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James A. Kostohryz  

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  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Hi Doug:

    I will address this in detail in my next couple of articles.

    Cheers!
    Feb 25, 2015. 06:27 PM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Tom: I think I have been clear:

    1) The market will make significant new highs relative to the point when the article was written.

    2) A correction of 10%-20% is likely at some point in 2015.

    I am saying that it is more likely than not that BOTH will happen That is not "having it both ways." That is actually a bolder prediction than saying that only one or the other will happen (which is what you seem to be asking for) or that either will happen.
    I will be writing more about this in the next few weeks.
    Feb 25, 2015. 12:28 PM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Readers:

    Interestingly, a reporter on MarketWatch picked up this SA article and wrote a feature piece summarizing it. Her article was the headline story on MarketWatch during the late afternoon and evening of today, February 23: http://on.mktw.net/1zB...
    Feb 23, 2015. 10:28 PM | 1 Like Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Thanks for the kind words, southie.

    You are correct that a strengthening economy will cause a wider current account deficit -- particularly if US growth outpaces the growth of its export clients. However, I would not necessarily expect this to cause USD weakness because relative GDP strength will generally cause relative currency strength.

    And no, I do not think that the Fed will pay much heed to the CA deficit in making its rate decisions. If the widening CA deficit is due to strong growth, then the Fed will be more inclined to raise rates.

    Apropos to that, strong growth and interest rate differentials will tend to overwhelm the CA effect in the short and medium term, so that provides further reason to doubt that the USD will weaken in the short term as a result of a wider CA deficit.

    Cheers!
    Feb 22, 2015. 11:10 PM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    "The interesting thing is if the Buffett ratio and Tobin's Q and Shiller p/e are truly meaningless, why did they have such an incredible track record forecasting subsequent 10 year returns over the past century."

    I will be writing an article soon to explain exactly that.
    Feb 22, 2015. 08:22 PM | 1 Like Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Doug: Assuming that the US economy is reaccelerating in 2H (as I expect) and that Europe risk has died down, I believe correction risk will subside. By that time fears of slowdown/recession in the US will subside and the decline in earnings should be fully priced in. Right now, I don't think that the slowdown in US growth in 1Q (and possibly into 2Q) or even the EPS growth decline is fully priced in.
    Feb 22, 2015. 03:11 PM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    SDNS: Great points, as usual.
    Feb 22, 2015. 02:02 PM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Rochapeau:

    I think you make a valid point about the size of these economies and the potential disruptive effect on a collapse of their imports. So while I think that this is a factor that is important enough to slow growth significantly in some countries that export to Russia -- particularly in central and Eastern Europe and Asia -- I don't think that this will ultimately have enough of an impact to derail the US economy or stock market.

    Now if the collapse of the Russian economy were something as bad as 1998, that would be a different story.
    Feb 22, 2015. 12:34 AM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    LaGree:

    Thanks for your comment. I think you make very plausible and well reasoned arguments. I agree with you that I think the Fed would like to get on with normalization of rates. Having said that, I think that if they sense ANY danger on the horizon they will opt to exercise "patience."

    Cheers!
    Feb 22, 2015. 12:30 AM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Rock:

    The bubble thesis is still very much in play.
    Feb 21, 2015. 11:19 PM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Herbert:

    I don't say I expect a 10-20% rally before a correction. I say that I expect a 10-20% correction, but for the market to subsequently recover.

    I would expect it to play out roughly like this. At most 5% higher from current levels; 10-20% correction, then recovery to new highs.

    I'll be writing about the Bufffet indicator soon since many people seem to believe it is relevant.
    Feb 21, 2015. 05:38 PM | 1 Like Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Soleprop:

    Here is a way to think about it, using your example of Louisiana:

    1. If everybody in Louisiana were to default on their debts, the US banking system as a whole would experience major problems. If we assumed that Louisiana debt represented 3% of total US assets and the equity to asset ratios of US banks were 3%, then US banks would be technically insolvent and there could be a run on the banks. It's even more complicated than that. If only 2 or 3 systemically important banks were greatly exposed to Louisiana -- say Louisiana represented more than 5% of their total assets, then the failure of those two banks could potentially trigger a systemic failure of a number of banks, because other banks are interlinked in various ways to the two banks that failed.

    2. If Louisiana citizens and government defaulted on their debts and seceded from the Union, this could conceivably create political problems for the US that go beyond the banking problem cited above. For example, what if other states decided to go the same path? The whole banking system and the credit structure of the entire economy would be jeopardized. The very integrity of the nation would come into play.

    The issues with the EU are not exact, but the above should help understand why Greece could potentially be important to the whole of Europe, and to the world. And I assume you agree that a financial, economic and political disintegration in Europe would be bad for the world economy and for S&P 500 companies specifically.

    I personally believe Europe is financially and economically prepared to deal with a Grexit in a way that it was not prepared in 2010-2012. But that is another story entirely. The point is that there is a reason why Greece represents a real concern.
    Feb 21, 2015. 02:44 PM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    rz2013:

    You accused me of making a "totally false statement."

    I provided the evidence that my statement was correct.

    Now, your argument appears to have shifted: You suggest that the source of the data that I cite cannot be trusted.

    So, I have a couple of questions for you: First, what is the source of data for your own view? Second, the sources of data I use are the sources used by all serious economists; in fact, there are no other relevant sources for this sort of data. Do you have any evidence that proves that the source I use is false?

    With all due respect, I think the problem here is that the actual data do not correspond to your preconceived view. It is normal that many people, when confronted with evidence that contradicts their ideologically preconceived view, refuse to change their opinions. But that is not a good investment plan.
    Feb 21, 2015. 12:16 PM | 3 Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    genomegk:

    You make various points worthy of discussion in another context. However, I don't see any of these risks as being particularly relevant for 2015, which is the time horizon for purposes of this article.
    Feb 21, 2015. 11:54 AM | Likes Like |Link to Comment
  • The Biggest Risks To Stocks In 2015: A 10-Point Analysis [View article]
    Lohengrin:

    I am going to write an article on the Buffet indicator and it will become clear why it is nonsense.

    Cheers!
    Feb 21, 2015. 10:49 AM | 2 Likes Like |Link to Comment
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