Banks Poised To Pull The Broad Market Higher In 2013? [View article]
This is a developing global phenomenon I have noted in my own articles. Look at charts of Deutsche Bank (DB), HSBC (HBC), Credit Suisse (CS), Mitsubishi UFJ (MTU) as well as the U.S. based regionals and money centers. A lot of breakouts, broken downtrends, and just about everything above its 40 week EMA.
Even Regions Financial, fresh off another set of allegations, has failed to break down so far. We have a lot of bearishness out there, but it's hard to see a big downside move with the banks (and small caps, and emerging markets) acting well.
Regarding your earlier point about the Nikkei going parabolic and not recovering (to date), it seems to me we had that moment with the NASDAQ in 2000.
As to the more general thesis that Japan is the model for the U.S. going forward, the argument has been made by more astute analysts than myself, and in fact I have made reference to it on occasion since the 2008 crash. But the more I think about it, the less convincing it seems, and I really am looking for someone to make the case coherently and comprehensively. Taking several points:
1. Bank solvency: the Japanese property boom dwarfed the one in the U.S., and while my impression is that the U.S. banks have still not come clean, I don't think they are holding nearly as much rubbish on their books. In Japan multi-generational loan terms are not uncommon; they had a much larger can and a much longer road down which to kick it.
I also tend to think (another view not widely shared) that, unlike the BOJ and Japanese government, the Bernanke Fed and Geithner Treasury have done a fairly good job under very difficult circumstances. Not perfect, but they are steadily leading us back from the nastiest collapse in any of our memories - and without much help from congressional fiscal action.
Japanese policy makers now seemed determined to break the grip of deflation once and for all. We'll see how it works out, but look at a long term chart of the yen and Nikkei now - yen has broken long term support and the Nikkei has broken long term resistance. 2013 just may be the year to start allocating some funds to Japanese equities.
2. Manufacturing is alive and well. The output of the U.S. manufacturing sector has been steadily increasing all along, even as manufacturing employment has been declining. We hear about the tech fueled productivity boom, but the manufacturing "productivity miracle" has been every bit as impressive. We just have to figure out what to do with all the folks we no longer need on the shop floor.
3. Global competition is a problem for everyone but that is something I see as a potential positive as well as a negative. It drives efficiencies and lowers costs, but again, there is that little employment problem.
4. Demographics is where I see one of the greatest divergences between Japan and the U.S., one that heavily favors the U.S. We do need a sensible immigration policy, and my suspicion is that we will get one - not optimal, but reasonably sensible (that seems to be how we do things here). In the unlikely event that we fumble it, and give in to the nativist and xenophobic streaks that have been common in the U.S. since the 19th century, then we could have a problem.
That's about all I can come up with absent some more thought and study.
Thank you for your comments. @skiman, triple top or head & shoulders top, it doesn't look very comforting either way. But I am not bearish, just cautious.
@Ari, I realize that my long term view on the dollar is probably not widely shared, particularly here at Seeking Alpha. Turning the question around, I see dollar bears as exceedingly sanguine on the world ex-U.S. We have issues, but I wouldn't trade ours for anyone else's.
@change, you seem to be asking me to defend a counter-factual. I would instead ask you to flesh out your implicit assertion - why is the U.S. today so much like Japan in 1990?
The Unbridled Truth About Dividend Contribution To Shareholder Profitability [View article]
This ongoing debate between dividend investing and capital appreciation investing has been interesting, to say the least. The various participants on both sides have on occasion argued with a sort of theological intensity, which I have found odd - and at times amusing.
My take on this is that any sort of absolutism when playing in the markets is your enemy, because nothing works all the time. I cut my teeth as a serious investor in the 1990s, when the very notion of dividend growth vs capital appreciation would generally have been regarded as having been settled for all time in favor of the latter. We saw how that worked out.
The current macro cycle does seem to favor dividend stocks, at least empirically, as Chuck has so well demonstrated, and Tom Armistead apparently also found in his own study. I have my own ideas about this, but my suspicion is that it too shall eventually pass. I remain an agnostic, or perhaps better, a mercenary. No allegiances here, I will go with what works as long as it's working.
Good observation chartdawg. There is a fair amount of the fear trade still showing in the treasury market. COY isn't a highly liquid security, so I'm not sure big moves are a good signal. However if you have noticed a correlation with equity markets, that does have some value.
Do you think the pullback in COY and similar funds has anything to do with re-positioning in anticipation of tax rate changes going forward? We saw similar, but less dramatic, moves in more liquid funds such as HYG and JNK
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
When looking at enterprise IT companies, I always talk to my senior IT guys. Years ago they preferred HP in the data center, even if they were buying Dell for the desktop and laptops. The last few years they have been saying what rubbish the HP server products had become, and how useless support was.
That kind of feedback from the front lines, as well as the instability at the top and the acquisition disasters, have kept me away from this stock. I have bought names like Ford and even B of A at firesale prices because I saw they were going concerns that the market was pricing for extinction. I have never felt that way about HP.
Microsoft And Nokia See A Couple Of Important Developments [View article]
The Surface is going to face at least one major obstacle to widespread adoption: the “rent is too damn high.” I think MSFT seriously missed on the price point.
Christmas In Athens: You're A Mean One, Mr. Grinch [View article]
Perhaps I am being overly optimistic, but at some point ("after the funeral" as you say) the Greeks will decide they have had enough, and will begin to get on with the restoration work. What other choice is there really?
On a darker note, I do know of some (mostly older) Greeks who privately hope for another military junta to sieze control and restore order and discipline. Apart from the question of whether such a thing is even possible, it is an interesting indicator of how far things have gone.
Christmas In Athens: You're A Mean One, Mr. Grinch [View article]
Agreed that Greece is, as you put it, "done." Utterly and completely insolvent. Exiting the currency union has appeared, to me at least, all but inevitable for some three years now.
What we see playing out currently is the political process of sorting out who will take the losses, and when - and most importantly, how it can be done without having to re-capitalize many of the European banks. Unfortunately this is a matter in which the Greeks themselves become largely irrelevant once they reject the austerity measures.
Ending it quickly a couple of years ago would have been much better than the delays that have been permitted, but if it were easy, it would have already been done. That is the nature of political processes. The only hope I can see for Greece is a re-issue of the Drachma, devaluation and re-denomination of the debt, and some orderly plan to convert it to long term debentures. Which, as Mr. Spencer detailed, brings us to this little problem of the banking system.
Christmas In Athens: You're A Mean One, Mr. Grinch [View article]
Fine job Mr. Spencer. As a Greek expat with family and friends with business interests still in the country, I think you are spot on in nearly every regard. And predictably accompanied by the usual nonsensical comments about the U.S. being the next Greece.
Of course PCs aren't dead. From a growth investor perspective, however, they may as well be dead. That is because there is no clear driver of growth for the PC industry. Now you have dividend income investors sniffing around Microsoft and Intel, and companies like Dell trying to reinvent themselves outside the PC space.
The shares of the 90s tech giants are unlikely to return to their glory days, barring some game-changing innovation. That doesn't necessarily make them bad investments, it just makes them more appropriate for a different class of investors.
Yield Is The Last Refuge Of Scoundrels [View article]
So it's not patriotism any more?
Reaching for yield is like having drinks at a joint in a bad neighborhood. You might be OK, heck you might even have a good time, but you had better be keeping an eye on everyone in the room.
Cracks Are Beginning To Show In The Market [View article]
Thanks for the support kolpin. It's tough to make a call on anything in the midst of a correction, so you may be better off where you are - on the sidelines - for now. My read on the Dow utilities is that the index is currently at the lower bound of the 3+ year trend line, and looking like it may want to roll over. We need to see a move higher soon.
Looking at a couple of names in the sector that I follow, ConEd (ED) has been flirting with support at the 200 day for about a month now. I would want to see a convincing move off that support as a buy signal. Southern Co (SO) is a little steadier, and would be my personal choice at this point. However, I am not buying until the overall market steadies.
Microsoft: Windows 8 Shows Why Steve Ballmer Must Go, And Why That Is A Buying Opportunity [View article]
The fundamental thesis for MSFT is kind of murky. It is generally agreed that Ballmer is a hindrance, and that the corporate culture is dreadful. There is less agreement on the product strategy - this is a company that has a number of hits and misses on its record.
My own view of MSFT, like Matthew Dow, is primarily as an enterprise software company that has an opportunity to reinvent itself in the consumer space. The big bet on the new UI in Win8 (and the accompanying hardware) represents a risky but necessary and belated acknowledgement of the end of the PC era. However I have a hard time seeing them taking significant market share in mobile. To me the more interesting question is what they do with Skype, and how they monetize it.
Fundamentals aside, over the last ten years one of the easier ways to make money in the market has been to buy MSFT under $25 and to sell around $30. We were stopped out a couple of weeks ago.
Banks Poised To Pull The Broad Market Higher In 2013? [View article]
Even Regions Financial, fresh off another set of allegations, has failed to break down so far. We have a lot of bearishness out there, but it's hard to see a big downside move with the banks (and small caps, and emerging markets) acting well.
Disclosure - long BAC
Looking Ahead To 2013 [View article]
Regarding your earlier point about the Nikkei going parabolic and not recovering (to date), it seems to me we had that moment with the NASDAQ in 2000.
As to the more general thesis that Japan is the model for the U.S. going forward, the argument has been made by more astute analysts than myself, and in fact I have made reference to it on occasion since the 2008 crash. But the more I think about it, the less convincing it seems, and I really am looking for someone to make the case coherently and comprehensively. Taking several points:
1. Bank solvency: the Japanese property boom dwarfed the one in the U.S., and while my impression is that the U.S. banks have still not come clean, I don't think they are holding nearly as much rubbish on their books. In Japan multi-generational loan terms are not uncommon; they had a much larger can and a much longer road down which to kick it.
I also tend to think (another view not widely shared) that, unlike the BOJ and Japanese government, the Bernanke Fed and Geithner Treasury have done a fairly good job under very difficult circumstances. Not perfect, but they are steadily leading us back from the nastiest collapse in any of our memories - and without much help from congressional fiscal action.
Japanese policy makers now seemed determined to break the grip of deflation once and for all. We'll see how it works out, but look at a long term chart of the yen and Nikkei now - yen has broken long term support and the Nikkei has broken long term resistance. 2013 just may be the year to start allocating some funds to Japanese equities.
2. Manufacturing is alive and well. The output of the U.S. manufacturing sector has been steadily increasing all along, even as manufacturing employment has been declining. We hear about the tech fueled productivity boom, but the manufacturing "productivity miracle" has been every bit as impressive. We just have to figure out what to do with all the folks we no longer need on the shop floor.
3. Global competition is a problem for everyone but that is something I see as a potential positive as well as a negative. It drives efficiencies and lowers costs, but again, there is that little employment problem.
4. Demographics is where I see one of the greatest divergences between Japan and the U.S., one that heavily favors the U.S. We do need a sensible immigration policy, and my suspicion is that we will get one - not optimal, but reasonably sensible (that seems to be how we do things here). In the unlikely event that we fumble it, and give in to the nativist and xenophobic streaks that have been common in the U.S. since the 19th century, then we could have a problem.
That's about all I can come up with absent some more thought and study.
Cheers
HF
Looking Ahead To 2013 [View article]
@Ari, I realize that my long term view on the dollar is probably not widely shared, particularly here at Seeking Alpha. Turning the question around, I see dollar bears as exceedingly sanguine on the world ex-U.S. We have issues, but I wouldn't trade ours for anyone else's.
@change, you seem to be asking me to defend a counter-factual. I would instead ask you to flesh out your implicit assertion - why is the U.S. today so much like Japan in 1990?
The Unbridled Truth About Dividend Contribution To Shareholder Profitability [View article]
My take on this is that any sort of absolutism when playing in the markets is your enemy, because nothing works all the time. I cut my teeth as a serious investor in the 1990s, when the very notion of dividend growth vs capital appreciation would generally have been regarded as having been settled for all time in favor of the latter. We saw how that worked out.
The current macro cycle does seem to favor dividend stocks, at least empirically, as Chuck has so well demonstrated, and Tom Armistead apparently also found in his own study. I have my own ideas about this, but my suspicion is that it too shall eventually pass. I remain an agnostic, or perhaps better, a mercenary. No allegiances here, I will go with what works as long as it's working.
This Rally Has Legs [View article]
Do you think the pullback in COY and similar funds has anything to do with re-positioning in anticipation of tax rate changes going forward? We saw similar, but less dramatic, moves in more liquid funds such as HYG and JNK
Disclosure - we are long HYG
This Rally Has Legs [View article]
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
That kind of feedback from the front lines, as well as the instability at the top and the acquisition disasters, have kept me away from this stock. I have bought names like Ford and even B of A at firesale prices because I saw they were going concerns that the market was pricing for extinction. I have never felt that way about HP.
Microsoft And Nokia See A Couple Of Important Developments [View article]
Christmas In Athens: You're A Mean One, Mr. Grinch [View article]
On a darker note, I do know of some (mostly older) Greeks who privately hope for another military junta to sieze control and restore order and discipline. Apart from the question of whether such a thing is even possible, it is an interesting indicator of how far things have gone.
Christmas In Athens: You're A Mean One, Mr. Grinch [View article]
What we see playing out currently is the political process of sorting out who will take the losses, and when - and most importantly, how it can be done without having to re-capitalize many of the European banks. Unfortunately this is a matter in which the Greeks themselves become largely irrelevant once they reject the austerity measures.
Ending it quickly a couple of years ago would have been much better than the delays that have been permitted, but if it were easy, it would have already been done. That is the nature of political processes. The only hope I can see for Greece is a re-issue of the Drachma, devaluation and re-denomination of the debt, and some orderly plan to convert it to long term debentures. Which, as Mr. Spencer detailed, brings us to this little problem of the banking system.
Christmas In Athens: You're A Mean One, Mr. Grinch [View article]
PC: Not Dead Yet! [View article]
The shares of the 90s tech giants are unlikely to return to their glory days, barring some game-changing innovation. That doesn't necessarily make them bad investments, it just makes them more appropriate for a different class of investors.
Yield Is The Last Refuge Of Scoundrels [View article]
Reaching for yield is like having drinks at a joint in a bad neighborhood. You might be OK, heck you might even have a good time, but you had better be keeping an eye on everyone in the room.
Cracks Are Beginning To Show In The Market [View article]
Looking at a couple of names in the sector that I follow, ConEd (ED) has been flirting with support at the 200 day for about a month now. I would want to see a convincing move off that support as a buy signal. Southern Co (SO) is a little steadier, and would be my personal choice at this point. However, I am not buying until the overall market steadies.
Microsoft: Windows 8 Shows Why Steve Ballmer Must Go, And Why That Is A Buying Opportunity [View article]
My own view of MSFT, like Matthew Dow, is primarily as an enterprise software company that has an opportunity to reinvent itself in the consumer space. The big bet on the new UI in Win8 (and the accompanying hardware) represents a risky but necessary and belated acknowledgement of the end of the PC era. However I have a hard time seeing them taking significant market share in mobile. To me the more interesting question is what they do with Skype, and how they monetize it.
Fundamentals aside, over the last ten years one of the easier ways to make money in the market has been to buy MSFT under $25 and to sell around $30. We were stopped out a couple of weeks ago.