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Tales From The Future
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Tales From The Future. I picked my nickname because many advisors and investors claim they can predict the future of the (stock) markets and somehow pick the winners. I don't. I usually do not engage in short-term trading and myopic analysis (quarter by quarter, without looking at the big... More
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  • "Momentum-Investor-Fueled Euphoria" - Who Just Wrote That? 2 comments
    Oct 22, 2013 12:15 PM | about stocks: NFLX

    The NFLX CEO in his most recent shareholder newsletter:

    "In calendar year 2003 we were the highest performing stock on Nasdaq. We had solid results compounded by momentum-investor-fueled euphoria. Some of the euphoria today feels like 2003."

    http://bit.ly/HeUAM2

    That should tell us something. See my earlier post on a 2013 tech bubble brewing - it's not Nasdaq 1999 yet, but Nasdaq 1998 doesn't seem like a bad analogy for some technology stock moves in 2013.

    More in early 2014. Let's wait and see how a possibly already fully priced market does in its last innings.

    Societe Generale's Albert Edwards (yes, he's usually very bearish, but hear him out, there are enough bulls on CNBC and other financial media each and every day) writes about the US stock markets:

    Only the brave can react to what they see and leave the markets. The global macro looks an appalling mess and even more importantly, long-term equity investors can find nothing worth buying. For equity investors we are closer to 2007 than 2001 as the vast bulk of the equity market, as represented by the median PE, PB or Price/Sales, is expensive. The US median price/sales ratios is at a record high, indicating that there is practically nothing cheap in the equity market left to buy.

    (click to enlarge)

    Themes: market timing, bubbles Stocks: NFLX
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  • Tales From The Future
    , contributor
    Comments (4956) | Send Message
     
    Author’s reply » Update: Barron's is running a piece on Edwards today:

     

    "Edwards writes:

     

    I know we are getting into the eye of a financial bubble when I have little comprehension of what is going on any more. This was confirmed when I read in the Financial Times that “eight years since the PIK-toggle entered the market, companies are again using the esoteric structures, along with a host of riskier borrowing practices associated with the buyout boom that helped inflate the 2006-07 credit bubble.” The article quotes Craig Parker who helped invent the product and who is now head of leveraged finance at Goldman Sachs. He thinks “we’re in the third year of the greatest leveraged finance markets of all time because of the efforts by the Fed, and all the central banks around the world, to keep rates t zero.

     

    There’s more than that, though. He points to housing prices in London, where housing prices just rose 10% in one month, and Germany, while the Chinese, he writes, “have also lost control of house price inflations–again!” He notes that long-term stock buyers can find “nothing worth buying…The US median price/sales ratios is at a record high, indicating that there is practically nothing cheap in the equity market left to buy.”"

     

    http://on.barrons.com/...
    23 Oct 2013, 05:36 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (4956) | Send Message
     
    Author’s reply » Another interesting piece from James Saft:

     

    "The Fed is not going to taper bond purchases any time soon, and the central bank does continue to see keeping markets happy as its unofficial third mandate.

     

    That's a strong reason to think financial assets have an upward bias, but only in the absence of some force that can overcome faith in the Fed and in the ability of stocks to remain unmoored of fundamentals.

     

    What that might be is hard to say. The recovery, such as it is, is getting long in the tooth, making a U.S. recession or downturn a 2014 possibility. And of course there is always political dysfunction and the possibility that the U.S. shoots itself in the foot.

     

    When leverage builds up and the wrong guys trot out the same old lines, it is time to be very cautious. "

     

    http://reut.rs/18cQHgU
    23 Oct 2013, 05:40 PM Reply Like
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