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  • The S&P 500 And Stock Buybacks [View article]
    Much appreciated, James!

    For the article, the bottom line is that we're pretty much stuck with it, as it's been picked up and republished in several places, which would make retracting it or a significant edit pretty ineffective. Our best option is to follow through on our plans are to follow it up, where we'll also point out why our analysis isn't applicable to the index in real life. We'll likely target next Monday, since that's our heaviest traffic day.

    In the meantime, we'll see if we can't prompt some other analysts whose insights we follow to offer their two cents. The curious thing is that the early feedback we're getting from general readers is running about 80-20 in favor of the premise, which suggests that the so-called "buyback effect" has got a hold on conventional wisdom.

    Not that we haven't taken that on before!...
    Jul 27, 2015. 09:26 PM | Likes Like |Link to Comment
  • The S&P 500 And Stock Buybacks [View article]
    The statement is valid if one assumes that share buybacks for the S&P 500 affect the value of the index, which is an inherent assumption that comes from treating the index as if it were the stock price of a single company.

    As for extending our comments, we do have a follow up planned for next week, which will begin with our quoting the final paragraph of this article, followed by the sentence "But not for the reasons they thought."

    In retrospect, we do regret including the portion of the quotation from the Marketwatch article mentioning the market cap because it isn't particularly relevant given the context of where we took our own analysis. However, that's not our cross to bear, as we think it's really a matter of poor wording choice by their original author, Wallace Witkowski, to whom such criticisms and requests for greater clarity would be better directed.

    Beyond that, we're afraid that we do not have much influence over the articles that appear here at Seeking Alpha, which SA's editors select from those we publish on our RSS news feed, and which the editors will sometimes modify. Usually that means things like the headlines, but sometimes other content (for example, for this article, the links that appeared with the data sources in the original version indicated readers would be clicking through to Excel spreadsheets - SA's editors modified that content).

    Thank you for your comments!
    Jul 27, 2015. 07:12 PM | Likes Like |Link to Comment
  • The S&P 500 And Stock Buybacks [View article]
    chewy790: Thank you for your question. An average investor can get information on S&P's data (in Excel spreadsheet format) for both share buybacks and dividends through the links we provided with the data sources indicated at the end of the article.

    You can also find directly links to these and a wealth of other information through the "Additional Information" dropdown menu at S&P's site for the S&P 500:

    http://bit.ly/1Ku5ObN

    It's a tremendous resource - S&P's Howard Silverblatt deserves a great deal of credit for the work he does in assembling it.
    Jul 27, 2015. 02:27 PM | Likes Like |Link to Comment
  • The S&P 500 And Stock Buybacks [View article]
    James,

    Taking your points in order:

    1. We agree - what you're citing is a direct quote from the CBS Marketwatch article "Wall Street's new drug is the stock buyback", which really didn't explain how they arrived at those figures.

    2. We had hoped that our comments referring to our treating the index as if it were the stock of a single company would have better clarified what we were doing in our "what if" analysis.
    Jul 27, 2015. 02:18 PM | Likes Like |Link to Comment
  • The S&P 500 And Stock Buybacks [View article]
    We're afraid you've made a fundamental error - stock prices are not directly driven by earnings (the only exception are those stock markets, such as China's, where the dividends of many companies have been set to be a fixed percentage of their earnings - that linkage is one reason why those stock prices have been falling in recent weeks, as the earning outlook for those firms has been deteriorating).

    Instead, where companies set their dividend policies independently of their earnings, changes in the growth rate of stock prices are directly proportional to changes in the expectations for the growth rate of their dividends per share, which is where share buybacks have an influence over stock prices.

    Hope this helps clarify things!
    Jul 27, 2015. 08:20 AM | 2 Likes Like |Link to Comment
  • China's Import Recession Continues And Weighs On Stocks [View article]
    Think about what you've just said. Wouldn't Chinese firms would have a much, much higher level of profitability than 0.6% if each of these things were true?

    http://reut.rs/1LUbUEa

    And you might want to check the tonnage figures for the ex/im data - it's not just the prices of commodities that have fallen.
    Jul 9, 2015. 12:10 PM | 1 Like Like |Link to Comment
  • Closing Out The Second Quarter Of 2015 With The S&P 500 [View article]
    You're more than welcome!
    Jul 6, 2015. 04:59 PM | Likes Like |Link to Comment
  • The S&P 500 Finds Its Ceiling [View article]
    Thank you for your comments - we appreciate your having posted them twice in response to this and our preceding post. Our readers should take care to note that the chart we've featured in both posts only extends back to 31 March 2015 and only covers approximately 2 1/2 months of the S&P 500's index value, and should not be mistaken for a chart that covers 15 years worth of stock price history.
    Jun 26, 2015. 10:20 AM | Likes Like |Link to Comment
  • Decoherent Expectations And The S&P 500 [View article]
    Thank you for your comments - we appreciate your having posted them twice in response to this and our subsequent post. Our readers should take care to note that the chart we've featured in both posts only extends back to 31 March 2015 and only covers approximately 2 1/2 months of the S&P 500's index value, and should not be mistaken for a chart that covers 15 years worth of stock price history.
    Jun 26, 2015. 10:19 AM | Likes Like |Link to Comment
  • Resolving Anomalies In U.S.-China Trade [View article]
    Ben Gee,

    No-one, other perhaps than yourself, believes the nation's official economic GDP figures. Even China's top leader does not believe them:

    http://reut.rs/qp5sgQ

    Does this help clarify things?
    Jun 11, 2015. 08:43 AM | 1 Like Like |Link to Comment
  • The Improving State Of The U.S. Housing Market [View article]
    The relationship between the median new home sales price and median household income data is linear with the nominal data. With such a linear relationship, you would only succeed in "scrunching up" the visual presentation by changing to either a semi-log - or more properly in this case, a log-log chart presentation, which wouldn't add any real value.

    But you don't have to take our word for it. Since we've provided the links to our data sources, you can determine how valuable that exercise might be for yourself.

    As a good rule of thumb, you would only seek to change to a semi-log (or in this case, a log-log) graph if the relationship between the two things being charted was either exponential or involved a power law, where the relationship would then appear to be linear. Otherwise, it's pretty much a waste of time.
    Jun 1, 2015. 02:24 PM | Likes Like |Link to Comment
  • A Major Setback For The Apollo Group [View article]
    Not at all. Here's why:

    1. The technical problems that the Apollo Group described in the last two conference calls you mention did not identify the implementation of the Apollo Group/Carnegie Learning Adaptive Math Practice system as even a significant source of its problems - we've broken that story in the media. Just to confirm, here are links to the full transcripts of those last two calls:

    http://seekingalpha.co...

    http://seekingalpha.co...

    The first call only mentions adaptive learning near the end, with respect to its potential, and not with respect to providing instruction in mathematics.

    2. Apollo Group/Carnegie Learning Adaptive Math Practice (AMP) system was being developed to be a product that would compete with Pearson's MyMathLab system, which would open new revenue streams for the Apollo Group. The failure of the AMP system means that potential for future business growth has been pushed out by several years, at least, and perhaps indefinitely. It will be interesting to see if the company will address this situation in its next conference call with investors.

    Finally, please keep in mind that the Apollo Group has an established track record of employing unusual reporting techniques that have effectively concealed the extent to which its business situation has been deteriorating from investors in recent years (most notably in how it has reported its enrollment data in its SEC filings since 2012, which we've previously addressed). Perhaps that will change with their new CFO, who has only been on the job for almost a month now following the surprise dismissal of his predecessor. We'll see.
    May 24, 2015. 01:19 PM | Likes Like |Link to Comment
  • Hauser's Law In Greece? [View article]
    It's an interesting question. Total government revenues has the following major components:

    1. Income Tax Collections
    2. Payroll Tax Collections
    3. Corporate Income Tax Collections
    4. Excise Tax Collections
    5. Revenues from Originating Loans (this became significant after 2009).
    6. Fees and User Charges

    We've done the statistical math for the first three - together, these all fit with Hauser's Law with normal variation. (I should note that as corporate income tax collections have fallen dollar for dollar with the increases in the employer's portion of payroll tax collections that have occurred in the post-WW2 era, as might be expected by Hauser's Law. Meanwhile, personal income tax collections very much follows the Hauser's Law trendline with normal variation.)

    By comparison, the other three categories are minor contributors to the federal government's revenues (and in the case of student loans, very recent contributors), which is why we haven't focuses any statistical analysis on them outside of our look at total revenues.

    Apr 29, 2015. 12:49 PM | Likes Like |Link to Comment
  • Hauser's Law In Greece? [View article]
    Maybe a picture will help:

    http://bit.ly/1DEjGus

    In the chart linked above, the "Dot-Dash" lines represent the long term mean trend line. The horizontal orange-shaded bands are plus/minus one standard deviation from the mean trend line, where we expect 68% of all observations to fall. The dashed lines are plus/minus three standard deviations from the mean trend line, where we expect 99% of all observations to fall.

    What you're describing is not anything more than the typical kind of variation that might be found in any normal distribution with an established trend. To claim otherwise is mindless cherrypicking of the data.

    Hope this helps!
    Apr 27, 2015. 06:10 PM | Likes Like |Link to Comment
  • Hauser's Law In Greece? [View article]
    David,

    Thanks for your comments - it's always nice to get insights that are backed by solid data!

    Picking up on your first point, we've been able to expand the basic definition of Hauser's law based on a wider sample of data - as such, we've been able to both generalize and to extend it.

    Picking up on your second point, it's a bit misleading to include pre-World War 2 tax data - the structure of the U.S. income tax code before the war was not oriented for revenue maximization, which changed considerably during the war - that's the major reason why the number of pages needed to explain the U.S. tax code to tax professionals went from being 504 pages before the war to 8,200 pages by its end in 1945:

    http://bit.ly/1DDSZ9p

    That aside, working with the post-war data, we've applied statistical methods to the basic premise to validate that it still applies, and have demonstrated that the data is such that the variation can be described by a Gaussian (normal) distribution:

    http://bit.ly/1DDSZ9v

    As a quick observation, since the definition of GDP for the U.S. was revised in 2013, it continues to hold, however the percentages of GDP are lower than what Hauser had referenced based on the pre-revision data.

    Second, others, including ourselves, have found evidence of it applying outside of just the United States. Here's an example for Canada from one of the economists at Worthwhile Canadian Initiative:

    http://bit.ly/1DDSZpK

    Meanwhile, here's what we found for Spain:

    http://bit.ly/1DDSXhD

    And obviously, the analysis above would apply for Greece, and the indications are that it did in France with its recent failed experiment with elevated income tax rates.

    http://bit.ly/1DDSZpL

    Hope this helps!
    Apr 27, 2015. 03:43 PM | Likes Like |Link to Comment
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