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  • S&P 500's Summer Slumps And Why This Summer Could Be Different [View article]
    Hi Valley Boy,

    Thanks for the comment. Interesting to see the strong euro today. Last summer there was a high correlation between US and European assets. Not sure if we can rely on European flows to help.
    Apr 1 12:55 PM | Likes Like |Link to Comment
  • S&P 500's Summer Slumps And Why This Summer Could Be Different [View article]
    Hi whidbey,

    Thanks for the comments.
    Apr 1 12:53 PM | Likes Like |Link to Comment
  • S&P 500's Summer Slumps And Why This Summer Could Be Different [View article]
    Hi Michael,

    Thanks for the comments and the data. I understand that there is a reason that people say "sell in May and go away", but I prefer to use more specific catalysts than the calendar. By the way, looks like April is a good time to be in the market.
    Apr 1 12:53 PM | Likes Like |Link to Comment
  • S&P 500's Summer Slumps And Why This Summer Could Be Different [View article]
    Hi Nate,

    Thanks for the comment. Agree that the Fed is a powerful force now.
    Apr 1 12:51 PM | Likes Like |Link to Comment
  • S&P 500's Summer Slumps And Why This Summer Could Be Different [View article]
    Hi patb234,

    Thanks for the comments.
    Apr 1 12:50 PM | Likes Like |Link to Comment
  • S&P 500's Summer Slumps And Why This Summer Could Be Different [View article]
    Hi TaiPan,

    Good question. It really depends on the catalyst for the pullback and the timeframe of the investor.

    Here are some of the things that I am thinking about.

    For me, if earnings are bad, I will likely scale back some of my positions, raise cash and rotate more to large caps than small caps. Depending on the situation, I may also go short.

    If earnings are good and the market just drops a few percent to blow off steam then I would probably use that to add to some positions.

    If interest rates spike and/or there is a Fed induced pullback, then I would be more concerned and adjust accordingly.

    It also depends on if there is a "risk off" pullback like last year when all asset classes trade together, or if there is less correlation.

    There will be a pullback at some point and the catalysts at the time will determine the adjustments.

    By the way, there are lots of other factors to take into account, such as taxes, capital gains treatment etc. and this is NOT investment advice.
    Apr 1 12:49 PM | Likes Like |Link to Comment
  • Watching Key Charts For Quantitative Easing Clues And A Big Move In Bonds [View article]
    Hi Ed Invests,

    Thanks for your comments.

    I think there will be a very noticeable change when QE ends. The Fed is on pace to buy ~$1 trillion of bonds this year, including ~$500 billion of Treasury bonds, which accounts for about half the value of the bonds that theTtreasury needs to issue this year. When QE ends and the market loses this deep-pocketed buyer, there will likely be a big impact. There are no bond vigilantes in the US bond market now because the power has shifted to the Fed, but they may come back when the Fed goes away. Finally, if bond yields go up, then all the high yield companies that are borrowing big at low rates will see their financing costs go up.
    Mar 31 10:35 AM | Likes Like |Link to Comment
  • Watching Key Charts For Quantitative Easing Clues And A Big Move In Bonds [View article]
    Hi dneedle1,

    Thanks for your comments.
    Mar 29 10:29 PM | Likes Like |Link to Comment
  • S&P 500's P/E Multiple Ending Q1 At 3-Year High [View article]
    Hi Cashawash,

    Thanks for your comments.
    Mar 25 06:41 PM | Likes Like |Link to Comment
  • S&P 500's P/E Multiple Ending Q1 At 3-Year High [View article]
    Hi brbpdb,

    Thanks for the suggestion about Hussman's piece. I don't fully agree with it, but it is a good read and interesting perspectives.

    A few observations:

    First, I agree that at some point there will be a market correction. I don't know when or how deep. How deep will depend, in part, on when it happens. The catalyst that I am looking for is when the Fed ends QE and (later) raises interest rates. If they do it too soon (less likely) then we will have a weak economy without Fed support - not good. If they do it too late (more likely) then they may need to cut the support quickly, which will create a shock. Either way, the market will probably start reacting a bit in advance. I am much more worried about this than P/E multiple and profit margins. As I wrote in my article here seekingalpha.com/artic... I don't think we need to worry about the Fed right now, but it could be an issue in a few months. Now the issue is earnings.

    Second, he says that his models didn't work in the 2008/2009 crisis because they didn't incorporate data from the depression. If that is the case, I am not sure why his models would work now. What is happening now is still part of the 2008/2009 crisis, i.e. the slow, painful rebound.

    Third, I don't really believe the profit margin argument. We are still coming out of the last recession. Unemployment is 7.7%. Eventually it will go down to 7%, 6.5% and hopefully 6%. This may take 3 years, 5 years or 7 years. Most companies will see their margins benefit greatly as unemployment goes down. Companies have too much capacity and the economic rebound will use up some of that capacity and help margins (think about how this will help Starbucks or Wynn, two companies that I like and I am long). I am not saying that margins will jump higher, but there are tailwinds for margins, not just headwinds.

    Fourth, I don't think it is fair to compare the economy now to 2007. Then you had debt fueling a lot of growth that was not sustainable. Now there is much less debt and companies and households are deleveraging, not leveraging. Also, we are not at the same point in the cycle as 2000.

    Fifth, I don't believe in sentiment indicators. Investors today are shellshocked and still recovering from 2008/2009. They may be far more bullish than a few months ago (but more conservative than at any point in the 5 years before 2008). There is little evidence of exuberance. Sentiment indicators (meaning polls of investors, advisors, etc.) don't seem to take into account time frames.

    Clearly, the market is artificially supported by the Fed and that will be a problem one day. We may experience a 20% correction at some point, but I have not yet seen enough evidence to think that point is now. If earnings are bad, I may come to a different conclusion, but I want more evidence first. In fact, I think that the fact that most people are waiting for, or calling for, a correction like last year may indicate that the next move in the market is in the opposite direction (but, again, it depends on earnings).
    I was much more bullish on the market in Q4 during the election / fiscal cliff crisis. That was a better time to invest than now. But, I am not yet ready to be bearish.

    I hope this helps. What are your thoughts?
    Mar 25 04:34 PM | Likes Like |Link to Comment
  • Watching Key Charts For Quantitative Easing Clues And A Big Move In Bonds [View article]
    Hi Data Driven,

    Thanks for your comments.
    Mar 25 04:08 PM | Likes Like |Link to Comment
  • S&P 500's P/E Multiple Ending Q1 At 3-Year High [View article]
    Hi manfac,

    Thanks for the comments. Appreciate the feedback.
    Mar 25 11:59 AM | Likes Like |Link to Comment
  • S&P 500's P/E Multiple Ending Q1 At 3-Year High [View article]
    Hi xuinkrbin,

    Thanks for the comment. Yes, I should have written that Apple disappointed analysts. There is a saying that companies don't beat or miss earnings, analysts do. It is really a game of expectations.

    That said, I think there were a lot of investors that were also disappointed with the last Q's earnings.
    Mar 25 10:38 AM | Likes Like |Link to Comment
  • S&P 500's P/E Multiple Ending Q1 At 3-Year High [View article]
    Hi, Rock_nj,

    Thanks. I'll comment more about Hussman later.

    I think earnings are the key now, but another risk for the medium term is the Fed. The Fed will likely pull back on QE at some point and could impact the market. I don't think QE tapering will happen in the next few months, but it is on the horizon. I wrote more about this in my last article.
    Mar 25 10:15 AM | Likes Like |Link to Comment
  • S&P 500's P/E Multiple Ending Q1 At 3-Year High [View article]
    Hi brbprd,

    Thanks for the comment. I will look at the report and add more later.
    Mar 25 10:11 AM | Likes Like |Link to Comment
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