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Michael Allen

 
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  • Warning: Bond Bears Might Be From The Twilight Zone [View article]
    You’ve done a lot of research to support your venting, so I’m surprised that you didn’t notice that I am personally long both equities and bonds. I do not have the ability to notify Seeking Alpha every time that I change my mind, but I’m not embarrassed to say that the Aug 12 article was wrong, and that it forced me to make significant adjustments to my approach. I’m pretty much OK with the results. Thank you for asking.
    Jun 17 01:16 AM | 1 Like Like |Link to Comment
  • Warning: Bond Bears Might Be From The Twilight Zone [View article]
    Not sure what makes you say this. I'm not aware of implying any such thing about deflation. But I do take it for granted that private sector innovation goes on all the time and is nothing new.
    Jun 16 11:51 PM | Likes Like |Link to Comment
  • Warning: Bond Bears Might Be From The Twilight Zone [View article]
    My assumption is that corporate profits as a percent of GDP are very far above sustainable levels. Numerous other analysts have come to the same conclusion. Therefore, there is no necessary connection with nominal GDP.
    Jun 16 11:18 PM | Likes Like |Link to Comment
  • Equity Returns And Inflation [View article]
    Agreed on all the caveats. I'll have a look at your inflation forecasts.
    Jun 14 07:48 PM | Likes Like |Link to Comment
  • Should You Invest In Turkey While There's Still Blood In The Streets? [View article]
    Rothschild had insider information.
    Jun 13 11:33 AM | 1 Like Like |Link to Comment
  • Reinhart-Rogoff And Krugman Square Off Again, But Are They Arguing About The Right Issues? [View article]
    You raise a lot of intersting points as in your discussion of how to improve the structural integrity of a building that is in the process of burning to the ground. It is not very helpful to the people inside.
    Jun 12 05:57 AM | Likes Like |Link to Comment
  • Testing Krugman's Debt Reduction Strategy (And Finding It Fails) [View article]
    The May report of the CBO puts the deficit at 80% of GDP. I presume you have an alternative measure of debt that gets us to 105%?
    Jun 12 05:40 AM | Likes Like |Link to Comment
  • Abe's Three Arrows Or Japan's Hail Mary Pass? [View article]
    I think a lot of people start with the assumption that the yen was fairly valued when Abenomics started. It wasn't. There is no beggar-thy-neighbor policy, here, only a stop others from manipulating MY damned currency policy.
    Jun 12 05:20 AM | Likes Like |Link to Comment
  • Is Abenomics Over? I Don't Think So. [View article]
    BTW, we should all separate analysis of the Japanese equity market, which can do anything it wants to, from analysis of the economy, which has to follow rules.
    Jun 10 07:59 PM | 1 Like Like |Link to Comment
  • Is Abenomics Over? I Don't Think So. [View article]
    Anyone with any experience in Japanese equities knows that banks and insurers are net beneficiaries of higher interest rates. Everyone also knows that consumers are net beneficiaries of higher interest rates, as they are net savers. And surely even my pet rock knows that everyone in Japan is a net beneficiary of a weaker yen. Yet, even as the yen rose and interest rates fell, Japan's GDP rose 0.8% annually from 2001 to 2010 while its working-age population shrunk 5%. In contrast, the US dollar collapsed 25% and its population rose 9% during the same period, yet it mustered only 1.8% annual growth in GDP. I've lived in both countries for half my life, and one thing I notice is that its very easy for foreigners to point out flaws in each others cultures, and they are not wrong to do so. But if I were competing with a Japanese company today, with the new economic policy in place, I'd be very afraid.
    Jun 10 07:47 PM | 1 Like Like |Link to Comment
  • Equity Returns And Inflation [View article]
    Real total returns on equities have exceeded inflation about 3.2% per year since 1890. There were only three periods when 10-year total real returns were negative, so for the most part, stocks are a reasonable, if imperfect hedge against inflation. What hurts equities is not so much inflation itself, but abrupt and unexpected rises in the rate of inflation. The reason for this is that during extreme inflationary shocks, input costs and output costs typically rise at very different rates, making it difficult for corporate profits to advance. If you can forecast these shocks accurately, you can probably make a lot of money. If there is any evidence that anyone can make such forecasts consistently, I would appreciate being educated about it.
    Jun 9 10:01 AM | 5 Likes Like |Link to Comment
  • Right Now Is One Of The Worst Times To Buy Stocks In The Past 40 Years [View article]
    After just checking my own data, I can partially answer my own question. The ratio of foreign-derived profits to the total has doubled over the past 40 years, but the relationship between the profit/gdp ratio and the subsequent 4-year profit growth rate has not changed at all. I don't fully understand the reason for this, but it's clear from the data that foreign profits do not alter the equation. It is probably because the driver of the relationship is the volatility of margins, not the level of revenues, and foreign profits suffer the same volatility in margins as domestic profits. They also, apparently, don't offer any diversification benefits.
    Jun 1 12:14 PM | Likes Like |Link to Comment
  • Right Now Is One Of The Worst Times To Buy Stocks In The Past 40 Years [View article]
    Thanks for this very complete and succinct summary of the bear case. Corporate profits/GDP have never before been sustained at the current level, but every time this issue is raised, someone will claim that "this time it is different." To be fair, U.S. companies source more of their profits from overseas than in the past. It seems intuitive to me that overseas profits must be subject to similar constraints on profit margins, but I wonder if you are aware of any empiracal research on the limits of overseas profits / GDP?
    Jun 1 11:42 AM | 2 Likes Like |Link to Comment
  • How The Experts Were Wrong: Gold Failed To Hold $1,400 And The Taylor Rule [View article]
    I find it difficult to believe that there are very many professional hedge fund managers who are unaware of the Taylor rule. It is neither obscure nor magic. It is basic economic theory that you would have to know about (but not necessarily fully agree with) if you were qualified to be investing other people's money.
    Jun 1 03:39 AM | 3 Likes Like |Link to Comment
  • Japan's Turbulence And The Euphoria Trap [View article]
    gggl: good point. Try pricing the S&P500 in yen all these years and it don't look so hot either!
    May 30 03:38 PM | Likes Like |Link to Comment
COMMENTS STATS
159 Comments
168 Likes