TucsonSpike

Combining Value and Earning Surprises for Outsize Returns

I think earnings surprise % is flawed in that earnings of .02 against expected earnings of .01 would be a 100% surprise but not very meaningful in absolute terms.

Erosion in the M2:M1 Relationship and the Burgeoning Eurodollar Bubble

Related to this the TED spread reversed course and started rising middle of September, while the LIBOR has stayed flat or even dropped a little.

Does anyone have a theory on why/how this can be happening?

The Consequences of the U.S. Monetary Base Bubble

During the Clinton administration the Fed added a second objective to its policy making, that being to maintain economic growth. The effect has been for the Fed to serve as a backstop to poor policy and spending choices by the government. The more destructive the policy, the more the Fed has had to compensate, and the less the Fed could do to maintain the integrity of the currency.

What has mostly been forgotten, even to the point of not being mentioned any more, is the genius of free markets. No collection of Washington bureaucrats can provide the clarity that free markets give us, and the longer we ignore this the worse our situation will deteriorate. The Fed has become a "one trick pony", with the answer to all sticky problems being to print more money. Small dislocations are, therefore, unresolved by free market economics and continue to grow ever larger.

"Anything that can't go on forever won't"--Herbert Stein

Backtesting a Moving Average System on SPY

My version of reality:

1. No timing system is perfect. The investing world is a stream of news & interpretation.

2. Every timing trader has to develop his own system.

3. Every timing system must continually improve & adapt.

4. Timing systems should identify uptrends, downtrends & sideways trends.

5. Timing systems and indicators are just one piece of information in investment decisions.

Speed—Fast systems produce more false signals. Slow systems produce larger losses in downturns and reduced profits in upturns.

Complexity—Complex systems require a lot of experience in interpretation and can create doubt. Simple systems create confidence but lead to investment errors.

Another Big Name Throws Its Hat into the ETF Ring

Re: Nuclear1929

If you trade any given sector or index several times a year like I do then cost and inconvenience of trading a large number of stocks is a lot less desirable than trading ETFs. Plus, I frequently make partial trades of positions both on the way in and on the way out. Also, I find that ETFs are a lot less likely to offer up a really unpleasant surprise the way individual securities do. ETFs have been a great boon to my investing.

Open Letter to FHFA's New Director: How About an Agency Preferred Stock Swap for REO?

Thanks for an interesting article Bruce, the concept and the comments that follow show the degree of difficulty in sorting out the GSE mess. There is likely no solution that a sufficient number of parties will agree to to resolve the problems, so I can only conclude that they won't be solved anytime soon. Therefore I would expect things to continue getting worse.

Cheers,

3 Foreign ETFs with Exceptional Yields

IMHO we do not really know the yield of EWS as it has a very irregular dividend history and the last dividend was June 23 at an annualized rate of 1.2%. VGK only pays a dividend once a year in December, and the last time I checked Europe was in a recession. EMB, on the other hand, pays monthly dividends, although the amounts vary somewhat. So of these three, I would suggest EMB to be the superior investment.

Liquid ETFs of Size with Yield

Thanks Richard for some very useful information. Of particular note is the difficulty in finding out whether or not the payout is entirely dividend yield. The CEF industry in particular has often resorted to "managed distributions" in which the payout is partly earned and partly return of capital. I always thought that was a great scam, charge a management fee for giving you your money back while at the same time confusing those payments with actual performance.

Market Outlook: 3 Bears that Don't Hibernate

I am short this market also, my technical indicators showed a shift from Greed to Fear. It always amazes me how many different analysis tools reach similar conclusions.

Elliot Wave: 'Step Aside from Long Positions'

I have followed Prechter for years and have read several of his books which are well written. However when it comes to Elliot Waves, they can somehow be cobbled into historic markets but offer little in the way of short to intermediate market timing. However this time I think Prechter is essentially correct. My own timing model for bond market sentiment shows that we are one or two days away from a turning point from Greed to Fear. I would expect the equities market to follow.

Cash for Clunkers: Lessons Unlearned

The Cash For Clunkers program is redistribution of wealth in its purest form. Take money from you and me and give it to somebody driving a beater. Congress and the administration have declared victory, victory being defined as success in handing out free money. It has been a rough summer and they are finally getting some relief from all the criticism over cap-and-trade and health care reform. How simple is it, just hand out some free money, or ice cream, whatever.

But I have an even better idea. There are more kinds of clunkers than just cars. Besides, none of my cars are clunkers. I think I deserve to get in on some of this action. So why don't we push for a "Cash For Clunker TV" program! As it turns out I have an old 27" analog CRT TV in my office, an obvious clunker. It would be nice to get a new large screen HD TV in time for football season. It would be even nicer if I could get everyone else to help pay for it.

So I am asking you to write the Big O and your congressional representatives and push for a Cash For TV Clunkers funding program as soon as possible. And if you can think of anything you need that can somehow be defined as a Clunker program I'll do the same for you.

Financials Are Flying, Tech Is Weak - Don't Argue with the Algorithms

If you would like some insight into why the financials are doing so well this is a "must read" article. It explains in detail why the worse shape a bank is in the higher are the reported profits.

www.bloomberg.com/apps...

David Kotok on Clunker-nomics

Cash for Clunkers is redistribution in its purest form. Take money from you and me and give it to somebody driving a beater. Congress and the administration have declared victory, victory being defined as success in handing out free money. It has been a rough summer and they finally getting some relief from all the criticism over cap-and-trade and health care reform. How simple is it, just hand out some free money, or ice cream, whatever.

But I have an even better idea. There are more kinds of clunkers than just cars. Besides, none of my cars are clunkers. I think I deserve to get in on some of this action. So why don't we push for a "Cash For Clunker TV" program! As it turns out I have an old 27" analog CRT TV in my office, an obvious clunker. It would be nice to get a new large screen HD TV in time for football season. It would be even nicer if I could get everyone else to help pay for it.

So I am asking you to write the Big O and your congressional
representatives and push for a Cash For TV Clunkers funding program as soon as possible. And if you can think of anything the rest of you need that can somehow be defined as a Clunker program I'll do the same for you.

The Fallacy of 'Money on the Sidelines'

This is a great article with great comments. Taken together, we could see Dow 1,000 or Dow 100,000. There is no realistic portfolio strategy that would be successful in all conditions, and the speed of market movements keeps increasing. Add to that the misinterpretation of economic data on a large scale and you have a powerful brew.

Personally, I have never seen a more dangerous situation.

Background Info on Leading Bond ETFs

Thank you Richard for another fine and useful article. Most investors don't realize that the bond market is the dog and the equities market is the tail. Intense scrutiny of the bond market will provide valuable information on the equities market.