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Eric Parnell

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  • Assessing The Recent Stock Market Damage [View article]
    Hello Tony - Thanks for your comment and for raising a number of outstanding points as always. I appreciate you sharing your thoughts here on my article. I enjoy reading your commentary on SA and look forward to your future posts.

    Thanks again!
    Apr 12 10:44 PM | 1 Like Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello frank,

    Thanks for your comment and for raising a good point. Historically, sell in May has had a good track record and I agree that it did not apply well last year. I actually wrote an article to this point last May suggesting that the sell in May trend would likely not apply last year. I've included a link below for reference. The fact that Fed stimulus is winding down this year at a time when stock valuations are now meaningfully higher I think are both differentiators this year. It will be interesting to see.

    http://seekingalpha.co...

    Thanks again!
    Apr 12 10:43 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Humates - Thanks for your comment and for raising a good question.

    Southgent - Thanks again for your reply. This is great information.
    Apr 12 10:38 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello jstratt,

    Thanks for your comment and for making a great point. I find the headlines humorous that proclaim the markets are somehow in panic when the markets have declined in recent months. I look at it this way - would a person in late November only a short five months ago look at an 1815 reading on the S&P 500 and think that the market is in panic, as such a reading would have represented a fresh all time high at that point. To your point, a few cheery responses to earnings reports whether justified or not or a sentence from a Fed member and the market could just as quickly be flying higher the way it was on Wednesday afternoon of this past week.

    Great points. Thanks again.
    Apr 12 10:36 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello dragos2901,

    Thanks for your comment and for making a number of excellent points. I also agree that the risks are tilted to the downside at this phase. Overall, I believe that any market decline that we see will not likely be a sudden and sharp move lower (perhaps it will be initially on the first 10% or so), but will instead likely be a slow grinding decline with lower highs followed by lower lows that could play out over the course of a few years as persistent bulls seek to pick bottoms and policy makers work to provide enough support to stem any sharp short-term downside. It will be interesting to see how it all plays out, but I agree that the bull is getting old at this stage.

    Thanks again.
    Apr 12 10:30 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello Rose - Thanks so much for your comment and your kind words. I appreciate it!
    Apr 12 10:26 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello Family Investor - Thanks for your comment and your continued great work on Twitter @faminvestor! The Investor In The Family website also has a lot of great content and I enjoy following it. http://bit.ly/Qipk3n

    Thanks again!
    Apr 12 10:25 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello southgent,

    Thanks for your comment. This is great information and I appreciate your sharing it here. Thanks again!
    Apr 12 10:23 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hi Brian,

    Thanks again for your comment and for raising a particularly good point. And I share your view about utilities and you highlight some of the reasons why I have been overweight to utilities since last fall. While they certainly are interest rate sensitive and are likely to come under pressure when interest rates rise, they also stand to perform well during periods of slow, stagnating economic growth and pricing pressures biased toward deflation, which fairly defines the economic environment we continue to operate in despite the persistent optimism among economists that an accelerating recovery is either coming in the second half of the year or in the New Year for five years running now. They also have shown the ability to generate gains during periods in the post crisis era where the broader stock market has fallen into sharp decline. And I believe you are absolutely correct that if utilities join the broader market to the downside during a prolonged market pullback that it is likely the signal that things are about to get particularly ugly.

    Great points Brian. I appreciate your comment and look forward to talking with you again soon.
    Apr 12 10:20 PM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello systemBuilder,

    Thanks for your comment. The charts for PFF are not wrong as you state. Instead, they are prices that are adjusted for the dividends paid over time. The prices from Yahoo that you are citing are the closing prices only that are not adjusted for dividends paid, which does not reflect the total return generated from these holdings. You will find Yahoo also reports Close and Adjusted Close prices, the latter of which is more relevant from a total returns perspective. Thus, the PFF chart shown here and others are not in need of correction.

    Thanks for your comment and for raising an important point about how charts can be different depending on the source.
    Apr 12 08:01 AM | 2 Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello 11146471,

    Thanks for your comment and for raising an important and interesting question. I actually explored this topic in an article that I wrote back in late 2011. And basically what was identified is that when it comes to global equity markets, they are all highly correlated, particularly during periods of financial stress. I've included the link below:

    http://seekingalpha.co...

    As a result, I believe the key is to identify asset classes that are not only uncorrelated to stocks if one believes that stocks are at risk in the current environment, but also those that remain uncorrelated during periods when stocks are in decline.

    With that being said, if we enter into a more standard market correction phase, an emphasis on quality, value and income has historically been well served. Examples include dividend growth stocks trading at discounts to intrinsic value (not easily found anymore in the current environment, but some are still out there) and selected utilities.

    Thanks again.
    Apr 12 07:56 AM | 2 Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello Brian,

    Thanks so much for your comment. I appreciate it!

    I hope you are doing well and I look forward to exchanging ideas with you again soon.

    Thanks again!
    Apr 12 12:33 AM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello Gene,

    Thanks for your comment and for raising some interesting points on portfolio rebalancing as well as the peak trend line. These are some great points, particularly regarding the long-term expanding triangle, for if we were to roll over and begin to make a run at the downside of this pattern, things would get extremely ugly in the process.

    Thanks again.
    Apr 12 12:32 AM | Likes Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello Great Swami & Brian,

    Thanks for your comments and for making a number of very good points. And I agree with Brian that the market remains more defined by complacency than panic at this stage, as the VIX was down at 13.70 as recently as the open on Thursday, which is low by historical standards.

    Great points. Thanks again
    Apr 12 12:28 AM | 1 Like Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    Hello Matthew,

    Thanks for your comment and for raising an excellent point. My concerns are not so much with the underlying economy, as I believe we remain on the course for solid but generally unexciting and gradual improvement. My worry instead is that the stock market has gotten so far ahead of the fundamentals implied by the underlying economy, particularly over the last two years, that a sizable valuation air pocket has been created that runs the risk of either slowly deflating or popping outright. And if sentiment turns negative across asset markets, it has the potential to feed on itself and ultimately serve as a drag on the already sluggish economic recovery.

    Thanks again for your comment and for raising an important point.
    Apr 11 10:07 PM | 5 Likes Like |Link to Comment
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