NoFate

Why Technical Analysis is Nonsense

There are at a minimum several benefits of TA:

1) At the very least provides a framework in an otherwise context free environment.

2) Certainly the more macro signals are powerful ...lower highs and lower lows, double bottoms, etc. Ignore these things at great peril.

3) It is hard to prove support and resistance levels, etc. because TA is trumped by the economy, news and earnings ...often slicing through TA levels like butter. But these levels also often hold when other forces are not moving the market.

4) Many people know TA and therefore some predictions become self fulfilling prophesies.

I too come at investing from an academic background ...Economics degree and MBA ...and I regret listening to many of my professors (who meant well). TA is an attempt to determine the impact of psychology on the market, which is a severly understudied phenomena.

During my studies all I heard was "random walk" ...which is probably accurate for the very short term ...but tell me the NASDAQ took a random walk from 5200 to 1200 at the beginning of the century. What a load of crap.

Not just in investing, but in life ...always be skeptical, but also always be open to new ideas.

Is the S & P Expensive?

If this is supposed to show that PE is currently "normal" ...it doesn't.

Do two things ...draw a horizontal line across the graph at about PE=18 and ignore the 90s (since it was a bubble). What you find is that 18 is close to the peaks in all cases ...and the valleys dip down to about 6.

The only other period it stays significantly above PE=18 is pre1929 ...of course this doesn't strengthen your argument either.

Final Note: A financial trick to determine expected return on a stock is to calculate 1/PE. When PE=18 you are expecting about a 5.6% return on your money. If this works for you then go for it.

5 Reasons Stocks Will Keep Falling

Guys - If everything is priced into the market and the market has a 6-9 month forward view, then why did it get cut in half in a week? The market is an emotional crack whore, not a crystal ball. It's favorite drug (credit and high leverage) got cut off a week ago and what we are seeing is DTs.

Further, Obama's increased likelihood of election didn't cause the crash! That is the most ridiculous thing I ever heard! His numbers went up because nobody believes McCain can fix it ...your causation is backwards.

In addition, I also disagree with the author on oil and the US$ for the same reasons as the first post.

Finally, it just stuns me how much disinformation is out there ...and what you all buy into sometimes! I am a Libertarian and am sick of being lied to by both parties and their media outlets.

How to Handle a Snap-Back Rally (If We Get One)

We are in a level 5 hurricane ...there is no investing right now. Investing in this environment is like starting construction on a new office building at the same time Katrina makes landfall.

Back to my trading...

How NOT To Think About Investing

It is not about counter-party risk ...it is about transparency.

When we can finally read a financial statement for a bank without worrying about "mark to myth" or off the books SIVs ...and actually figure out what they are worth... then there will be no counter-party risk.

It's good to see that you are finally bearish Jeff ...too bad you are still not understanding the root problem.

The Next Bull Market Could Be Rentals

I agree that the DEMAND for rentals will go up as more people get foreclosed on ...or simply can't get financing to buy a home.

I would also point out that the SUPPLY of houses (and apartments) increased dramatically in the past 7 years also.

So demand for rentals should increase, but supply of rentals should increase as well. I would be very careful with the author's thesis.

I would also point out that the C-S Index is still dropping like a rock and will likely shoot past the mean before it starts to flatten out. Banks are demanding 30% down on rentals because they realize this (i.e. grew a brain). So even if you get positive cash flow, you will likely lose equity immediately (unless you get a really good deal).

I plan to buy houses to rent, but am waiting for blood in the streets. When the Case-Shiller index is almost flat in another year or two I will start looking. Until then I am very happy sitting on cash.

The Media Has Mistaken a Major Re-allocation for a Recession

What we have is a sucker rally ...it should go for a while, then we plunge again. My responses to the points in this article below.

1. The enforcement of SEC rules against naked short selling will provide stability for the financials.
- Didn't help China much did it? I think it will smooth out the race to the bottom though.

2. Non-financial earnings results to exceed lowered expectations.
- Energy, sure. The others had their expectations lowered about a week ago. We have been in an earnigns recession for a year now with no indication of a turn around.

3. Probable 2% GDP growth announced for 2nd quarter.
- Maybe, because of the stimulus checks ...if you can even believe the government statistics. There will not be the huge growth expected in the 2nd half everyone was predicting though.

4. Evidence of a significant decline in oil demand.
- Oil demand declines when emerging market growth slows down. Think this is a good thing for stocks?

5. Booming exports.
- Somewhat, but this is because the US$ is weak. The exports do not come close to making up for the food and energy price increases.

6. Low stock valuation.
- Huh? The PEs on the S&P are still over 20. The historical norm is around 15 I think and we are overdue for a mean reversion. Oh that's right ...it's different this time!

7. Low interest rates, low taxes, and an additional stimulus package on the way.
- Hmmmm, maybe liquidity trap, reduced government revenues and increased government deficits. Sound like fun?

Anyway, banks have 100s of billions of additional unknown write-downs since they can't even predict how many more foreclosures there will be or how far down home prices will go. Banks margins are going to continue to be stretched. The Fed is damn near out of bullets. The consumer is in debt up to their eyeballs. Unemployment is rising, profits are declining, etc...

Anyway ...SOLD TO YOU!

Stocks Rally on Financial Writedowns: Overly Optimistic?

Imagine what will happen to UBS stock a year from now when they will still be making additional writedowns!

It will probably take another 2 years for housing prices to bottom ...at which point they will finally be able to "mark to market" all their mortgage backed securities ...and take their final writedowns (if they are not off-balance sheet on SIVs)!

Calls For A Market Ready to "Rocket Higher"

Usually the person who writes the article is not the troll, but in this case I think you are.

Sure, we hit a bottom ...and subprime is contained ...and the rest of the world will decouple ...and earnings will rebound in H2 ...and if you click your heels together 3 times the economy will fix itself!

Nice job Jason ...any credibility you did have is now gone.

How to Trade This 'Bear' Market - Barron's

$2 a share ...we finally got MARK TO MARKET!!!

Now the rest of the investment banks have to drop to $2 and we might be at a bottom.

Disagree? Great ...SOLD TO YOU!

The College-Educated Are Getting Richer

Another thing the chart points out though ...on average people are making less than they did in 2000.

This is probably due to off-shoring and globalization ...although this should begin to turn around. I've read places like China and India are starting to have shortages of educated workers and this is why their inflation is starting to rise.

I'm guessing more educated workers will further increase the spread over the next 10 years.

Here's Hoping Tuesday's Fed Move Spurs a Recovery in Credit Markets

I took the opportunity to buy more shorts today! Thanks Ben!

The College-Educated Are Getting Richer

I'm with locke on this.

Very interesting and supports what I have been thinking. I think this is what underlies race also ...more whites/asians have more education (on average) than blacks/latinos ...and on average make considerably more.

Class warfare and Race warfare evolves into ...knowledge warfare!

This is hard to swallow for many people because they can't blame society and have to accept it is their own fault they didn't go to college.

A Sensible and Refreshing Move from the Fed

Here is an analogy ...your teenager has maxed out their credit cards and is to a point they can no longer make payments. You step in as a co-signer and get the limits on the cards doubled.

Is this the right decision? This is what the Fed did for the banks yesterday.

What they should have done is "tough love." Step on their damn necks and tell them to take their proper write-downs (that are hidden on their SIVs or are still inflated due to "mark to myth").

Until there is trust and responsibility, more liquidity will not solve the problem.

Nowhere Near a Real Estate Bottom

jcrash - I don't know about anyone else on this board, but I have an Econ degree from UCSD (summa cum laude) and an MBA from UW. I never post this info due to modesty, but I've never been compared to a bank teller either.

I also find I get better information from blogs than from the mass media. These days I trust The Economist and that's about it.

Finally, I will short this bear to the bottom and will probably make a ton of money doing so. That doesn't mean I find it amusing. In fact I find it rather disgusting that we are currently being run like a banana republic. Monoline ratings are a joke, banks are technically insolvent and the Fed is unwilling to make the hard choices required to fix it. Think about it ...if you had a teenager who constantly maxed out her credit cards and didn't make payments would your solution be to double her limits? Nuff said...