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  • Weighing The Week Ahead: Expecting Too Much From Jackson Hole? [View article]
    CautiousInvestor -- I mentioned that Draghi was scheduled for Saturday, but I might have said a little more. This does not seem like the forum for any new policy announcements, but he has already surprised us with the "it will be enough" speech:) Who knows?

    The GaveKal group has had some lively discussion over the course in Europe. Their most recent piece, by Louis Gave, focused on the effect of the Italian election next April. He mused that this might actually provide a little more negotiating power for Monti.

    Concerning the weakening German economy, you see this as limiting their resources for funding. Others see it as an incentive for German leaders to act before things get worse. Most of what is needed from them right now is not immediate cash, but concessions on lending and guarantees versus sacrifice of sovereignty by others.

    We agree that it is complicated, and that nations will act in their own interest. We'll see.

    Jeff
    Aug 26, 2012. 11:15 AM | 2 Likes Like |Link to Comment
  • Weighing The Week Ahead: Expecting Too Much From Jackson Hole? [View article]
    Dancing diva -- Thanks and thanks also for the link. Chapter IV seems to be on point here.

    Bernanke has not been getting much help from Congress and the President.

    Jeff
    Aug 26, 2012. 11:03 AM | 1 Like Like |Link to Comment
  • Don't Worry About Profits As A Percent Of GDP [View article]
    Here is the note at FRED explaining that the use the NBER definition, not the popular two-quarter rule of thumb.

    http://bit.ly/Od4MCa

    You have been using it yourself without realizing it, as you can easily see if you look at this chart using the default FRED settings: http://bit.ly/OfdinF
    Aug 24, 2012. 04:01 PM | Likes Like |Link to Comment
  • Don't Worry About Profits As A Percent Of GDP [View article]
    Gary -- That is not what you get if you use the FRED functions. If you used your own special function to draw the recession shading, would you mind sharing it so that the rest of us can replicate it and test it?

    Thanks,

    Jeff
    Aug 24, 2012. 03:13 PM | Likes Like |Link to Comment
  • Understanding The Business Cycle -- The Key To Investor Success [View article]
    Daro -- I can only do so much in each installment:)

    I would note that the ECRI said nearly a year ago that recession was a 100% certainty and we might already be in one. I was the first to say "no" to this, and provided strong research findings from many sources.

    At the moment, these sources say a very low chance of a recession for nine months or a bit longer. This is more than enough time for our purposes, so there is no reason to talk about a year from now.

    More to come.

    Jeff
    Aug 24, 2012. 10:32 AM | 1 Like Like |Link to Comment
  • Understanding The Business Cycle -- The Key To Investor Success [View article]
    Freddy -- I think that you have excessive confidence in the regularity of the timing of these cycles.

    Many believe that the cycle is getting shorter -- the ECRI for one, but they have convinced others.

    I contend that there will be a lot of variation, and this recovery will involve a longer period of aggressive policy action.

    While we may disagree about interpreting data, why don't we agree that the discussion is not "silly" -- -OK? That does not add anything.

    Jeff
    Aug 24, 2012. 10:17 AM | 4 Likes Like |Link to Comment
  • Don't Worry About Profits As A Percent Of GDP [View article]
    Very interesting article on an important topic -- thanks.

    In your first chart, what definition of recession did you use?
    Aug 24, 2012. 10:13 AM | Likes Like |Link to Comment
  • Understanding The Business Cycle -- The Key To Investor Success [View article]
    Gary -- I read your interesting article on profits as a percentage of GDP -- http://seekingalpha.co....

    Welcome to Seeking Alpha and I look forward to your future contributions.

    Meanwhile, I note that your article has shaded areas indicating US recessions. I have a simple question for you: When did your chart did you use the NBER recession dates that I recommend? Or did you use what you call the "tried and true" definition of two negative quarters?

    Just wondering....

    Jeff
    Aug 24, 2012. 10:12 AM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: The Lull Before The Storm? [View article]
    Nolesince87 -- If you have been reading regularly, you know three things:

    1) My short term perspective changes frequently, so I have been bearish within the last few months.

    2) My long term risk-adjusted perspective also changes, so I got more conservative last October when the SLFSI went over 1.1.

    3) My overall investor perspective has been accurate. I was talking Dow 20K two years ago when Dow 5000 was getting the attention.

    So I am not a permabull, but I do have specific metrics. I don't think about values for the market or individual stocks without considering earnings, which are at an all-time high, much stronger than 2008.

    I was not writing in 2000, but I had the valuation issue nailed then, so that is not a fair comparison.

    You may be right about slightly cheaper prices, but most will not pull the trigger on a small correction, just as they did not earlier this year.

    I appreciate the chance to discuss this, but I strongly disagree that I am providing logic for a market "bubble."

    Jeff
    Aug 21, 2012. 11:57 PM | 2 Likes Like |Link to Comment
  • Weighing The Week Ahead: The Lull Before The Storm? [View article]
    Mobywhite -- Thanks!

    And thanks to the many people who joined in with comments, including those who are relatively new to Seeking Alpha.

    I hope that we have a good forum for discussing prospects in various time frames:)

    Jeff
    Aug 19, 2012. 09:57 PM | 2 Likes Like |Link to Comment
  • Weighing The Week Ahead: The Lull Before The Storm? [View article]
    Timo -- You might enjoy this piece, and also the wide variety of comments.

    http://seekingalpha.co...

    and thanks for the kind words.

    Jeff
    Aug 19, 2012. 11:32 AM | 3 Likes Like |Link to Comment
  • Weighing The Week Ahead: The Lull Before The Storm? [View article]
    nafar -- The economic growth is building employment, but not fast enough. 110,000 a month in net job gain is just treading water. 165,000 would make some progress. We need something closer to 300,000 for a robust recovery.

    It is also true that corporations have been very profitable despite the modest growth. Stocks are priced based on profits, so for investors, the slow growth has provided some gains. For society, it is not very good.

    As aggregate demand improves -- and it gradually will -- companies will hire more people. I think we are in a longer than normal recovery cycle.

    Your question is one that everyone should be thinking about.

    Jeff
    Aug 19, 2012. 09:44 AM | 7 Likes Like |Link to Comment
  • Weighing The Week Ahead: The Lull Before The Storm? [View article]
    Cautious Investor -- These are all good points. I certainly agree that many if not most fund managers are having trouble navigating when policy decisions have such an important role.

    One problem is that they have never studied political science or public policymaking. Without this background, the actions of the decision makers does not seem rational. These people are not doing what they themselves would do if they were in power.

    As I frequently write, you need to put aside your own political preferences and concentrate on forecasting behavior and decisions. Since this is my sweet spot, I have done well with my forecasts on the Fed, Congress, and (so far) Europe.

    In topics where I have less personal background, I work to find the right sources, ignoring the instant experts on Europe and China.

    Thanks for your thoughtful comment!

    Jeff
    Aug 19, 2012. 09:40 AM | 4 Likes Like |Link to Comment
  • Weighing The Week Ahead: The Lull Before The Storm? [View article]
    whiff -- The correct answer to this question is different for each investor. I start by asking whether someone is preserving wealth or still needs to build wealth. For those in the first case, it may be right to have 100% bonds. Those with shorter time frames and lower risk tolerance should also emphasize bonds.

    I have some clients who have a longer time frame who need stocks more than bonds, a current Warren Buffett recommendation.

    For those needing bonds, I build a bond ladder that goes out no more than 7 years -- all investment grade. The yield depends on when we set it up, but as interest rates rise, the portfolio will gradually adjust. I wrote about it here: http://bit.ly/Pw0iK8

    Good question.

    Jeff
    Aug 19, 2012. 09:32 AM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: The Lull Before The Storm? [View article]
    It is interesting. Our Felix model is based on a pattern recognition approach, but with a set time frame.

    Let's watch this in real time for a bit. It is not clear from the article whether the data reflect testing or actual experience.

    Thanks for the pointer.

    Jeff
    Aug 19, 2012. 09:26 AM | 1 Like Like |Link to Comment
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