kotika98

The S&P 500 P/E Needs to Correct

Ok, and another thing... I am all for fundamental analysis, but over the years i am more and more aware that professionals value companies on EV/EBITDA. This past year this has become even more crucial as the EV/EBITDA measure emphasises strong balance sheets. For example PE ratios in some industries such as tanker and bulk shipping and yes, banking, were already very low going into 2008 --- all for a good reason! The market was correctly discounting their highly leveraged balance sheets.

The S&P 500 P/E Needs to Correct

Cramer also used to say that you buy cyclicals when the PE is highest, and sell them when PE is lowest. Now that cycle has come around, and we are reminded that almost every company depends on the general economic health to make money. So, dont worry be happy - the earnings graph shows we will recover to S&P earnings of between 50 and 70 within a year or year and a half. I honestly dont know what the level of the index that justifies, but the market trades on next years earnings not on current quarter earnings. Keep that in mind when you look forward to Q2 results. In any case Q2 is traditionally a non-event, the three other quarters are always alot more important. Q1 gives the start to the year, Q3 is back to school quarter, and Q4 is christmas quarter. Thats on the consumer side, and on business spending side capital investment decisions are not made in Q2 either.

Social Security: Bankrupt System Will Impact Markets Sooner than Expected

since someone raised the issue of illegals, perhaps its worth reiterating - illegal workers pay into but dot not receive a penny from the SS trust fund.

Here is how it works, I arrive to the USA, buy a fake social security card and number and get a job in a slaughterhouse, as a cleaner, or in a number of other shit jobs that unionized workers would not touch unless paid 60$ an hour. Social security payments get deducted from my paycheck and sent to the IRS, marked with my bogus SS number. IRS happily accepts the payments, never turns anyone in to the DHS, and of course never pays back a penny to the "illegal" immigrant. Have a nice retirement (paid for by the sweat of the illegals)!

2.3% Growth in Real Disposable Income in March

This puzzle is easy - disposable income is gross income minus taxes, minus fixed expenses such as food and shelter. And shelter, aka housing has been dropping at 20% annual rates. Housing cost is about 30-40% of gross income for most people so the housing drop alone would tend to increase disposable income by at least 9% per year. I wonder if "disposable" income is an average over all people or only counts those that have any income, if it doesnt count then the increase in unemployment would not affect the number y itself.

Any better informed opinions?

Open Letter to Quant Funds: Now's the Time to Help Maintain Orderly Markets

The general law of the markets is that the "crap" has high beta - it always outperforms on the way up and always underperforms on the way down. What is so special this time?

VIX Withers Down Below Technical Support After Huge Job Loss Catalyst

The phrase used in the article "VIX options" is a dead giveaway - there is no such thing, or actually there is but they are not actively traded and anyway they are not what this author thinks it is. Hahaha...

Ricardian Equivalence in the Markets Today

its funny i looked at the actual numbers today - the US is still a rock solid credit, even with Iraq, Dubya, Medicare, and all the stuff from this year.

The Downfall of Keynesian Economics and the U.S. (Part 1 of 3)

the author is probably a "gold bug", so no need to argue about keynesianism and all other theoretical stuff.

The Downfall of Keynesian Economics and the U.S. (Part 1 of 3)

"Keynesian" economics is when the government makes fiscal stimulus in response to credit contraction. And Friedman was generally a proponent of keeping the functioning of the markets free from interference. One does not contradict the other, and Bernanke especially is both someone who believes in the role of government in the credit cycle and also that free markets work best. The thing to understand here is that since the printing of money is the job of the government anyway, there is no suppression of market mechanism involved - the supply of money is simply not part of the free market system.

3 Signs of a Near-Term Market Advance

My friend, 72 in S&P earnings this year or even next? What are you smoking? I say 50-60. Remember, about 20% of earnings in the S&P are due to oil companies, and that just went out in a puff.

Ready for Another Leg Down

are you guys saying the money wasted on subprime loans is greater than the money wasted in the dotcom bubble?

Confessions of a Former Inflationist

Here is how to read Yellen's comments. Its like, "yes we will fight the wage-price spiral if it comes, wink wink ('cauz we all know it wont)". Here is another way to read it - "yes, we will fight the wage-price spiral because there is nothing we can do about the commodity-cost spiral".

What a Time to Be a Value Investor

You sound like you bought a bunch of "value" bank stocks in january, or even earlier. If so I would not call you a value investor, a wannabe value investor maybe...

High Likelihood of a Market Crash

"How to way to make predictions for dummies" guide.

Market down 300 points from the peak? predict a crash!

Banks losing 500 Billion buck? Predict a credit crisis!

Earthquake destroys SF? Predict a long a arduous rebuilding effort!

People dying in Indonesia from chicken flu? Predict a 2 billion people death toll next month!

Biggest rain in 50 years? Predict a Mississippi flood!

(I'm only half joking - some useful conclusions can be gotten this way, too)

The Current Market: Investors Lack Fear

No kidding, lack of fear! Somehow that does not ring true... when people are driving stocks down 4-5-6% in day on top of a 20-30-40% decline if it isnt fear i'm not sure what it is.

BTW, The fact that people are dumping individual stocks, even those without any obvious problem, rather than buying protection on the index via options and driving up the VIX is perfectly consistent with extreme level of fear. In other words, when people are just getting pessimistic they may buy index put options, but when they are panicking they will be dumping the stocks in their portfolio (in mass). I think we are seeing just that.