulls, this risk represents a reason for comfort, and for bears it continues to represent the primary downside risk from a shorting perspective.

    It has seemed that under Janet Yellen the Fed is increasingly looking to get out of the QE game and would like to raise interest rates a few quarter points to store up some dry powder for the next recession. Whether they have the luxury to actually raise rates before it's all said and done remains to be seen.

    Great points and thanks again!
    Apr 26, 2015. 08:12 AM | 3 Likes Like |Link to Comment
  • A Case For Attractive Stock Valuations [View article]
    Hello Alan,

    Thanks for your comment and for sharing your perspective. I also enjoyed reading your recent article on the U.S. Dollar outlook leading up to the 2016 election - a very interesting perspective.

    http://seekingalpha.co...

    Thanks again!
    Apr 24, 2015. 10:53 PM | 1 Like Like |Link to Comment
  • A Case For Attractive Stock Valuations [View article]
    Hello pica314,

    Thanks for your comment. You have hit on some excellent points. First, while the overall focus is on deflation, it seems to be continuously overlooked that many segments of the economy continue to experience steady and measurable inflation. Moreover, it stands to wonder why for so many years when oil prices were rising it was considered a transient non core inflation issue that could be disregarded, but suddenly when oil prices are falling it implies a broader deflation problem that warrants close attention. If you are right and sustained inflationary pressures not only take hold but start to accelerate, things could get interesting in a hurry.

    Thanks again.
    Apr 24, 2015. 10:44 PM | Likes Like |Link to Comment
  • A Case For Attractive Stock Valuations [View article]
    Hello DH51,

    Thanks for your comment and excellent point. You have actually anticipated the theme of my next article, as I look forward to expanding on the point that you have raised here!

    Thanks again!
    Apr 24, 2015. 10:39 PM | Likes Like |Link to Comment
  • A Case For Attractive Stock Valuations [View article]
    Hello Occasional Contributor,

    Thanks for your comment and for raising an excellent point. As I know you well know, equity risk premia can be computed in a variety of different ways. For the purpose of this discussion, I opted to focus on the earnings based approach for estimating the expected total return on stocks (k = E/P) at any given point in time throughout history. To your point about cash flows, another reasonable approach would have certainly been to use the dividend based approach (k = D/P + g), but I opted for the earnings based approach given that it is relatively more straightforward and ties directly into the frequent discussion about P/E ratios for the stock market. Both models have generated fairly comparable results over the long-term time period investigated in this article. As for your point about the negative ERP in this instance, my point in this article was not to assess the premium versus the risk-free rate but instead against a comparable alternative asset to stocks in the 10-Year Treasury, which is subject to risk in its own right despite the fact that they may still be considered risk free as long as the bond is held to maturity. In short, the emphasis was to compare stocks not necessarily to a risk-free rate but instead to a straightforward benchmark and highly liquid alternative to stocks in the form of 10-year Treasuries. Now it could certainly be argued that a better ERP would compare the earnings yield to the real 10-year Treasury yield over the nominal rate, but incorporating this adjustment did not change the underlying conclusions of the article that stocks are much better valued today in this regard than they have been over the last 35 years, thanks in large part to interest rates currently being so low.

    Excellent questions and thanks for raising them here.
    Apr 24, 2015. 10:38 PM | 3 Likes Like |Link to Comment
  • A Case For Attractive Stock Valuations [View article]
    Hello RV,

    Thanks for your comment and your good point about the yield curve. Given that the Fed has kept interest rates pinned at 0% for so long and all of the distorting effects that have resulted whether the traditional pattern of the inverted yield curve predicting the next bear market and economic recession will play out this time around. And with this inverted yield curve thinking in mind, it is also reasonable to wonder whether the fact that rates have gone negative so far out the yield curves across Europe, which is technically inverting these yield curves albeit in a very unusual way, is a predictor of anything regarding the future market and economic prospects across the region. It will be interesting to see, but these are certainly unusual times in so far as global yield curves go.

    Great comment and thanks again.
    Apr 24, 2015. 10:17 PM | 2 Likes Like |Link to Comment
  • U.S. Stocks: Timber! [View article]
    Hello goindians,

    Thanks for your comment and your point is well taken. I may come off as bearish, but my intent is to try to keep readers aware of the risks that may exist around them in capital markets. So much time gets spent in the financial media talking about how great things are all the time, which of course is an understandable bias given that investment institutions need investors that want to put money into the market in order to survive. As a result, I often feel compelled to focus instead on what investors should be watching out for, as these risks often get either ignored or minimized by the media in the process (when an analyst on a business news network says stocks are going higher, they hardly ever get challenged or even a follow up question asking "why?", but if an analyst suggests that stocks are going down, it is often followed by an inquisition and a good dose of derision).

    But I appreciate your comment. I actually have a few more bullish articles in the queue. Maybe I'll bring them forward to show my sunnier side.

    Thanks again.
    Apr 23, 2015. 07:29 PM | 5 Likes Like |Link to Comment
  • U.S. Stocks: Timber! [View article]
    Hello eagle1003,

    Thanks for your comment and hope that you are doing well. I always enjoy reading your perspective and great point on the Fed and lumber. Unfortunately for the energy space right now, the Fed can't burn millions of barrels of oil each day either.

    Thanks again!
    Apr 23, 2015. 07:23 PM | 1 Like Like |Link to Comment
  • U.S. Stocks: Timber! [View article]
    Hello DH51 - Thanks again for your comment both here and on my article from yesterday!
    Apr 23, 2015. 07:22 PM | Likes Like |Link to Comment
  • U.S. Stocks: Timber! [View article]
    Hello Ted - Thanks as always for your comment and for sharing your perspectives. Great point as always. Hope you are doing well.
    Apr 23, 2015. 07:21 PM | Likes Like |Link to Comment
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