Seeking Alpha

AuCoaster

AuCoaster
Send Message
View as an RSS Feed
View AuCoaster's Comments BY TICKER:
Latest  |  Highest rated
  • Rethinking Buffett's 'Favorite' Valuation Metric [View article]
    There will likely be a bubble at some point.
    But, we are not near that condition yet.
    This market should go much longer and higher before it crashes.
    I think we will see forward PEs above 25 in the bubble phase.

    Margins will shrink again, and the market will slide after that becomes established with a year or so of those slipping margins.
    Then a looming recession will trigger the next big, prolonged sell-off.
    All of this will happen after interest rates rise substantially, inverting the yield curve. So, Fed tightening is the next big step on the cycle path.
    Aug 22 11:10 AM | 1 Like Like |Link to Comment
  • Great News: The Fed Is Likely To Raise Rates Sooner Rather Than Later [View article]
    Great info. very useful.

    Hopefully, the Fed will not raise rates as fast and far as they did in 2005 and 2006, when they inverted the yield curve and set the stage for the financial crisis. So many got crushed in that trap.
    We don't need to go through that again.
    Aug 21 05:18 PM | 1 Like Like |Link to Comment
  • Correcting A Common Misconception About Alternative Investments [View article]
    Alternative investment vehicles cover such a wide range of investment purposes/goals that it is difficult to make apples-to-apples comparisons.

    But, I have noticed a tendency for alternative investments to have very high fees, making them great for the sponsors.
    Aug 19 04:24 PM | 1 Like Like |Link to Comment
  • The Curious Mathematics Of Moving Averages [View article]
    Gary,

    Your claim is false, and does not work.

    Your formula of using only the first and last data points will only work when the data series follows a perfectly straight linear path. Any other combination, and the two methods will have differing results (as noted in Stephen's example above). And, FYI, the market Never follows a perfectly straight linear path.

    Consider this example: 6 2 6 4 4 4 5 4 4 4, changing to 2 6 4 4 4 5 4 4 4 6 on the next day. By your formula the MA was 5, and declined to 4 even though the new data point is equal to the one dropped. Yet the real MA is unchanged at 4.3.
    Aug 19 04:02 PM | 3 Likes Like |Link to Comment
  • The Religion Of Doom And Gloom [View article]
    The overly-optimistic and overly-pessimistic pundits are always at each other's throats, mocking each other.

    Over the course of a cycle, the realists will shift from optimistic to pessimistic and back to optimism. The advice of those who never shift is unreliable because it is independent of reality.

    Most of the time optimism is warranted.
    But, in each cycle a period of significant trouble will come.

    The perma-bulls never foresee the trouble, and the perma-bears continuously see it when it is not there. Each group is correct only when happenstance moves things in line with their unwavering bias.
    Aug 17 03:58 PM | Likes Like |Link to Comment
  • Death Cross For S&P 500 And Russell 2000 Taking Place [View article]
    Most investors have already seen such market panic drops.
    That is why many of them have so much fear of the market.
    Aug 17 02:52 PM | Likes Like |Link to Comment
  • The Religion Of Doom And Gloom [View article]
    Those who are wrong most of the time are not realistic.
    And the Doom Merchants are wrong most of the time.
    Aug 16 04:29 PM | 1 Like Like |Link to Comment
  • Death Cross For S&P 500 And Russell 2000 Taking Place [View article]
    Richjoy, The value of deeper analysis is my key point.

    The Death Cross should help you avoid total disaster.
    Over time that alone will enable you to significantly beat the market.
    Avoiding the prolonged bear markets is hugely beneficial.

    But, the Death Cross is a lagging indicator.
    And it gives far more false signals than useful ones.
    One can do much better than that, with deeper analysis.
    Why trade on the false signals?

    So, the trick is to understand when it is truly time to sell.
    And the answer is to look at the fundamentals of the economy.

    Look for recessions. That is what I do.
    And that is how I am able to sell BEFORE the Death Cross occurs, and repurchase BEFORE the Golden Cross occurs.
    And not trade on false alarms.

    Deeper analysis pays bigger rewards.
    Aug 15 12:48 PM | Likes Like |Link to Comment
  • Death Cross For S&P 500 And Russell 2000 Taking Place [View article]
    There have been 5 Death Crosses in the last 10+ years.
    being 2004, 2006, 2007, 2010 and 2011.

    Only one (2007) was a beneficial signal.

    In the other four cases the Golden Cross occurred at prices that were well above the point of the Death Cross. Meaning that if you sold on the Death Cross, and repurchased on the Golden Cross, you sold low, and bought back at a higher price - losing ground compared to just riding it out.
    You also paid taxes, reinvesting less than you sold.

    Four expensive false signals, and one very good signal.

    The difference between the 2007 case and the other four?
    A recession was starting.
    Aug 15 12:18 AM | 1 Like Like |Link to Comment
  • Death Cross For S&P 500 And Russell 2000 Taking Place [View article]
    People greatly fear declines. Even when the decline merely offsets a recent surge. 1987 was an up year for the stock market. The big scary decline merely undid the preceding 8 months of exceptional gains.
    The market rose too fast, and then gave it back.
    The net effect was effectively zero.

    To me, it's the net position over time that counts.
    I expect and accept fluctuation as part of the process.

    Most people are obsessed with their fear of declines.

    Volatility scares them. So, they accept much lower returns in order to reduce volatility. Or they stay out of the market to avoid the declines.
    But they also miss much of the gains.

    Peace of mind can be very expensive.
    Aug 14 11:50 PM | 1 Like Like |Link to Comment
  • Death Cross For S&P 500 And Russell 2000 Taking Place [View article]
    No recession in 1987, and it was an up year for the stock market.

    There was a recession in 2001, during a period of severe and prolonged decline in stock prices.
    Aug 14 11:30 PM | Likes Like |Link to Comment
  • Taxes Don't Lie [View article]
    Higher personal tax rates mean I would have to pull MORE income out of my business in order to sustain my after-tax income level.

    So, higher tax rates would reduce the amount of money available for reinvestment.

    Further, higher tax rates mean that the profit margins would need to be larger to achieve the same after-tax income. So, prices must rise.
    When prices rise, quantity sold declines.

    Taxes are a cost. When costs go up, output and GDP growth suffer.
    Aug 14 01:14 PM | 3 Likes Like |Link to Comment
  • Taxes Don't Lie [View article]
    Yes. The best growth came after the top tax rate was reduced from 70% to 50%. Of course, real GDP also grew well during the 1990s with the top tax rates further reduced to around 40%.

    Lower tax rates help. But, other economic elements are far more powerful than the tax rates... investment in infrastructure, education, technology, demographics...
    Aug 14 01:05 AM | Likes Like |Link to Comment
  • Death Cross For S&P 500 And Russell 2000 Taking Place [View article]
    I did experience Black Monday in real time.
    In fact, I watched it unfold on the news during that day, real time.
    I was invested in the stock market at the time.

    It was scary for a few weeks. But, it was only a temporary condition.
    I lost no sleep over it. Nor did it affect my retirement prospects, as I neither sold nor bought during that brief panic.

    Besides, it was a crash that followed an equally strong surge.
    So, the net effect of the two was almost nothing.
    It was a 90 day sell-off that erased about 8 months of gains.
    All in all, 1987 was a slightly up year.

    If all I lose in a sell-off is 8 months of gains, that is a minor event.
    The sell-off in 2011 also erased about 8 months of gains...

    Sell-offs (like 1987) that erase only months of gains are blips.
    They are temporary over-reactions by the crowd.

    Sell-offs (like 73-74, 00-02, & 2008) that are prolonged and erase many years of gains are very serious, and certainly not blips.
    But, those only come with recessions.
    Aug 13 03:50 PM | 1 Like Like |Link to Comment
  • Death Cross For S&P 500 And Russell 2000 Taking Place [View article]
    1987 was an up year, as were 1988, and 1989.
    Hardly the kind of market that one should fear.

    1987 had a very brief panic, with no lasting duration.
    The market rose steadily for almost 3 years after that panic.

    1987 had a surge and a crash that netted to little impact.
    It was only a brief but severe surge and drop on a rising tide.

    Yes, by the rule of thumb definition we had a bear market for about 90 days (from top to bottom). But, in the big picture it was just a blip.
    Aug 13 01:54 PM | Likes Like |Link to Comment
COMMENTS STATS
428 Comments
353 Likes