No Free Cake

What's the Trend? Where's the Price?

The blog link you specify still says that VWO is 10.2% above SMA rather than 25.5%.


On Jun 04 03:34 PM Richard Shaw wrote:

> Your calculations are correct. We used Exponential Moving Averages
> and erroneously used the label Simple Moving Average. The error is
> corrected on our blog ( www.qvmgroup.com/inves...
> ) and we have requested a correction on this SA republication of
> our article. Sorry and thank you.

S&P: Banking Crisis Could Go on for Another 3 or 4 Years

Folks, Cetin obviously just loves attention - any kind. Just ignore him and he'll (hopefully) go away.

Part of the problem with the oh-so-tiresome "green shoots" debate is that's its predicated on a subjective metaphor, Ryan Avent says. Perhaps my green shoots look more like weeds to you. "But," he writes, "I don't really see how people can avoid concluding that the worst declines are behind us."

The article says it's hard to conclude that the worst drops aren't behind us. OK - I'll stipulate that. That's not saying much and it's not the same as saying the economy won't get significantly worse.

It's hard to argue that it won't get worse before improving. Housing is at best bottoming although non-stressed sales are still abysmal, joblessness is increasing, and yada yada yada.

Stock vs. Bond Performance

American in Paris writes: "Finally, the pre 20th century data isn't relevant because regulations were lacking to inspire confidence in equity markets. I wouldn't trust any data prior to the Great Depression reforms"

I write: Oh, you mean compared to the regulations we have now which inspire such confidence?

(sorry, couldn't resist)

WIP and TIP: Better than Gold

No, all sovereigns are not in default. See my previous notes about the securitization of TIP bonds within ETF/Funds. It can be confusing. Distributions will return once inflation resumes. In fact, the ETF "TIP" has just resumed distributions. See:

us.ishares.com/product...

Note the "missing" distributions between Oct and Apr. The US Govt did not default.

On Apr 30 05:08 PM mangy cat wrote:

> like mjgrand3
> am also intrigued on no distributions in four months
>
> are all sovereigns in default?

WIP and TIP: Better than Gold

The ETF is not merely the sum of its holdings in the case of TIPS. With direct TIPS bonds the inflation adjustment is accrued to the principal and the real interest is paid out on that adjusted base amount. With securitization of these bonds, the entire inflation adjustment is reflected in the periodic distribution.

This has significant consequences in taxable accounts. In the case of direct ownership of bonds, you must pay tax on the accreted amount of the inflation adjustment. Since you are not paid the adjustment in cash (only the real coupon rate), you must pay the tax with cash from somewhere else. If you hold the securitized form, all the adjustment (real interest and inflation) is paid out in the distribution so you receive enough cash to pay the tax.

On Apr 30 02:10 PM Living4Dividends wrote:

> Since the ETF is merely the sum of its individual bond holding wouldnt
> it stand to reason that all benefits, cap gains, interest and CPI
> adjustments flow directly into the pocket of the ETF Holder?.

WIP and TIP: Better than Gold

Author writes: "If deflation occurs in the US, you are protected by the par value of your bond"

I write: This is only true when holding TIPS bonds directly. It is not true when holding TIPS in a fund or ETF (like VIPSX or TIP). Funds/ETFs holding TIPS adjust valuation up/down for inflation/deflation and is reflected in the periodic distributions. This explains why the distributions from these funds/ETFs have been so meager of late.

ETFs: Chart Trend Comparisons

No one else has said so but I sure like the charts. Thanks

What Was Surprising About the Bureau of Economic Analysis Report

Casey, your material is a bit technical for me but you seem like someone who could answer this riddle for me. Thanks in advance for any help.

The riddle ... Q1 GDP report said consumer spending rose. Yet, the State's are reporting signficantly lower sales tax collections. How are consumer purchases not reflected in sales tax collections?

My source for sales tax info:
www.reuters.com/articl...

Investors See 'Green Shoots' in 1Q GDP Manure

I've said it before and I'll say it again, how can consumer spending go up at the same time that State sales tax revenues are dropping big?

www.reuters.com/articl...

Great Recession Datapoint of the Day

If consumer purchasing is actually up, then why are the State's sales tax revenues going down so much?

www.reuters.com/articl...

GDP Report: Another Painful Quarter

It's puzzling ... the GDP report says consumer spending rose in the quarter. Yet, States are reporting significant drops in sales tax revenues. So, how are people buying these durable goods without paying taxes?

For a sales tax report, see:
www.reuters.com/articl...

Stocks to Help You Avoid the 7 Deadly Sins of Income Investors

The payout ratio for CEL and VE is over 150%. Usually not a good sign going forward.

The 3 and 5-year dividend growth rate for PGN is less than 2%. Can't even keep up with inflation at those rates - let alone after-tax. I'm a bit puzzled since Cliff mentioned this specific topic earlier. I agree they'll work hard to maintain current dividend amount, but, if it's not growing you are falling behind.

Every chartist knows it took 25 years for stocks to recover pre-1929 crash highs. Except it didn't. Not even 5 years.

Oh joy, accept lots of risk just to break-even after 7 years (or 4.5 from low of 1932). Couldn't I have done that just by putting my cash under the matress?

Why We Shorted the QQQQ

Fundamentals ... we don't care about no stinkin' fundamentals ... buy, buy, buy

(tongue firmly in cheek)

On Apr 23 07:36 PM The Geoffster wrote:
> Let's see... Chrysler bankruptcy, GM bankruptcy, CRE collapse, regional bank failures, unfunded pension liabilities, municipal bond defaults...

> Looks like a great time to get back in the market!