VP of Common Sense

Why a Market Crash Doesn’t Matter

Of course Peter Lynch found ten baggers in down markets, they aren't hard to find over the past 9 months!

Bill Gross: Anything But 0.01%

"New Normal"... Is that like the "new" business model of dot-com bubble internet stocks?

Global Markets in Review: Share Prices Too Far Ahead of Economic Reality

I haven't looked, but isn't this the 3rd or 4th time Pierre has written some version of this article?

Employment Lags the Stock Market

The leading statement was that unemployment lags the stock market, the quote you cited discusses the link between unemployment and the end of the recession (ie. GDP).

That would be apples to oranges my friends.


On Nov 08 10:02 AM logicalthought wrote:

> >>There is really no debate about the point that unemployment levels
> lag the stock market.<<
>
> I refer you to last week's Wall Street Journal:
>
> "The time-worn Wall Street gospel is that employment is a lagging
> indicator, but that isn't always so. It has only lagged significantly
> in the recoveries that followed the past two recessions. In the eight
> recessions between World War II and 1982, payrolls bottomed and unemployment
> peaked, on average, less than one and two months, respectively, after
> the recessions ended. Assuming, as most economists do, that the latest
> recession technically ended in June 2009, this recovery already is
> looking jobless."
>
> online.wsj.com/article...

Trading Week Outlook: November 8 - 13, 2009

There doesn't appear to be a whole lot of news/earnings this week in the USA. So the market will continue to trade on sentiment, meaning I think it will go up a bit more...

Dollar's Decline Has Contributed to Market's Recent 'Rise'

My opinion is that we are right on the threshold of equities being overpriced. So we may go up another 10%, or not, in the short term, but we will go either sideways or down over the next 3-6 months.

Are Markets Hitting the Ceiling?

I prefer to keep an eye on P/E, specifically in terms of valuation. Right now I see a moderate to strong P with a very weak E, aka 21 or so on the S&P. In plain english, I think valuations have been bid up to an unsustainable level.


On Oct 25 02:16 PM TradingHelpDesk wrote:

> Earnings don’t drive stock prices nearly as much as sentiment does
> so I am paying less attention to Q3 earnings and lot more attention
> to the sentiment on this site, which is as good a proxy as any for
> shifting sentiment.
>
> But that’s not to say earnings don’t matter. When earnings give investors
> a rising sense of confidence, they can be a powerful indicator of
> a sharp drop in market 1-2 quarters later. This was certainly true
> in 2000. Peak earnings coincided with the stock market’s all-time
> high and stayed strong right through the third quarter before finally
> succumbing to the bear market in stock prices. Investors who bought
> stocks based on strong earnings (and the trend of higher earnings)
> got killed.
>
> elliottwave.com/r....

Is Stock Market Uptrend Still Intact?

At some point the bear perspective has to be correct. You choose the evidence. Assuming the market will rise indefinately is just plain silly.


On Oct 25 04:03 PM Shishir Nigam wrote:

> Very similar articles and thoughts from the technical analysis front
> have been put forward at EACH of the numerous minor corrections in
> this extended rally. As an example, consider any of the small corrections
> that happened in early July, in mid Aug, in early Sep, in early Oct
> and now in late Oct.
>
> In every instance, a big overhanging resistance was talked about,
> a reversal in the uptrend was talked about, a pullback in the overbought
> conditions was talked about -- but each time the market broke through
> resistance and shot higher.
>
> What I'd like to ask is how is this time any different?
>
> For more analysis, check out my blog: youngandinvested.com

Bullish Biggs: The Market Has Plenty of Room to Run

The VP of Common Sense handle is based on thoughts like I've posted. That supply and demand is the end-all-be-all most of the time, that Joe six-pack from (you choose the state) probably thinks we get all our oil from the middle east, and that most Americans couldn't find Alberta on a map.

I think it's great that you're concerned about the environment, but consider just a year ago Americans were awash in drill-baby-drill enthusiasm, mostly in terms of right off our own coastlines and in our own protected habitats. You really think we care about boreal forests in Alberta?

If you really love Alberta, and want to protect your local environment, take it up with your (sold out) government. We Americans will gladly continue to buy whatever Canada is willing to sell. If that makes you want to slam me on an esoteric internet message board, so be it.

Bullish Biggs: The Market Has Plenty of Room to Run

Frankly I am ok with destroying 2% of Alberta if the Canadian government is. Once oil hits $200 a barrell we'll probably be willing to extract it from Yosemite, the Grand Canyon and Bald Eagles. If we're really lucky that might actually be a price point that actually impacts demand.


On Oct 10 09:16 PM Albertarocks wrote:

> On Oct 10 08:28 PM VP of Common Sense wrote:

Bullish Biggs: The Market Has Plenty of Room to Run

Minimize the damage to what? It's not like there was a rainforest there before. Oh no! We "destroyed" a grassy plain that was frozen eight months out of every twelve.


On Oct 10 06:09 PM Tom Armistead wrote:

> I apologize for jumping to the conclusion that your questioning of
> global warming made you an enemy of the environment. I have owned
> Suncor from time to time, specifically because I like the plentiful
> supply of energy provided by the tar sands, although I can imagine
> what it does to the environment. As you say, an effort is made to
> put things back the way they were and minimize the damage.
>

Fadel Gheit: Oil Prices to Remain Inflated but Don't Pass on Gas

My simplistic view is that natgas pricing is far more indicative of the US economy than oil, thus the discrepancy.

In the case of oil, once demand exceeded supply the price rose exponentially. Now that supply and demand are more or less hand in hand again the price reverts to the marginal cost of producing the last barrel. Which, for oil sands, is pretty high.

Regarding domestic natgas, something close to the opposite is going on. Demand is well below supply and pricing has fallen to the lowest cost of production. Remember, once the well is built (using the term "well" generically) the operator might as well run it as long as the sales price exceeds the cost of operating. So lots of wells are being capped and we are down to the lowest cost producers.

Since that is the basis of my beliefs, I think that natgas will respond primarily to the domestic economy, meaning pricing rebounds in late 2010. Oil will probably come back sooner as supply cannot keep up with demand when the worldwide economy is at full speed.

Nothing Fuels a Market Rally Like Free Money

Here's a guess: The rally ends when the easy comps end. Specifically, Q1-2010. My guess is earnings in that quarter will be marginally better than Q4-2009 as well as marginally better than the yoy comp of Q1-2009. That is when the lack of improvement in the real economy will impact the equity markets.

Boom or Bust Cycle: Where Are We Now?

There will be a retracement. It will start within the next 10 days.

Markets Need to Pump Up the Volume

By "all in" do you mean long or short? I think I know which, but I'd rather not frame the question.