I'd like to just caution you on that viewpoint - if you were to ask a cab driver what direction the U.S. dollar will go, I can pretty much promise you he or she would say lower. Whenever anything becomes conventional wisdom or presumed, you have to begin to entertain the idea of being contrarian.
bearfund - this is an interesting point as well, however most total return in international stock funds (particularly emerging markets) comes from capital appreciation rather than dividends. Given the currency translation effect, it becomes extremely important to understand that a bet on an international market's equities is also a bet against your own currency relative to their's.
Blix bring up some excellent points here. It may very well be that we're entering an era now where currency return will make up a bigger and bigger portion of one's total return on an international investment. We're in a world now where everyone wants to export to everyone else. Everyone wants a lower currency to sell their goods and effectively import inflation because of high debt loads. And while the consensus is certainly that the dollar will continue to go lower, I caution investors on assuming it will do so in a straight line. When the Euro was at $1.20, every pundit was predicting a crash to $1 (parity). Instead, the exact opposite happened as we went to $1.40. Anyone short the EFA ETF got badly hurt if they did not see the currency rise coming. It may not be necessary to hedge a currency's movement because of costs and difficulties involved, but it is important to know how fluctuations impact your investments.
Selling The 'Sell In May, Go Away' Strategy [View article]
The issue relates more to the other side of the sell in May strategy, which is to go into bonds. Even if stocks do not go up in the next 6 months, bonds can go down which negatively would impact returns this year for those following the approach. As always, appreciate the kind words.
The Junk Debt Dilemma and the Summer Crash of 2011 [View article]
Keep in mind that ultimately the only difference between a Crash and a bear market is speed. If my scenario is correct, the market would not decline into next year. Rather, a substantial decline would occur in very compressed period of time.
Thanks Thomas. It's somewhat of an odd thing that's occurring. Some of the emerging market ETFs have done phenomenally well in the last few months, but most of the return is due to their own currency appreciation. And yet, its that very same currency appreciation which actually hurts earnings because it makes exports less attractive, which should be reflected back in equity prices.
The Summer Surprise Of 2012, Or The Great Realization [View article]
Sentiment is extraordinarily bad when bond yields globally are below inflation targets by various central banks. The spot VIX is meaningless as a fear gauge - you have to look at the steepness of the VIX curve, and also consider the context of global liquidity pumping into the system (which means the spot VIX may actually be very expensive given the environment of low interest rates). And while bonds are generally more right, they are not always right. Bond yields leading up to the '87 crash prove that.
From Fall Melt-Up To A December To Remember [View article]
As per my quote, this is not something to hope for to happen, despite its potential inevitability. There are many many innocent bystanders who could get devastated by a Eurozone collapse.
Oil Prices May Play Out Like It's 2008 [View article]
Perhaps, but the bond market is suggesting a 2008 like juncture. Banks in Europe are esentially at their March 2009 lows, and I'm fairly certain thatt if you were an investor in Germany's market, the past month feels exactly like 2008.
Oil Prices May Play Out Like It's 2008 [View article]
A few points here. Deflation is a highly leveraged society is disasterous in many ways because the real value of existing debt only goes up, while growth does not outpace it. This means that yes - deflation/recession for the U.S. is one and the same.
Second, my analysis is not meant to be long-term, i.e. for multiple years. I am arguing that Oil prices could fall substantially and are not justified at these levels given the behavior of certain industry groups and asset classes. I may be wrong, but investing is about probabilities - the odds seem pretty high to me of a very real decline.
Third - I recommend reading up on the contango/backwardation effect on USO. You may want to reconsider it as a way to pay Oil once you have.
Utilities Are Warning the Correction Is Here [View article]
This is incorrect - Utilities on a total return basis outperformed the S&P 500 by over 2000 basis point in 2008. You are not including dividends in your statement, and dividends are the largest portion of one's return from Utilities.
As to the point I am making - Utilities can be seen as a leading indicator on the term structure of interest rates, which in turn is a leading indicator of the stock market. In other words, when Utilities outperform, it is an early sign that the yield curve may flatten, which is not bullish for stocks.
Two points here. First of all, no where in this article did I say Gold was in a bubble. I specifically said "weakness appears to be fully entrenched if you look at recent price ratio action. What this means is that there is an opportunity cost to holding gold over equities, such that equities could sustainably perform relatively better." This is a RELATIVE trade - RELATIVE to equities, Gold may sustainably underperform, and if that's the case, and you care about minimizing opportunity cost/maximizing profit potential, then Gold may not be an optimal investment here.
To your second point. The Real Estate boom was also one of the most "predicted bubbles of all times" and the bust still happened despite that. Just because people "know" something is going to happen doesn't mean they actually act on it enough to cause the burst to occur until years later.
'Dividendsanity' And The Case For Sticking With Utilities ETFs [View article]
Appreciate the counter-perspective and reference. There is one element here which is missing - valuation. Dividend sectors such as Utilities, Healthcare, and Consumer Staples are vastly overpriced on a P/E basis, as I discussed on CNBC yesterday:
I certainly understand and respect where you are coming from, but given inflation targeting and valuation, income is far more expensive relative to growth now than in the recent part. Part of my Summer Surprise call is that a reversal in that relationship occurs.
Keep in mind that ratio analysis must be considered within the context of the environment. In the case of the "false bottom" - you are correct, but this was because the context favored a "Summer Crash" last year as I wrote of first here on Seeking Alpha on June 8, 2011. Within context today, the negative narrative and love for dividends seems like a vastly overcrowded play.
We're All Currency Traders Now [View article]
We're All Currency Traders Now [View article]
We're All Currency Traders Now [View article]
Selling The 'Sell In May, Go Away' Strategy [View article]
The Junk Debt Dilemma and the Summer Crash of 2011 [View article]
We're All Currency Traders Now [View article]
Something's Gotta Give [View article]
The Summer Surprise Of 2012, Or The Great Realization [View article]
From Fall Melt-Up To A December To Remember [View article]
Is The Fall Melt-Up Over? No! [View article]
04/11 Called top for Silver before historic collapse
06/11 Called for Summer Stock Market Crash
09/11 - Called top in Gold days before collapse
09/11 - Called Fall Melt-Up on the 29th
That's a lot of "coin flips," particularly when my articles explain the causations and reasoning behind the analysis.
Oil Prices May Play Out Like It's 2008 [View article]
Oil Prices May Play Out Like It's 2008 [View article]
Second, my analysis is not meant to be long-term, i.e. for multiple years. I am arguing that Oil prices could fall substantially and are not justified at these levels given the behavior of certain industry groups and asset classes. I may be wrong, but investing is about probabilities - the odds seem pretty high to me of a very real decline.
Third - I recommend reading up on the contango/backwardation effect on USO. You may want to reconsider it as a way to pay Oil once you have.
Utilities Are Warning the Correction Is Here [View article]
As to the point I am making - Utilities can be seen as a leading indicator on the term structure of interest rates, which in turn is a leading indicator of the stock market. In other words, when Utilities outperform, it is an early sign that the yield curve may flatten, which is not bullish for stocks.
Is the Gold Bull Market Over? [View article]
To your second point. The Real Estate boom was also one of the most "predicted bubbles of all times" and the bust still happened despite that. Just because people "know" something is going to happen doesn't mean they actually act on it enough to cause the burst to occur until years later.
'Dividendsanity' And The Case For Sticking With Utilities ETFs [View article]
http://bit.ly/Ldrh9v
I certainly understand and respect where you are coming from, but given inflation targeting and valuation, income is far more expensive relative to growth now than in the recent part. Part of my Summer Surprise call is that a reversal in that relationship occurs.
Keep in mind that ratio analysis must be considered within the context of the environment. In the case of the "false bottom" - you are correct, but this was because the context favored a "Summer Crash" last year as I wrote of first here on Seeking Alpha on June 8, 2011. Within context today, the negative narrative and love for dividends seems like a vastly overcrowded play.