Cecil's Comments

Tactical Asset Allocation Based on the Yield Curve

Mon, 16 Nov 2009 10:15:26 -0500

He means the spread in absolute terms.

On Nov 16 04:03 AM Rhunzzz wrote:

> What do you mean when the yield curve is <0%?
>
> Are you referring to the gradient of the curve? The spread between
> 2 and 30-year interest rates?

Dollar Chart Tells a Much Different Story than Pundits Do

Thu, 21 May 2009 19:56:01 -0400

Thank you Mr. Kim. I have made a bloody fortune off of your market predictions. I simply do the exact opposite of what you say.

'Buy and Hold' Is Alive and Well

Mon, 24 Nov 2008 09:43:31 -0500

You make some good points in this article, but I don't see how you can conclude that buy and hold is alive and well. What would you say to the people who bought stocks 11 years ago, and have absolutely nothing to show for it?

Is Buy-and-Hold Dead? Hardly

Fri, 14 Nov 2008 19:10:55 -0500

Buy-and-Hold has been dead since the 2000 market peak. I think you're forgetting to account for the fact that investors who buy and hold will need to spend their money at some point. If you can sit patiently for 20 years or more, buy and hold might be just the thing for you. But for the rest of us, return OF capital is more important than return ON capital. This requires getting out of the way of prolonged bear market cycles.

9 Reasons Why We Are Close to, If Not Past, the Bottom

Sun, 28 Sep 2008 13:48:42 -0400

I too have been involved in the capital markets for over 30 years, and I have learned quite a lot about how things work. Putting all of my favorite indicators together, I come up with a scenario where the upside for stocks is significantly better than the downside. I agree with most- not all- of the points you have made. In my view, we are reasonably close to a floor in valuations, but still have some downside left as the market continues to be rocked by emotional reactions to what's going on in the financial system.

I also think that it's entirely possible for the S & P to rally as much as 25-30% in the next 6 to 12 months. This would not be as bullish as it appears on the surface. A 25% rally from here would only take the index to 1500, at which point it could peter out without making a new high. If this were to happen, it would fit with my view of the economy being mired in low growth/mild recession for longer than most expect.

The key, of course, is how to play such a robust rally in a very weak economy. And the question that is on almost every investors mind right now is- which investments should I avoid today? The fear of meltdown and a return to the great depression is palpable. It's primarily because of the pervasiveness of this fear that I end up agreeing with you- we must be near the bottom.

9 Reasons Why We Are Close to, If Not Past, the Bottom

Sun, 28 Sep 2008 12:19:25 -0400

Rich Bernstein, in the current Barron's, calculates the trailing 12 month P/E on the market to be 16 or 17. Add this to earnings estimates for 09 being too high, and I must ask you- how are valuations low?

Goldman: What Have You Done For Me Lately

Fri, 29 Aug 2008 02:54:43 -0400

What a weak argument! The chart shows that analysts were raising estimates for the financial sector all year long, until late June. Credibility anyone? So, to argue that Goldman is in trouble because these wrong-headed analysts have turned against them is very weak, indeed.

The People's Republic of America?

Wed, 27 Aug 2008 21:53:23 -0400

aoxomoxoa:

Thank you for being honest and spewing your gutteral hatred for Obama. Let me take a wild guess... you're an overweight, middle-aged white guy, right? People like you give the republican party the reputation that it enjoys today- yesterday's news.

Looming Financial Catastrophe: A Real Inconvenient Truth

Mon, 25 Aug 2008 02:20:42 -0400

I may be repeating what someone else already said, but I would add a word of caution about jumping too quickly on this bandwagon. The majority of the ideas in this compendium are sound, and the author's efforts should be applauded. But some of the biggest backers of the 'save the world for our children' movement have hidden agendas. The IOUSA movie can be misused as an argument for further dismantling of our social safety net. The Bush crowd, for instance, can use much of the arguments presented here as justification for privatizing social security. Neocons can use these arguments as proof that big government must be stopped, and the way to stop it is to cut entitlements.

Let's not get fooled into this kind of manipulation of the facts presented here. Let's instead focus on doing the smart things, like rolling back the Bush tax cuts and asking the top 1% of wealth owners to pay a greater share of the burden. And let's cut government spending, not by eliminating entitlements, but by outlawing the great lobbying machine, squeezing the pork barrel offenders, and getting out of Iraq.

And in case you're wondering, I'm not a democrat. I'm an independent who supported Ron Paul.

Looming Financial Catastrophe: A Real Inconvenient Truth

Mon, 25 Aug 2008 02:00:46 -0400

Great article, and very good comments from readers. Except for Deee. I'm sorry, Deee, you're an idiot.

There Is Plenty to Fear in This Market

Sun, 27 Apr 2008 15:11:49 -0400

Well said, and dead-on.

The Insolvencies of Non-Bank Financial Institutions

Wed, 19 Mar 2008 16:23:30 -0400

How sure are you about the $400 Billion limit for the Fed? Seems to me that a quick executive order or a quick congressional bill would take care of expanding this line of credit as much as needed.

The Industry Indicator: Buy When the Market Sells

Sun, 16 Mar 2008 18:11:06 -0400

Thomas Kee,

With respect, I understand what you are trying to do for your users, and I have no quarrel with the validity of your approach. I'm just pointing out that most market-timing systems (99% or more) do not work in the long run. If you are saying that your system is in the less than 1% of long term winners, I congratulate you. But I'm awfully skeptical of this kind of a claim.

The problem with market-timing systems is that they depend on assumptions. Assumptions are guesses. Even guesses that are based on what has happened in the past are still guesses. Do you disagree with this?

You may be very dialed in to something that is going on in our markets right now, and you may be creating excess returns for your users. (One wouldn't actually know this unless you provided an audited track record of all your market calls.) But I say that over time, the forces that you are in sync with today will cease to be the main drivers of excess return sometime in the future. At that point, your serial run of luck will end and you will be heaped on the pile of "used to have a hot hand" market timers.

Sorry, but that's just the way it is, and the way it always has been.

The Industry Indicator: Buy When the Market Sells

Sun, 16 Mar 2008 17:53:16 -0400

user,

Unfortunately your two goals conflict with each other. The only way to preserve capital for certain is to avoid risk. But the only way to make lots of money quickly is to take risk. So, will your real goal please stand up?

Also, I never presume to know what my clients' goals should be. I coach them about how to figure that out for themselves. Then I advise them on the safest way to get there.

The Industry Indicator: Buy When the Market Sells

Sun, 16 Mar 2008 13:31:19 -0400

Clue Me In,

Don't give up. Before you get yourself all wrapped around the axle over specific and detailed questions like this, why don't you take a step back and get a few fundamental things in order.

For example, what is the goal of your investment plan? And it isn't enough to answer "my goal is to make as much money as possible in the shortest amount of time." People who are saving and investing for retirement have a very different goal than people who are already financially secure and are speculating for the pure sport of it.

Then ask yourself this question: if all I really need is to get from point A (your current net worth of, let's say, $50,000) to point B (a net worth of $1.5 million) and I have 32 years to achieve this, what is the best way to go about it? The best way will always be the way that involves the least amount of risk in order to generate the final result. Taking on any risk above that level is unnecessary and more likely to result in disappointment.

The second thing you should ask yourself is, do you want to re-invent the wheel by trying to become an expert investor, and enter the arena against highly trained, highly skilled, very wealthy professionals? In my view, this is a very low-percentage bet. I would not even think of representing myself in a lawsuit just so I could save on attorneys fees. Likewise, I believe that serious investing is not well-suited for do-it-yourselfers.

Unless you have so much free time, and so much personal interest in becoming successful at investing that you are willing to do whatever it takes to achieve it, do yourself a favor and spend that time and energy instead on finding a professional to do it for you. It will be well worth the cost.

The Industry Indicator: Buy When the Market Sells

Sun, 16 Mar 2008 12:46:59 -0400

I agree with the overall message here, but disagree with some of your premises.

First, I was also a broker, for a major wall street firm, so I too know the inside game. You make it sound as if the managers of these firms know full well when the market is about to fall, but greedily advise their advisors to push their clients into buying anyway. This is false on two fronts. Nobody- not managers, not brokers, and not you- knows when the market is going to fall ahead of time. The best anyone can do is make an educated guess and take on the risk of betting against the current trend.

Secondly, the real reason why the brokerage industry maintains a nearly permanent "buy and hold" or "buy more on the dips" posture is only partially explained by greed. It is also explained by the fact that we live in an extremely litigious society, and if a brokerage firm were to advise their clients to sell when everybody else was still buying, and if they were wrong on that market call, their customers would lose money, and lawsuits would start flying in the doors.

Therefore, the potential gain from "doing the right thing" for the customer by advising them to sell, is overwhelmed by the potential pain of guessing wrong on market direction. Prudence therefore dictates that wholesale market-timing should be avoided.

You are right in saying that the brokerage business is all about gathering assets. I would take that further and say that the best way to gather and keep more assets is to perform well for the customer. So that motivation is already built into the process. But brokerage firms do not emphasize this because it involves taking too much litigation risk.

Don't misunderstand me, I am not a defender of the industry. I witnessed the same shameful behavior that you probably did, and the whole system is terribly biased and flawed. But to say that management deliberately screws the customers by giving advice they know to be wrong is giving them more credit than they deserve.

The other problem I have with the article is that you imply that your indicators tell you, with sufficient certainty, when to be in the market and when to be short the market. But you don't offer much in the way of explanation as to how you are able to achieve this. In fact, you make it sound like anyone with half a brain should have known 6 months ago that the market was going to fall. Is it really that easy? Since the ability to predict major turning points in the market is nothing less than the "Holy Grail" of investing, if you really had it all figured out you would be as famous in the world of investing as Babe Ruth was in the world of baseball.

Analyzing Business Cycles: It's All in the Timing

Thu, 13 Mar 2008 12:04:05 -0400

Very interesting, and very important for investors to understand and keep in mind. Too little attention is paid to this concept, which you call timing, but I call maintaining contextual awareness. No investment decision should ever be made in a vacuum. What seems like an ironclad bet today may turn out to be a disaster if you get the context wrong.

Market Sentiment and Reality

Tue, 04 Mar 2008 13:20:27 -0500

The blogosphere needs more cool heads like yours.

Active vs. Passive Investing: There's No Real Choice

Sat, 23 Feb 2008 17:58:09 -0500

This article starts out well enough, but veers sharply off course and ends up in some kind of bizzaro-world of alpha rats and 30 year puts. Could you just come up with a theme, and stick to it? It would be so much more interesting for the reader!