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Alex Filonov
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I was born in 1956 in USSR. After graduation from college in 1979 I worked full-time as an IT specialist. Until 1990 I worked for different companies in the Soviet military industrial complex. I created a small software business in 1991, which failed in 1993. I worked for Oracle Corp in 1995 in... More
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Muddling Investor
  • Changing Trends, Continued 2 comments
    Jun 7, 2013 4:57 PM | about stocks: SAN

    New trends are settled. I wrote in March that:

    Reverse dependency between dollar and asset classes is broken.

    Commodities are flat or down.

    Stocks are up.

    Bonds are up.

    The only change since is in bonds: they are down hard. 10 years Treasury yield is well above 2%, again. Don't know if this new trend continues, don't see any reasons for it.

    What can we deduce from these trends?

    Power definitely shifted to equity. In more broad terms, power shifted to more risk for more return. This is a good trend. Now, I would be glad if that happens, because in the long term, stock market is on the way to the new long-cyclical bull market (average 35 years cycle). The only thing which bothers me, bullish stock market is only supported by valuation expansion, not by fundamentals. Oh well, whatever works. Can't complain when most of my money is in stocks.

    Another trend of last couple of months: Europe stock markets are up, a lot. If Europe repeats US path, that means that in about 4 months we are going to see end of recession there. Not sure if it's true, but if it is, great. I'm looking for good investments in Europe. That's beside my position in Banco Santander (SAN), which is OK, but doesn't shine.

    Another change from beginning of year: we are back to ETF market. In the beginning of year, it was mostly funds market. It was quite obvious when big funds were buying huge amounts of stocks. Now we see that most of buying starts with big ETF buys. And it's all markets, equities is just one of them. Same picture is obvious in commodities and bonds. Maybe it's because markets are thinner and more trades are done by tradebots? No idea, your guess is as good as mine.

    Commodities are still going down. All of them. Something still keeps oil above the water. Gold kinda stabilized around 1400. Everything else is down. Agros, metals, natural gas (after runup in January-March). For me, it means that most traders came to their senses and don't believe in big inflation ahead (never mind hyperinflation).

    Every trend above is great for stocks. I'd like to see fundamental support for the stock market, but I'm taking every buck market gives me. With gratitude. The only problem here: you can't expand valuations indefinitely. Economic growth should support stock market, or we are up for another crash.

    Disclosure: I am long SAN.

    Additional disclosure: Positions can change any time.

    Themes: Market Outlook Stocks: SAN
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  • sundate36
    , contributor
    Comments (288) | Send Message
     
    Alex - thanks for the update. Do you have any insight into why emerging markets ETFs (Russia and Brazil especially) are trading so low? Are these two countries correlated with a deflated commodities market?
    8 Jun 2013, 02:10 PM Reply Like
  • Alex Filonov
    , contributor
    Comments (1411) | Send Message
     
    Author’s reply » Yes, it looks like that. On the other hand, Australia feels much better. Probably combination of weak commodities and negative outlook for emerging markets. With current trading environment, any trend can be overshot in any direction though.
    9 Jun 2013, 01:45 PM Reply Like
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