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Eric Parnell, CFA  

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  • The 2 Biggest Risks Facing Stocks Right Now [View article]
    Hello wrschindler,

    Thanks for your comment. You make a good point that the virtually exclusive driver of stock gains over the last 18 months has been valuation expansion, as the "E" in P/E has ground to a halt and forward earnings estimates continue to come down along with profit margins still at historical highs. Thus, the more stocks continue to rise, the multiple headwind is only going to increase. And if earnings were to happen to fall into a sustained decline the pressure in this regard would become all the more acute regardless of how much stimulus is being pumped into the system. After all, stocks are not the only asset class that liquidity can flow to find a home.

    Thanks again for your comment and great point.
    May 29, 2013. 04:38 PM | 1 Like Like |Link to Comment
  • The 2 Biggest Risks Facing Stocks Right Now [View article]
    Hello ejmoosa,

    Thanks for your comment and excellent point. I've been writing articles on SA with greater frequency lately, and sometimes I overlook the fact that readers may not have caught some of my previous articles. So I apologize for my oversight here and you are absolutely correct to raise this point.

    The point that you have raised in your comment is something that I have been hammering on for much of the last year in many of my articles. The fact that stocks have soared to all time highs in the face of not only declining earnings growth over much of the past year but also earnings forecasts that have been steadily revised lower for more than a year now is curious to say the least. This is one of the many disconnects from fundamentals that we have seen in stocks over the past 12 to 18 months.

    My reason for excluding this point in the article here is because it seems that stocks have become so solely focused on the daily sentiment surrounding Fed stimulus that fundamentals no longer seem to matter very much. This of course is the point that you've wisely made here and is one with which I completely agree.

    Great comment. Thanks again.
    May 29, 2013. 11:39 AM | 7 Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello Economic Analyst,

    Thanks for your comment and for raising a good question here. I'm going to be overly simplistic with my response here, but it is an analogy that I typically find fitting. The economy can be viewed like a person. When an economy is going through the expansionary phase of the business cycle, everything is going well and the party is on. And like any party, people can be prone to eat and drink too much. If such behavior goes on too long, a person will become overweight and represent a health risk. Thus, at some point, the partying must end and its time to diet and get back into shape, which is where the recessions come in. During recessions, projects that should have never been started get cancelled, people who should have never been hired are let go, and debt that should have never been accumulated is paid off. Just like going on a diet and hitting the gym, recessions can be a difficult and painful process when your going through it, but what your left with is a far healthier situation once its all over. But by not allowing the economy to go into recession, it is the equivalent of allowing the economy continue to party and overeat with the defense that a handful of diet pills will quick fix the problem. What ultimately happens in the end is that the economy will have a heart attack, which is effectively what happened in 2008 after effectively skipping over recessions in 1986, 1994, 1998 and 2006. And instead of finally forcing the economy to get into shape in the aftermath of 2008, it's more monetary quick fix diet pills to try and wish the problem away. Unfortunately, for this reason the next shock could end up being much worse.

    This response may not answer your question, but hopefully it makes sense.

    Thanks again.
    May 26, 2013. 11:53 PM | Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello WMSTRZ - Thanks for your comment and your kind words on my article. I appreciate it!
    May 26, 2013. 11:42 PM | Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello Ray Lopez,

    Thanks a lot for your comment. I appreciate it and you hit on one of the key points and primary concerns, for the longer policy makers try to put off dealing with the excesses that have been built up in the economy, the more severe and disorderly the final corrective is likely to be.

    Great point. Thanks again.
    May 26, 2013. 11:40 PM | Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello bluegillfish,

    Thanks for your comment. I appreciate it, and as I mentioned to Lawrence in a comment above, the ability to engage in a broad and substantive debate is a great way to explore topics in far greater depth and discover new insights. For point without counterpoint quickly becomes most unproductive, and I always believe it is important to respect all sides of the argument.

    Thanks again for your comment. I appreciate it.
    May 26, 2013. 11:37 PM | Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello Lloyd,

    Thanks for your comment and for you kind words. I appreciate it.

    You make a number of outstanding points here with which I agree. In particular, your points about unproductive spending and improving the regulatory environment are spot on. I have contended for some time that more than additional monetary stimulus or fiscal spending, what would benefit our economy most would be far greater regulatory clarity. This is something that fiscal policy makers could take action on immediately with little cost. In fact, it offers the potential to improve the growth potential of the economy while at the same time reducing spending and lowering debt through greater efficiencies. Unfortunately, such an outcome is far beyond the realm of what could be hoped for on the fiscal policy front in this or any environment for that matter.

    Great comment. Thanks for sharing your thoughts and perspectives.
    May 26, 2013. 11:28 PM | 1 Like Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello KenGold,

    Thanks for your absolutely outstanding comment. I agree with you completely here. One of my primary objections with everything that came after QE1 is that it took actions that were supposed to be extraordinary and temporary in order to rescue the global financial system and made them not only ordinary but demanded by the markets. The fact that the market had a fit on Wednesday because the Fed is potentially thinking about cutting back on asset purchases several months down the road shows exactly how far out of control this has gotten. How the Fed works themselves out this tightening box will be interesting to watch in the days, months and perhaps years ahead.

    Great comment. Thanks again.
    May 26, 2013. 11:21 PM | Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello Lawrence,

    Thanks for your excellent comments both here and below on this article. I genuinely appreciate you taking the time to provide the counterpoint to my points in the article. You make a variety of excellent points as always and your contributions here have gone a long way in rounding out the discussion. While we may not agree on a variety of points, it is the exploration of this difference of opinion and the varying viewpoints around these differences that really advance the discussion.

    Thanks again Lawrence. I appreciate your thoughts and perspectives.
    May 26, 2013. 11:15 PM | Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello Bill James,

    Thanks for your comment and for raising a great point. One of my long time complaints about these balance sheet expanding monetary stimulus programs is that it effectively results in a tax on virtually 100% of Americans that consume energy products such as gasoline and oil to effectively subsidize the 47% of Americans that own stocks in the hopes of trying to create a "wealth effect" where a percentage of these paper gains are reinvested back into the economy. While oil and gasoline prices cooled after an initial QE3 jump into February, they have been once again on the rise since mid April. How prices move into the summer driving season will be very important in this regard.

    Thanks again for your comment and for raising an excellent point.
    May 26, 2013. 11:10 PM | Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello Gratian,

    Thanks as always for your comment. I agree with your points completely and you are right that it will be most interesting to see how and when this all plays out in the end.

    Thanks again.
    May 26, 2013. 11:01 PM | Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello Left Banker - Thanks for your comment and your kind words. I appreciate it!
    May 26, 2013. 10:59 PM | Likes Like |Link to Comment
  • The 7 Reasons Why People Hate QE [View article]
    Hello Mike H,

    Thanks for your comment. The reasons that you have cited for why the Fed is implementing QE are widely understood. And I agree that the Fed could not allow the global economy to collapse and that responding with QE1 was a good decision. I suppose the bigger question from my perspective is that once they pulled the global economy back from the brink, has implementing QE2, Operation Twist 1 & 2 and QE3 helped achieve not only their dual mandate defined goals of maximum employment and price stability but also sustained economic growth? And if not, does it continue to justify the increasing risk associated with these programs to continue pursuing these same policies if they still have yet to achieve these goals after so many years? Perhaps they will in the end, but I have been and am becoming increasingly concerned that if they are wrong the consequences are becoming increasingly severe. It will be interesting to see.

    Thanks again.
    May 26, 2013. 10:59 PM | Likes Like |Link to Comment
  • Retail Stock Investors: We Won't Get Fooled Again [View article]
    Hello TAS - Thanks for your comment. I appreciate it!
    May 24, 2013. 11:41 PM | Likes Like |Link to Comment
  • Retail Stock Investors: We Won't Get Fooled Again [View article]
    Hello kingmob,

    Thanks for your comment and for raising an excellent question. While the net inflows into domestic stock ETFs is a bit better than the mutual fund flow data, the difference is marginal at best and is still entirely insufficient to explain the dramatic deviation between fund flows and the performance of the stock market over the last few years. But this is an excellent question to raise, as I have considered the same thing over time.

    Thanks again.
    May 24, 2013. 11:41 PM | 2 Likes Like |Link to Comment
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