greaterdepression

The Twenty Year Stock Bubble Is Still Inflated

Profit margins are mean reverting.


On Nov 20 07:44 AM a fat panda wrote:

> Great article. I would like to have seen you discuss profit margins
> as well. Here is why: I don't dismiss the historical relationships,
> but I would ask you how do you factor in the advent of the PC? You
> will note the break with the past started in early 90s when PCs were
> just gaining wide acceptance in the market place. Adding the PC made
> 1 do the work of two. In my case, I went from programming on 3 PCs
> to just 1 because the speeds were faster. Our contribution to GNP
> didn't increase all that much, but we did it with a fraction of the
> input costs. This is about increasing profit margins which made the
> value of the business go up a lot.
>

Intrepid Potash: Investors Betting on a Fall

should that be $1.60 and $1.65? not .60/.65

Does Anyone Actually Believe in Market Efficiency?

If it takes a market 10 years to realize reality, THAT is not efficient.
Markets are not efficient because people are not rational.


On Nov 06 08:44 AM Kid Dynamite wrote:

> i believe markets are efficient in the sense that YOU (with YOU being
> anyone who doesn't do an extreme amount of work) can't beat them.
> MOST active managers fall under the category of "YOU." there are
> SOME who go out in the field and do their own channel checks, instead
> of talking to the company or the sell side - and these managers may
> be able to beat the market.
>
> Interestingly, I claim that the recent financial debacle proves that
> markets are MORE efficient, not less - in the sense that many many
> managers who appeared to be generating tremendous excess returns
> in the preceding decade were exposed - and brought right back to
> at or below market average returns when they blew up. Perhaps their
> excess returns were generated not by alpha, but by leverage.

Does Anyone Actually Believe in Market Efficiency?

A multi-century history of bubbles and crashes disproves EMH soundly.


On Nov 06 07:33 AM Steve in Greensboro wrote:

> Yes, I do believe in market efficiency, absent government interference.
> There was a bubble in equities and real estate which burst in 2007-2008.
> The bubble was created by the Greenspan Fed holding interest rates
> too low for too long. Money supply manipulation by the government
> creates market signals which confuse (and are intended to confuse)
> market participants. The blow-up in CDS is one of the many disastrous
> results caused by monetary inflation by the Greenspan Fed. And Bernanke
> is Greenspan only moreso.

Charlie Gasparino: Another Crash 'Has to Happen Again'

Cow manure or not you are correct. The easiest criminal cases may be made against the Raters. They in turn will Rat out their former golf-buddy banker "friends".


On Nov 06 04:19 AM JamesPond wrote:

> In reading this and other similar commentary, the lack of mention
> of the role the security rating agencies played in this crash of
> '09, is deafening !!
> I thought that the loss's eventually exposed in European and U.S.
> funds etc., including large U.S. and international banks, due to
> the purchase of those over rated 'bonds' consisting of weak mortgages
> rolled into a 'bond package' , are what began the deadly financial
> snowball rolling. That in turn cause the blinds to be opened and
> the weakness in Leh, MS, C, et.al, became public. But I still have
> cow manure under my soles, so what do I know?!!

Dollar-Equity Correlation: Roubini's Got It Wrong (Again)

Mr. Prechter explored the "all the same markets" theme years ago.
He pointed out the tight correlation of virtually ALL assets (except the dollar) and that they were simply rising on a wave of liquidity (which was really just soon to be bad debt).

Corrupted by the Treasury

It is great that you saw through the Brain-washing session. The well calculated curse word was used for just the purpose you describe.
The best bet going forward is to decline further invitations from your new "friends".
They have already made you back away from examining the evil being done by friendly, well dressed men in suits and seeing the battle as merely a "statistical" difference in opinion.
These were slick and polished grifters, and having met them, you already resist this depiction, because you are not as cynical as they are Just remember, like a car salesman, they laughed about how easy it was to "sell" you the undercoating after you left their expensive conference room.
Their policies kill real people. But they are mighty friendly.

A Sit Down with Treasury Officials (Part I)

They have begun your "capture". You probably enjoyed your visit with these polished people in their impressive conference room. They will invite you back, and you will start to look forward to this "access", and the story which you can write upon your return. You may see photos of the children of these Treasury people, and share some personal stories. You may begin to moderate some of your statements to avoid losing this access and avoid offending these "nice people".
You have been captured.

Thursday Outlook: Commodities, Global Markets

Thanks for useful charts and commentary.
See you at the Crash.

Thursday Outlook: Commodities, Global Markets

Thanks for useful charts and commentary.
See you at the Crash.

Bank of America, Citigroup, JP Morgan and Wells Fargo Stocking Up on Liquidity

Is that the kind of accounting used to hide insolvency?


On Nov 04 03:46 AM bbro wrote:

> Again show some understanding of accrual accounting...

Bank of America, Citigroup, JP Morgan and Wells Fargo Stocking Up on Liquidity

No, JPM BAC C are insolvent-Bankrupt, if you will. JPM has over one Trillion in losses hidden off-balance sheet. See Reggie Middleton's great work on this.


On Nov 03 04:54 AM bbro wrote:

> Good article....banks (large banks) are solvent and very liquid but
>
> unprofitable ( for the moment)...preprovision earnings is the way
> out of
> the wilderness....

Recent Market Weakness: The Technical Damage

Yes, the shorts created the Delusional credit bubble.
Enjoy the Crash.


On Oct 29 06:59 AM apppro wrote:

> My question is what does (as one commenter said) all this nasty market
> performance prove? Are we all that willing to let a few short-term
> thinking option traders/traitors take us ALL back down to levels
> we should have never been at in the 1st place?
>
> We must start INVESTING in this Nation and we must stop all this
> short-term gambling that has encompassed the markets for the past
> 10 years.
>
> The 4 Golden Rules:
>
> 1. Reinstate the Up-tick rule
> 2. Crack down on naked short selling
> 3. Institute some rules on what should be said on National TV to
> prevent rumor-mongering
> 4. Pass a Wind-Fall Capital Gains Tax of 65% on ALL short
>
> AND
>
> Revised Tax Rules:
>
> 1. Capital gains under <6 months - 55% tax on capital gains
> 2. Capital gains 6 > 12 months - 45% tax on capital gains
> 3. Capital gains 1 > 2 years - 35% tax on capital gains
> 4. Capital gains 2 > 5 years - 18% tax on capital gains
> 5. Capital gains 5+ years - 5% tax on capital gains
> 6. Most critical of all — Institute a capital gains tax of 55% on
> ALL short sales not directly tied to a long buy by a licensed hedge
> fund. I'm tired of paying for the pure shorts 3rd vacation home.

Why Is the Market Going Up When Jobs Are Going Down?

Or it's a bounce just like November 1929 through Spring 1930. An 89% Crash followed. We will see similar.


On Oct 27 01:22 AM Options Trading wrote:

> The stock market is a discounting mechanism. It anticipates and discounts
> future value to present price and typically leads the real economy
> by a matter of months. The market has been rising due to economic
> recovery expectations even though unemployment rate is still rising,
> investors are expecting a bottom and is pricing in future value now.
> In fact, you can see the same expectations in the bonds market from
> the bond yield curve. In fact, things like the ISM index and the
> leading indicators have been predicting a much better 6 months later
> and that is what investors are buying into.

Why Is the Market Going Up When Jobs Are Going Down?

You will be right. AFTER the New Great Depression ends. S&P 100 will be a great long term buy. Will you have the cash to buy it there?


On Oct 26 04:59 PM Sirvasq wrote:

> Can you be any more naive? For businesses, this is a simple and time-honored
> judgment: cut back on labor, and become more efficient in response
> to lower revenues (2008). In the process, discover how much fat and
> lack of cohesion was present in the boom economy. Then, with a leaner,
> profit-yielding machine in place, profits beget confidence, which
> begets expansion. Stock players are not stupid; it's their money
> at risk. They put it at risk when conditions favor expanding PE ratios,
> like now. Notice the pace of earnings (not revenue, which is not
> the holy grail, that was the '90s) UPGRADES preceded this rally.
> See the documented analysis by Bespoke earlier today.
>
> The greater fools are those who are sitting out the rally, and trying
> to short a fundamentally driven market, which properly takes positions
> after the profitability engine is in place, and awaiting the final
> leg of the recovery, the hiring signs on main street. Frankly, bigger
> profits will come maintaining a prudently managed operation than
> will hiring bodies and burning cash. Every business owner knows that
> and stock investors are no different.