Matt Blackman

http://TradeSystemGuru.com
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+2 / 0

172 Comments

    • Mon Apr 28th 13:22 PM | Rating: 0 0
      Commented on:
      Let's Think Long and Hard About Extending Those Bush Tax Cuts
      You make the same mistaken assumption that politicians and bureaucrats make and that is that by raising taxes, you will raise revenues $1 dollar for every $1 increase in taxes. All the credible studies I have read show that after an initial jump there is a commensurate drop in government revenues when taxes rise above 30%.

      Given that the US has the second highest corporate tax rate in the world, taxes are already past the optimal tax rate/revenue threshold. The Laffer Curve explains this quite well (see www.investopedia.com/a... )

      You clearly show that you are among the misguided group that mistakenly believe that governments can spend your money better than you can. Given the high degree of mismanagement,waste and porkbarrel spending programs, I find this premise completely at odds with reality.
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    • Sun Apr 27th 15:54 PM | Rating: 0 0
      Commented on:
      Bill Miller: Credit Panic Ended With Bear Stearns
      The comment from Coast to Coast sounds like it could have been written by Bill Miller himself... except that it makes no sense whatsoever. Sounds like it could be someone who works in his office... or a friend but who hasn't a clue about the markets or how to write.
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    • Fri Apr 25th 18:05 PM | Rating: 0 0
      Commented on:
      Bubbles Aren't Bubbles - Or Are They?
      Just reading the above comments. Total hogwash.

      "sometimes markets overreact and sometimes underreact,"? The tech bubble lasted for the better part of four years and the housing bubble began forming in 2000. Bubbles form when emotion (greed) takes over and end when the reality comes home (no pun intended) to roost. The year 1987 was a short-term correction but the Great Depression began in 1929 and didn't really end till 1939 with the advent of WW II. The Dow dropped 90%. Are you trying to tell me that the drop of 90% was the market correcting the short-term price inefficiencies? So when markets rallied, that was a correction of the previous overreaction to the first price inefficiencies? Give me a break!

      Markets are highly emotional. Always have been and until they are run by robots, always will be. Emotions are anything but efficient.

      Fama's theory is a myth and he is self-delusional which this article highlights quite clearly. Ditto for the Random Walk myth.

      But hey, keep living in your dream world. Keep investing as if stocks were priced to perfection which means that with the exception of brief periods of inefficiencies, should return to their theoretical price based on fundamentals. Meanwhile, savvy traders who realize the large human factor in markets will continue to eat your lunch in bull and bear markets.
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    • Fri Apr 25th 13:54 PM | Rating: 0 0
      Commented on:
      Implied Volatility Suggests Financials Risk Is At Six-Month Low
      Interesting opinion except for one fairly major point. Options traders really aren't any smarter than your average stock bull or bear if the CBOE Put/Call ratio is any indication. A high put/call ratio is as good a contrarian indicator as it gets - the best time to go long is when there are the greatest number of puts compared to calls (when options traders are the most bearish) and vice versa.

      Also, using the VIX or any other volatility indicator as the rationale for making a trade will prove very costly as you will find if you backtest such a strategy.
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    • Fri Apr 25th 13:47 PM | Rating: 0 0
      Commented on:
      Bill Miller: Credit Panic Ended With Bear Stearns
      Correction: Bill (not Bob)...
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    • Fri Apr 25th 12:48 PM | Rating: 0 0
      Commented on:
      Bill Miller: Credit Panic Ended With Bear Stearns
      Nice try Bob but your views are nothing more than sheer hope. Neither you nor anyone else for that matter knows what is in store for markets from here. But I can't blame you for talking your book (pumping up the stocks you hold) to encourage others to buy them as well...

      The one important takeaway is that secular bear markets are punctuated by powerful bull trap rallies driven by the type of sheer speculation in which you engage. Just look at the Nikkei 225 over the last 18 years - there have been a total of 6 powerful rallies, the last of which saw prices rally more than 100% before rolling over (see Figure 2 tradesystemguru.com/co.../ ).

      So while I can't blame you for talking your book, let's see if for what it really is. You're a salesman selling your views to encourage suckers to buy the same book or perhaps help you exit yours...
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    • Fri Apr 25th 12:41 PM | Rating: 0 0
      Commented on:
      As Home Sales Plunge, Some Say the Crisis Is Almost Over
      Looking at the housing picture from 30,000 feet, it is important to remember that real estate cycles are long and average 18.5 years. We've had a good run as home (and asset) prices got a tremendous boost from the Fed with the lowest interest rates in 50 years. This combined with the babyboomer effect (78 million of then in the US right now) driving home prices higher in real demand and then through speculation caused the biggest, most wide-spread real estate bubble in history, not just in the US but world wide.

      Now, depending on where in the world you live, that bubble has either broken or is in the process of breaking. Such events take years to resolve not a few months or a year or two.

      This is not a "doom and gloom" scenario but a realistic cycle that has to play itself out. We will get rallies because prices in bear markets do not simply go down unceasingly. These sometimes powerful rallies are driven by the hopes that the bear is over. Just take a look at the Nikkei225 Index in Japan that has had at least 6 powerful bear market rallies, the latest of which rallied over 100% before rolling over again (see Figure 2 at tradesystemguru.com/co.../ )
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    • Fri Apr 25th 12:30 PM | Rating: 0 0
      Commented on:
      Is End-of-the-World-Trade Unwinding?
      Interesting overview and comments on volume. Overall volumes have been lower but prices have held which reminds me of the old traders axiom to never short a dull market.

      I do disagree with your statement, "In absolute terms, earnings have been poor. In relative terms, earnings have been fantastic as most pieces of news confirm that." That is just simply not true. There have been pockets of strength (like Google and IBM) but overall earnings continue to deteriorate and since it is earnings expectations that drive stock price, stock prices will be weak until earnings turn around. Here is my take from my newsletter last week.

      "There may have been a few positive earnings surprises to get investors excited this week but overall, Q1-08 earnings continued to trend lower. According to Bloomberg, profit exceeded analysts' estimates at 58 of 101 companies in the S&P 500 that have released first-quarter results so far this earning season and this is what has excited investors. But earnings fell an average 37% from a year earlier. S&P500 Q1-08 earnings are forecast to decline 13.7%, which if it comes to pass would make it the third straight quarterly decrease. Looking at the broader picture, as of the second week of Q1-08 reporting season a total of 678 companies have now reported and average earnings fell 22% from the same quarter a year ago compared to a drop of 17% last week with 421 companies having reported. This compares to a drop of 57% for Q4-07 (3900 companies), a 21% drop (4205 companies) for Q3-07 reporting season and a 13% jump in Q2-07 (4211 companies). (Is it a coincidence that the total number of companies has dropped each quarter?) " (See Figure 4 in column "The Trouble with Earnings" tradesystemguru.com/co.../ )
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    • Thu Apr 24th 13:46 PM | Rating: 0 0
      Commented on:
      6.5 Million Foreclosures; Is There a Behavioral Problem?
      But then again, playing the blame game is typical in the aftermath of a bubble isn't it? After all, bubbles demonstrate the epitome of a mass behavioral shift as greed takes over and the normal logical checks and balances that we have all learned through experience are thrown to the wind...
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    • Thu Apr 24th 13:35 PM | Rating: 0 0
      Commented on:
      The Fed Freeze Factor
      Say what??
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    • Thu Apr 24th 13:11 PM | Rating: 0 0
      Commented on:
      4 Things I Just Don't Get
      One thing I don't get and that is value investing. You guys buy stuff on the way down because as it falls, it gets cheaper. Great if there is a turnaround in the near-term but if not, (can you say Enron, and more recently Bear Stearns?) you lose your shirt.

      Traders call that trying to catch a falling knife for good reason. My research shows that the fundamentals lag price action by anywhere from 3 - 9 months so waiting for a fundamental signal to exit is a dangerous practice from where I sit (you reading this Cramer?).

      Now combine the principles of value and employing the right fundamentals with an ability to read a chart... now you're talking!
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    • Thu Apr 17th 14:34 PM | Rating: 0 0
      Commented on:
      Options Trader: Thursday Outlook
      I enjoy your options input but come on, "[w]e still need something to be done on the Federal level to put a floor under the housing/mortgage market and something needs to be done to stop the dollar from breaking below 70, which will put us at $1.60 to the Euro and under 100 yen to the dollar - things that will make this month’s CPI and PPI look very mild by comparison," ? Give me a break. If doing both isn't mission impossible, I don't know what is.

      To put a floor under "an inflated" housing market implies lowering rates, while supporting the dollar implies raising them. You can't have both sides of the coin show at once. The reason the dollar is falling is because the Fed is trying to prevent the housing bubble from breaking. Given that this is an election year when governments and the agencies they control do everything they can to inflate the economy so as not to upset voters, we can expect more of the same if history is any guide.

      Besides, the Fed has used more than 60% of its asset trove of $700 billion and the Fed funds rate is now below the real rate of inflation (forget CPI or PCE, they are useless). The Fed is in the early stages of a gun fight and has used most of its ammunition. Guess they could drop interest rates to zero but then the dollar would be worth less than $0.50 on the US Dollar Index in short order and real inflation (not that measured by CPI or PCE) would explode...
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    • Thu Apr 17th 14:21 PM | Rating: 0 0
      Commented on:
      Doug Kass on Housing Predictions: An Update
      At the end of the day, nobody but you (Jeff Miller) cares about whether you are right and Doug Kass was right or wrong. Besides PCE (and CPI) is pretty much a useless indicator unless you are a Fed minion. If you want to launch such a discussion, take it outside or elsewhere. It is a waste of space here.
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    • Fri Apr 11th 12:48 PM | Rating: 0 0
      Commented on:
      The IMF's World Economic Outlook
      Interesting but what does it really tell us. Most economic forecasts a year ago said global GDP would continue to increase through 2010.

      Here is a quote that says it all about these kinds of "insights".....

      In 1929, days after the stock market crash, the Harvard Economic Society reassured its subscribers: “A severe depression is outside the range of probability” In a survey in March 2001, 95% of American economists said there would not be a recession, even though one had already started. Today, most economists do not forecast a recession in America, but the profession's pitiful forecasting record offers little comfort. – Economist November 15.

      So now IMF economists are saying the slowdown will be minimal? If history is any guide, the folks who write these reports have about a 95% chance of being wrong. Cold comfort isn't it?
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    • Fri Apr 11th 12:23 PM | Rating: 0 0
      Commented on:
      The Two Housing Crises
      I followed up on Malkiels link to costing the price to build a new home at www.building-cost.net/ . For a 1500sqft unfinished basement home with top quality finishing, hotwater heat, in Aurora Colorado, the price would be $205,011.00 or $136/sq. But if we are entering recession, that will drop significantly. Ten years ago the price was $60-$70/sqft and trades are still demanding high prices - a hangover from the boom.
      View article »
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