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WallStreetDebunker

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  • More Thoughts On The CAPE And Valuations [View article]
    Valuation nihilism is an ominous sign. It's interesting to see the same psychological mechanisms resurfacing only 15 years after 1999-2000. At this point, it won't be surprising to see a re-issue of the book, "Dow 36,000", originally released in 1999.
    Aug 19 04:01 AM | 4 Likes Like |Link to Comment
  • Daily State Of The Markets: The Valuation Debate - Robert Shiller Is Very Worried [View article]
    T:

    The chart includes years up to 2012. Since then, real earnings have increased, meaning the chart line would rise modestly higher above the historical trend of real earnings. Any 10 year period of (real) earnings surrounding 2008 is not below the historical average.

    The "bias" is trivial and irrelevant.

    "Anyone who has used CAPE has been left for dead."

    Oh wait, this quote might be from the unabashed, unequaled (and unaudited) stock blog superstar, Fear & Grecian Formula Trader.
    Aug 19 12:13 AM | 2 Likes Like |Link to Comment
  • Daily State Of The Markets: The Valuation Debate - Robert Shiller Is Very Worried [View article]
    "First, there's nothing trivial about the impact of a once-in-70-year event, like 2008, in the calculations."

    You changed the topic away from the trivial "downside bias" you claimed for CAPE. As far as 2007 and 2008 creating an unusually low 10-year period for real earnings compared to the average of 10-year periods in history, that's wrong too. The following chart debunks that unresearched belief:

    http://bit.ly/XZqrCG
    Aug 18 10:49 PM | Likes Like |Link to Comment
  • Daily State Of The Markets: The Valuation Debate - Robert Shiller Is Very Worried [View article]
    It's irrelevant that CAPE's trivial downward bias creates a slightly lower long term average PE than a conventional one-year PE. These aren't hard science gauges similar to a spectrometer; they're more like temperature dials from two different refrigerators. The numbers on the "dials" aren't interchangeable and they aren't to be interpreted with scientific precision.

    Bottom line: CAPE has had strong predictive correlation with long term returns. The decade surrounding 2008 was a good one for earnings in spite of 2008. Has Shiller defined overvaluation as being any number above the historical average? I've not seen that.

    There are other metrics that correlate more tightly to long term S&P 500 returns. Nearly all indicate the same thing: the S&P 500 is expensive and likely to generate below average long-term returns going forward.
    Aug 18 05:34 PM | 4 Likes Like |Link to Comment
  • Is The U.S. Stock Market Overvalued? [View article]
    What's the point of talking about valuation metrics unless they have predictive correlation with future returns? CAPE has long term predictive correlation but insignificant correlation with returns for one or two years.

    Current interest rates do not impact CAPE's correlation with future returns. It's a useless variable. The Fed Model of valuation (which considers interest rates) has very little, if any, predictive correlation.
    Aug 18 01:36 PM | 7 Likes Like |Link to Comment
  • Turnaround Happening At magicJack [View article]
    If Lenovo or a similar company were to buy Ooma or Obihai with the goal of partnering with Google (Google Voice), the only magic in Magic Jack might be how quickly the company disappears.
    Aug 18 12:59 PM | Likes Like |Link to Comment
  • Are Retail Investors "Totally Wrong?" [View article]
    Does it makes sense to be influenced by a 27-year old survey that just 200 to 300 retail investors respond to each week?

    "From a strict, statistical perspective, the AAII's survey is 'pretty much useless,' said David Madigan, professor and head of the Department of Statistics at Columbia University, who is particularly troubled by survey's reliance on voluntary self-reporting."

    -WSJ 2010
    Aug 17 09:28 PM | 2 Likes Like |Link to Comment
  • Signs Of An Approaching Bear Market [View article]
    "Even the so called high flyers tend to be solid companies with moats and strong business models raking in cash"

    Glenn: What's the percentage of high-flying story stocks that aren't in a bear market already? The few levitating story stocks are generally those that are popular with the media, the retail investor crowd, and anxious "growth" managers who have a mandate to stay fully invested. The levitating story stocks like TSLA are the last men standing--and they'll be first to be eviscerated in any significant market decline.

    If you think everything is fantastic in the land of story stocks, you should have a look at FUEL, DDD, and FEYE to get a reality check.
    Aug 17 03:20 PM | 1 Like Like |Link to Comment
  • The Religion Of Doom And Gloom [View article]
    Maybe the best predictor of bad tidings is when perennially over-optimistic pundits have become so smug and arrogant that they are not afraid to openly mock and laugh at perennially over-pessimistic pundits on major media outlets.

    Here's an op-ed piece mocking "Bubbleologists" by the authors of "Dow 36,000" in 1999 just before the crash:

    http://on.wsj.com/1pUQ5bG

    Here's video of Fox and CNBC pundits sneering and laughing at "doomster" Peter Schiff prior to the real estate meltdown in 2006-2007:

    http://bit.ly/1pUQ7Am
    Aug 17 02:46 PM | 1 Like Like |Link to Comment
  • Signs Of An Approaching Bear Market [View article]
    "A lot of things have changed with respect to the stock market over the last 20 years. Companies have become global, electronic trading has now become the norm, etc."

    The US stocks with the highest valuations are US small caps that have minimal global sales compared to the S&P 500. In the last 20 years, the earnings growth rate of US companies has been close to the historical average, so this factor doesn't explain the high P/Es.

    Note that there have been 20-year periods of unusually low valuations in history too. If the current market sentiment reverts to a 20-year period of low valuations (for whatever reason), there will be little or no money made in stocks for a decade or more. Investors would suffer lots of market drama for little gain. Obviously few people fathom such possibilities in a long bull market, especially when bonds and cash offer meager returns.
    Aug 16 01:00 PM | 1 Like Like |Link to Comment
  • The Religion Of Doom And Gloom [View article]
    Here's another cautionary statement from Buffett regarding investment decisions:

    "Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important."

    No offense intended, but haven't nearly all articles on SA by Financial Sense been of this variety? Here are a couple of recent articles:

    "The Trillion Dollar Question: What Happens When Quantitative Easing Ends?"

    "Is The Market Due For Another 10% Correction?"

    "What If Prosperity Breaks Out?"
    Aug 16 12:00 PM | 2 Likes Like |Link to Comment
  • Signs Of An Approaching Bear Market [View article]
    "Schiff's fund has an average annual return of 1.2% over 3 years."

    His company runs 9 mutual funds and other accounts. Several have done well so far, others not. A couple of years means nothing. Even 5 or 10 years doesn't mean much, if anything. Still, I would never use a Schiff fund or similar active mutual funds. The high fees almost guarantee long term underperformance.

    Schiff's and Faber's market predictions are as useful as F&G's. They're worth what you pay for them ($0.00). In the very long run only a small number of managers (and bloggers) outperform index funds for reasons other than blind luck.
    Aug 15 10:21 PM | Likes Like |Link to Comment
  • Signs Of An Approaching Bear Market [View article]
    F&GT,

    Schiff's funds are predominately in foreign stocks, bonds, and commodities. He has comparatively little invested in US stocks.

    You persistently attack investment professionals with incorrect statements and misunderstandings. Ironically, you call commenters "trolls" for correcting your regular stream of incorrect and defamatory statements. It's surprising that your account hasn't been removed from this website.
    Aug 15 06:26 PM | 4 Likes Like |Link to Comment
  • Signs Of An Approaching Bear Market [View article]
    F&GT: It says everything about your character that you pretend to know the investments of Shiller, Faber, Schiff (and even mine) while obviously knowing nothing. Then whenever possible, you include links to your SA blog constantly in your comments.

    Your SA blog links to your external blog which offers an email service. You previously charged people for your stock tips. Is that free now? (It should be free, as you've don't seem to offer an audited track record anywhere.)
    Aug 15 05:03 PM | 1 Like Like |Link to Comment
  • Signs Of An Approaching Bear Market [View article]
    MI: Below is a link that gives a glimpse of their returns. Morningstar reviews Schiff's funds in detail. Faber's record was the best of the Barron's Roundtable for 2002-2012 (23% annualized).

    http://cnb.cx/1qdo3pb
    Aug 15 04:27 PM | Likes Like |Link to Comment
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