Doubling The Return Of The S&P 500 Over 20 Years [View article]
Ploutos,
Is the low volatility stock index a proxy for Grantham's "high quality" stocks description?
I not the yield on SPLV is higher than the S&P which likely explains in large part the longer term outperformance. I suspect it will always be higher yielding than the broader market.
U.S. home prices rose 7.4% Y/Y in November, according to CoreLogic, the fastest pace since 2006. The company's pending index suggests the December read will tick up to 7.9%. Home prices are now off 26.8% from the peak, but up 9.6% from what looks to be the post-collapse low in February 2012. [View news story]
Big bright spot for the economy. Get this fixed and balance sheets start to look a lot better.
http://bit.ly/W8bAFk "Now let's dig a bit deeper into the "real" data, adjusted for inflation and against the backdrop of our growing population.
The first chart shows the complete series from 1992, when the U.S. Census Bureau began tracking the data. I've highlighted recessions and the approximate range of two major economic episodes."
Unsurprisingly, iPhone chip suppliers are joining Apple in getting hit by the WSJ and Nikkei's order cut reports. CRUS -5%. QCOM -1.4%. BRCM -1.3%. SWKS -3.7%. TQNT -1.2%. AVGO -1.9%. Can Samsung (SSNLF.PK - +1.2% in Seoul), which just announced 100M cumulative Galaxy S phone sales, pick up the apparent slack for some of these companies? [View news story]
This stock is down nearly 30% from its top or has to climb 40% to regain its peak and yet it appears to me that the owners of the stock are still in love with it. I find that amazing. From a market cap loss point of view it is literally quite incredible - as big as the entire GDP of New Zealand.
The most amazing thing about this selloff is that it hasn't led to weakness overall. That was the great fear previously if it ever did happen.
I suspect this stock could takeoff big in either direction depending upon its next two earning's reports.
All the other major surveys show a similar situation. Rare that we get this type of alignment in sentiment on the bullish side but the caveat is it can go on a long time which is what sucks in the last remaining bears.
Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
Jeff,
Thanks for taking this project on. I didn't realize it was such a huge undertaking until I started really digging in on this article.
" This is not just a mechanical application of arithmetic, but that is a starting point."
For me this is a really key point and I look forward to expanding my understanding of your thinking on the subject. I have been looking at it quite literally the way you have described, as I assumed that was the point.
Once again kudos for the effort and the content especially in consideration of the price we have paid to get it :)
Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
DD,
Great observations. The beauty of this model is its simplicity which allows you to ask all kinds of what if's.
I have similar thoughts to yours which basically boils down to the question of spread.
With this model, is it ever possible to forecast a recession with Mr. Model while ZIRP is in place?
Inflation at 6% and Unemployment at 6% with the current spread would get it close. I suspect the spread would be huge if this ever happened so I am not sure this scenario can occur.
Seems to me the most important variable in this equation is the inflation rate that the FED uses. If inflation rises substantially then we must assume the FED will act on the short end. Will the long bond cooperate and rise?
Can we get higher inflation without really strong growth?
Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
Jeff,
I thought the "I" in the quote was referring to you.
" In the next installment I'll say more about how to use this information -- it is not just forecasting recessions."
That would be great. I personally am very interested in hearing what you would do with this info from an actionable strategy point of view.
I just listened to that video on the 2007/08 recession and frankly it was a weak explanation as to why the model was warning years early. Not saying it wasn't useful to know this but from an investor's point of view it's not exactly clear what clients were being advised to do for those that were paying attention at that time.
Freddy makes a good point was the model saying the recession was over in early 2008?
Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
Jeff,
"In this final video, Bob and I focus heavily on the 2007-2009 recession. The model appears to show a false positive as it crosses the 200 basis point line in 2006, but continues sideways for some time before the recession was officially called. In a sense, this suggests severe instability rather than the dramatic declines of the past. In any case, we had ample warning that a recession was coming. It did not take us by surprise."
So what advice did you give your clients in 2006? Did you change portfolio construction?
It was a couple of years early so I was curious as to what you did back then and what you would do differently if the same thing happened today. Were there lessons learned?
Flows into equity funds hit $22.2B in the year's first week, according to EPFR, the strongest numbers since September 2007 (not the best time to buy), and the 2nd highest since the data began being compiled in 1996. Some are skeptical it marks the beginning of a "great rotation," instead seeing start-of-the-year factors at work. [View news story]
The ECRI Weekly Leading Index rises to 128.3 in the week ended Jan. 4 from 126.6 previously. The annualized growth rate rises to 5.1% from 5%, a nice bounce from a month ago when the rate had slipped to near 3%. [View news story]
I wonder if they will go to Oprah's show to ask for forgiveness :)
General Motors (GM) passed Ford to become the leading seller of vehicles to the U.S. government as it now claims a market share of 38.7% compared to 21.4% for its rival. The trend will be closely watched with the Treasury Department set to sell off its stake in GM, although the automaker steadily maintains it won its contracts through aggressive bidding. [View news story]
tcbracing,
You are not interested in the truth. You are finding what confirms your viewpoint.
There are literally centuries of law dealing with bankruptcy, bondholders, and non-secured creditors. This deal violated all of those preexisting laws beyond all the other stuff mentioned.
If you it makes you feel good to believe what you do, I don't have a problem with that. I do have a problem with lies and corruption which is what this bailout is a poster child for and why I am disgusted with the government and Government Motors.
FYI GM actually did go into bankruptcy it was just fixed to reward a certain group and punish the rest.
General Motors (GM) passed Ford to become the leading seller of vehicles to the U.S. government as it now claims a market share of 38.7% compared to 21.4% for its rival. The trend will be closely watched with the Treasury Department set to sell off its stake in GM, although the automaker steadily maintains it won its contracts through aggressive bidding. [View news story]
tcbracing,
" I am a GM employee"
Well that explains your obstinance then. It's cut and dry as far as the facts. Google the phrase I gave you: "how GM screwed bondholders and taxpayers"
The various articles on the subject are so clear as to how we the taxpayer and we the bondholders (grandmas', grandpa's, pension funds, insurance companies, etc) got screwed in order to redistribute wealth to a select few that you have to be willingly blind to not see it.
I am not blaming you specifically as you had nothing to do with it.
Doubling The Return Of The S&P 500 Over 20 Years [View article]
Is the low volatility stock index a proxy for Grantham's "high quality" stocks description?
I not the yield on SPLV is higher than the S&P which likely explains in large part the longer term outperformance. I suspect it will always be higher yielding than the broader market.
Thank you for the very interesting article.
U.S. home prices rose 7.4% Y/Y in November, according to CoreLogic, the fastest pace since 2006. The company's pending index suggests the December read will tick up to 7.9%. Home prices are now off 26.8% from the peak, but up 9.6% from what looks to be the post-collapse low in February 2012. [View news story]
December Retail Sales: +0.5% vs. +0.2% expected, 0.4% prior. Ex-auto +0.3% vs -0.1% expected. [View news story]
Doug Short covers this in depth:
http://bit.ly/W8bAFk
"Now let's dig a bit deeper into the "real" data, adjusted for inflation and against the backdrop of our growing population.
The first chart shows the complete series from 1992, when the U.S. Census Bureau began tracking the data. I've highlighted recessions and the approximate range of two major economic episodes."
Unsurprisingly, iPhone chip suppliers are joining Apple in getting hit by the WSJ and Nikkei's order cut reports. CRUS -5%. QCOM -1.4%. BRCM -1.3%. SWKS -3.7%. TQNT -1.2%. AVGO -1.9%. Can Samsung (SSNLF.PK - +1.2% in Seoul), which just announced 100M cumulative Galaxy S phone sales, pick up the apparent slack for some of these companies? [View news story]
The most amazing thing about this selloff is that it hasn't led to weakness overall. That was the great fear previously if it ever did happen.
I suspect this stock could takeoff big in either direction depending upon its next two earning's reports.
Stocks Are Overbought: It's Time To Raise Cash And Wait For A Pullback [View article]
Two interesting stories from FT Alphaville in addition to the above:
http://on.ft.com/ZLRAth
http://on.ft.com/10s38rw
http://on.ft.com/ZLRD8g
5 Under-The-Radar Stock Picks From Billionaire Ken Fisher [View article]
It would be nice to see the PSR's for the above stocks.
Stocks Are Overbought: It's Time To Raise Cash And Wait For A Pullback [View article]
Interesting. I have similar feelings. Whenever I get bullish it is usually a short-term top.
Sentiment surveys recently as well as fund flows are showing a very high level of bullishness.
Here's Investor's Intelligence and OEX:
http://bit.ly/xQNJ14
All the other major surveys show a similar situation. Rare that we get this type of alignment in sentiment on the bullish side but the caveat is it can go on a long time which is what sucks in the last remaining bears.
Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
Thanks for taking this project on. I didn't realize it was such a huge undertaking until I started really digging in on this article.
" This is not just a mechanical application of arithmetic, but that is a starting point."
For me this is a really key point and I look forward to expanding my understanding of your thinking on the subject. I have been looking at it quite literally the way you have described, as I assumed that was the point.
Once again kudos for the effort and the content especially in consideration of the price we have paid to get it :)
Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
Great observations. The beauty of this model is its simplicity which allows you to ask all kinds of what if's.
I have similar thoughts to yours which basically boils down to the question of spread.
With this model, is it ever possible to forecast a recession with Mr. Model while ZIRP is in place?
Inflation at 6% and Unemployment at 6% with the current spread would get it close. I suspect the spread would be huge if this ever happened so I am not sure this scenario can occur.
Seems to me the most important variable in this equation is the inflation rate that the FED uses. If inflation rises substantially then we must assume the FED will act on the short end. Will the long bond cooperate and rise?
Can we get higher inflation without really strong growth?
Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
I thought the "I" in the quote was referring to you.
" In the next installment I'll say more about how to use this information -- it is not just forecasting recessions."
That would be great. I personally am very interested in hearing what you would do with this info from an actionable strategy point of view.
I just listened to that video on the 2007/08 recession and frankly it was a weak explanation as to why the model was warning years early. Not saying it wasn't useful to know this but from an investor's point of view it's not exactly clear what clients were being advised to do for those that were paying attention at that time.
Freddy makes a good point was the model saying the recession was over in early 2008?
I look forward to it.
Thank you.
Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
"In this final video, Bob and I focus heavily on the 2007-2009 recession. The model appears to show a false positive as it crosses the 200 basis point line in 2006, but continues sideways for some time before the recession was officially called. In a sense, this suggests severe instability rather than the dramatic declines of the past. In any case, we had ample warning that a recession was coming. It did not take us by surprise."
So what advice did you give your clients in 2006? Did you change portfolio construction?
It was a couple of years early so I was curious as to what you did back then and what you would do differently if the same thing happened today. Were there lessons learned?
Thank you.
Flows into equity funds hit $22.2B in the year's first week, according to EPFR, the strongest numbers since September 2007 (not the best time to buy), and the 2nd highest since the data began being compiled in 1996. Some are skeptical it marks the beginning of a "great rotation," instead seeing start-of-the-year factors at work. [View news story]
The ECRI Weekly Leading Index rises to 128.3 in the week ended Jan. 4 from 126.6 previously. The annualized growth rate rises to 5.1% from 5%, a nice bounce from a month ago when the rate had slipped to near 3%. [View news story]
General Motors (GM) passed Ford to become the leading seller of vehicles to the U.S. government as it now claims a market share of 38.7% compared to 21.4% for its rival. The trend will be closely watched with the Treasury Department set to sell off its stake in GM, although the automaker steadily maintains it won its contracts through aggressive bidding. [View news story]
You are not interested in the truth. You are finding what confirms your viewpoint.
There are literally centuries of law dealing with bankruptcy, bondholders, and non-secured creditors. This deal violated all of those preexisting laws beyond all the other stuff mentioned.
If you it makes you feel good to believe what you do, I don't have a problem with that. I do have a problem with lies and corruption which is what this bailout is a poster child for and why I am disgusted with the government and Government Motors.
FYI GM actually did go into bankruptcy it was just fixed to reward a certain group and punish the rest.
General Motors (GM) passed Ford to become the leading seller of vehicles to the U.S. government as it now claims a market share of 38.7% compared to 21.4% for its rival. The trend will be closely watched with the Treasury Department set to sell off its stake in GM, although the automaker steadily maintains it won its contracts through aggressive bidding. [View news story]
" I am a GM employee"
Well that explains your obstinance then. It's cut and dry as far as the facts. Google the phrase I gave you: "how GM screwed bondholders and taxpayers"
The various articles on the subject are so clear as to how we the taxpayer and we the bondholders (grandmas', grandpa's, pension funds, insurance companies, etc) got screwed in order to redistribute wealth to a select few that you have to be willingly blind to not see it.
I am not blaming you specifically as you had nothing to do with it.
Good luck.