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GaltMachine

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  • The S&P 500, Dow And Nasdaq Since Their 2000 Highs [View article]
    Eric,

    There is a pro and con argument for both approaches.

    You can defer taxes on a cap gain indefinitely but you can't do that with a dividend in a taxable account.

    Reinvestment of the dividend requires some assumptions about how it is reinvested and taxed to be accurate. Cap gains has the advantage of being a flat tax for most of us. Including dividends certainly complicates the process of discounting the "real" return on those dividends as they are issued in addition to the other issues. Another wrinkle is whether the account is a taxable vs. non-taxable account so it would require a lot of calculations to reflect different scenarios.

    Maybe Doug will pipe in. The footnote on the chart says its excludes taxes and fees on the reinvestment of dividends so that doesn't give you a realistic view either. The total return in the real world would be less than the number on the last chart.
    Dec 4, 2012. 12:30 PM | Likes Like |Link to Comment
  • The S&P 500, Dow And Nasdaq Since Their 2000 Highs [View article]
    drrich,

    The last chart above includes dividends for the S&P500 and shows Total Return.
    Dec 4, 2012. 11:38 AM | Likes Like |Link to Comment
  • Based simply on recent PMI levels, Western stock markets are 15-35% overvalued, says Deutsche Bank, which believes the Fed's QE∞ and the ECB's OMT have allowed equities a 6-month grace period. If early 2013 economic prints don't start to improve, look for stock markets to give up and adjust downward. [View news story]
    bbro,

    The article appears on Zerohedge, the opinion is from Deutsche Bank.
    Dec 4, 2012. 11:01 AM | Likes Like |Link to Comment
  • Nov. ISM Manufacturing Index: 49.5 vs. 51.7 consensus and 51.7 prior. Prices index 52.5 vs. 55.0 prior. Employment 48.4 vs. 52.1 prior. Inventories 45.0 vs. 50.0 prior. New orders 50.3 vs. 54.2 prior. [View news story]
    mjc,

    Great blog called Calculated Risk has a phenomenal charts gallery and has a great write up on the ISM. Here's a link:

    http://bit.ly/THQ34s
    Dec 3, 2012. 12:52 PM | Likes Like |Link to Comment
  • Nov. ISM Manufacturing Index: 49.5 vs. 51.7 consensus and 51.7 prior. Prices index 52.5 vs. 55.0 prior. Employment 48.4 vs. 52.1 prior. Inventories 45.0 vs. 50.0 prior. New orders 50.3 vs. 54.2 prior. [View news story]
    mjc,

    The ISM is considered the standard for this indicator. The Markit is the new kid on the block for the US so I guess it has less credibility as a result - also a very limited track record.

    The ISM new orders component has a big weighting in the Conference Board's Leading Economic Index (LEI) so it is a significant piece of data on the US economy.
    Dec 3, 2012. 11:29 AM | Likes Like |Link to Comment
  • The S&P 500, Dow And Nasdaq Since Their 2000 Highs [View article]
    bbro,

    It's interesting as this validates one of Buffett's favorite rules about when to buy stocks - mkt cap to GDP. Sort of a price to sales ratio for the whole economy. Focus on the whole mkt not a subsection of the mkt.

    On this metric stocks were grossly overvalued in 2000 and have spent the last 12 years catching up to fair value as a result.
    Dec 3, 2012. 10:28 AM | 2 Likes Like |Link to Comment
  • Nov. ISM Manufacturing Index: 49.5 vs. 51.7 consensus and 51.7 prior. Prices index 52.5 vs. 55.0 prior. Employment 48.4 vs. 52.1 prior. Inventories 45.0 vs. 50.0 prior. New orders 50.3 vs. 54.2 prior. [View news story]
    Is there a lot of manufacturing in the Sandy affected areas?

    Pretty big miss to "expectations" which are apparently supposed to take into account known factors like Sandy when those expectations are calculated.

    "The PMI™ registered 49.5 percent, a decrease of 2.2 percentage points from October's reading of 51.7 percent, indicating contraction in manufacturing for the fourth time in the last six months. This month's PMI™ reading reflects the lowest level since July 2009 when the PMI™ registered 49.2 percent. The New Orders Index registered 50.3 percent, a decrease of 3.9 percentage points from October, indicating growth in new orders for the third consecutive month."
    Dec 3, 2012. 10:06 AM | Likes Like |Link to Comment
  • Greek 10-year bond yields plummet 1.46 percentage points to 14.66% following the government's release of details about its debt buyback program, while the ASE share index rises 1.3% in Athens. Spanish bond yields are also falling, down 9 bps to 5.22%. [View news story]
    This is hilarious. So much corruption - "The New Normal".
    Dec 3, 2012. 09:21 AM | Likes Like |Link to Comment
  • ECRI Weekly Update: Beating The Recession Drum [View article]
    Analysts make mistakes all the time and are rarely held to account for those mistakes. Take a look at David Kostin of GS who has been calling for a 1250 year end on the S&P all year long and now has suddenly become very bullish. Anybody following his advice would have also been mightily disappointed.

    ECRI was wrong last year. However, the question as investors is do you treat this as two separate calls and events? Do you analyse the most recent data and ignore the prior call because it biases the analysis?

    I think you look at the current call and data and decide accordingly. As Doug notes, there are some signs of weakness but it doesn't look anything like a recession at this point.

    Yet Lakhsman, a guy who seems pretty smart, is still out there sounding the alarm. Why would they do this? If they haven't destroyed their credibility before this, another "sky is falling" error will certainly ensure their demise you would think.

    Timing investment decisions to economic forecasts is pretty close to futile as ECRI has proven once again.

    The one thing that does seem concerning from a mkt point of view is the loss of momentum on top-line revenue this qtr. Given EPS expectations for this qtr and next year we could see some pressure on equities unless the trend turns around.
    Dec 2, 2012. 11:57 AM | Likes Like |Link to Comment
  • Tax On Dividend-Paying Stocks Rising To 74% [View article]
    "The double taxation of dividends and capital gains continues to reflect the populist bias of those who don't understand basic economics."

    Considering Jersey Shore was hit show that kind of tells you what the level of intellect is in this country. I am guessing the children of our Founding Fathers and their backwoods pioneers had better reading and comprehension skills than our current crop of educated youth.
    Dec 2, 2012. 11:40 AM | 13 Likes Like |Link to Comment
  • Oct Personal Income and Outlays: Income flat% m/m vs. +0.3% expected, +0.4% prior. Personal spending -0.2% m/m +0.1% expected, +0.8% prior. PCE core price index +0.1% +0.2% expected, +0.1% prior. [View news story]
    This is straight from the press release:

    "BEA cannot quantify the total impact of the storm on personal income and outlays because most of the source data used to estimate these components reflect the effects of the storm and cannot be separately identified. However, BEA did make adjustments where source data were not yet available or did not reflect the effects of Sandy. The largest of these adjustments was for work interruptions, which reduced wages and salaries by about $18 billion (at an annual rate)."

    This is for the whole month of Oct and the storm's real effects only occurred on the last 2 days of the mth. For most of us it was a rain event. I don't see how the final 2 days of the month could have that much impact on income although it obviously had some impact upon spending. Perhaps election jitters factor in here.

    Basically two separate items to consider here and both of them are key components of the 4 NBER factors.

    Link to Doug Short's review:

    http://bit.ly/YBMhjQ
    Dec 1, 2012. 02:24 PM | Likes Like |Link to Comment
  • Will U.S. Recession Be Confirmed Friday? [View article]
    Tack,

    You can focus on the past or look at it as two separate calls at this point. The first one was wrong or premature, this one looks wrong as well but who knows?

    If he was wrong last year on his timing but right this year does that make his pronouncement any less valid now?

    I would say not as far as the recession call is concerned but your point on the markets is bang on.
    Nov 29, 2012. 04:09 PM | 1 Like Like |Link to Comment
  • Will U.S. Recession Be Confirmed Friday? [View article]
    Jon,

    I watched him on Bloomberg TV with Tom Keene and he was adamant. The article you linked to is pretty much the boilerplate he used for the interview.

    I have to admit I am stunned by his persistence on this recession call given that he clearly isn't an unintelligent man. I have been reading Doug Short's commentary on the NBER criteria recently and he in fact is also documenting a possible peak as well. He however, is not even remotely forecasting a recession.

    http://bit.ly/VbpaM5

    "As the average of the Big Four charted above illustrates, growth in recent months has essentially flat-lined, and we still face the near-term impact of Sandy on the economy and the impact of how congress deals with the various components of the Fiscal Cliff. At this point in time, I think it is possible that the NBER could eventually date a new recession from some point in the third or fourth quarter of 2012. But I remain of the view that ECRI's 2011 recession call was painfully premature. "

    If ECRI ends up being right that would be one hell of a humble pie moment for the detractors.
    Nov 29, 2012. 03:42 PM | 3 Likes Like |Link to Comment
  • Chimera Maintains $0.09 Dividend, But Likely Two-Thirds Is A Return Of Capital [View article]
    alpha,

    I don't follow this stock so I am taking this article at face value. Would you recommend buying it and why?

    Thank you.
    Nov 29, 2012. 11:44 AM | Likes Like |Link to Comment
  • Chimera Maintains $0.09 Dividend, But Likely Two-Thirds Is A Return Of Capital [View article]
    "The REIT did not file its 2011 annual report or any subsequent reports due to the reconsideration of how to appropriately treat its junk-rated non-agency residential mortgage-backed securities portfolio under accounting standards. Chimera's failure to provide adequate filings has generated a cloud of uncertainty around the company, as well as its management and bookkeepers. This fee reduction appears to be an acknowledgment of this seemingly irrefutable fact."

    Now that's a scary statement.
    Nov 29, 2012. 10:57 AM | Likes Like |Link to Comment
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