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  • Growth Outlook Remains Modest [View article]
    The problem is that the last time the ISM index passed below 46, you would have lost 6 years of investment gains, and the previous time that occurred, 3 years of investment gains.

    So what do you think is a reasonable ISM level to start scaling back on stocks, especially regarding the fact that the ISM has been in a steady downward trend since 2011?
    Jun 4 03:39 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: New Leadership For Stocks? [View article]
    The majority of economic data last week were below expectations and some were downright bad (ADP, Chicago PMI, Factory Orders), but the market brushed them off and instead concentrated on the Consumer Confidence and most importantly the Employment situation reports. However if you analyse the employment report there are fewer total hours worked than the previous month. So all you are left with is the Consumer Confidence index which is basically a subjective index.

    Bottom line is: production is decreasing while hope is increasing.
    May 6 02:06 PM | 1 Like Like |Link to Comment
  • The 'Sell In May...' Truth No One Is Telling You [View article]
    "If you believe we are exiting the Secular Bear Market, then you should buy and hold"

    The S&P 500 is still 30% below it's inflation adjusted high in 2000. What reasoning can possibly make you say that statement?
    Apr 30 02:52 PM | Likes Like |Link to Comment
  • Unmistakable Signs Of Growth And Recovery [View article]
    The problem with historical data is that the market has already taken that into account. It calculates future value based on today's data.

    What would be more informative is to calculate the trend of deceleration in growth, because when growth acceleration passes below zero, growth begins to decline. Employment growth, retail sales growth, industrial production growth (Feb 1.1%, Mar 0.4%), all have a decelerating growth trend over the last couple of years. If you extrapolate the trend and calculate the time when it passes below zero, that would probably be your market peak.
    Apr 17 04:07 PM | Likes Like |Link to Comment
  • Claims Back On Track [View article]
    Instead of concentrating on the Initial Claims on a point by point basis I performed a linear regression on the %change in Initial Claims over a 2 year period. If you apply a 13 week moving average to the %change in Claims, you can see a clearly discernible trend.

    According to the regression analysis, if the trend continues, Initial Claims should bottom out around July 2013, and then start climbing after that.
    Apr 12 04:55 PM | Likes Like |Link to Comment
  • Impressive Progress In The Federal Budget [View article]
    Impressive in the short term, but your article does not address any of the other highly likely issues facing the budget besides Obamacare. Other probable obstacles facing the budget are :

    1. Interest rate payments on rollover debt when interest rates are back to normal levels.
    2. A major recession in the next 10 years.
    3. Less likely, but still a factor, a major war in the next 10 years.
    Apr 12 10:30 AM | 1 Like Like |Link to Comment
  • Why This Rally Is More Broad And Sustainable [View article]
    I note that your reasoning of a sustainable rally makes no reference to economic factors besides PE ratios. PE ratios are directly related to consumer confidence, so comparing PE ratios to previous peaks is irrelevant unless you bring consumer confidence into the equation.

    It may be prudent to examine some leading economic indicators as well, such as the trend of the percentage change in retail sales and the trend of the ISM Manufacturing New Orders Index to gauge where the economy is going.
    Apr 3 04:19 PM | Likes Like |Link to Comment
  • Federal Budget Deficit Declines By Almost One Third [View article]
    The sad fact is you comparing now to the period when the economy was at its worst. You should be comparing now to the period before the great recession for a more sobering figure. Even before the recession, economists were worried about the deficit value.
    Mar 14 01:21 PM | Likes Like |Link to Comment
  • Federal Budget Continues To Improve [View article]
    No mention of the cumulative effect of the difference between spending and revenue (aka debt) and how that effects the time until balanced budget?
    Feb 15 09:19 AM | Likes Like |Link to Comment
  • Avoiding Recession Is All That Matters [View article]
    "With almost $7 trillion sitting in bank savings deposits earning practically nothing, and with tens of trillions invested in risk-free assets around the world, there are therefore many millions of people and investors who need a recession to justify their current asset allocation."

    I suspect a lot of these people with money in the bank are the baby boomers now in retirement.

    Also because of Wall street or "financial experts" always talking up the market, we have had to two disastrous sell offs in the previous decade - why would anyone trust the market now?

    I have recently seen some pension funds change their policy of switching progressively from equities to bonds 10 years before retirement, change it to 20 years because of this market volatility. I therefore suspect the P/E ratio of the market to remain low for many years to come.
    Feb 1 03:53 PM | 1 Like Like |Link to Comment
  • One Way To Look At Equity Prices [View article]
    Price/Sales is indeed high which is not mentioned by the permabulls. This should be closely watched as evidence is mounting that this cannot be maintained without extreme volatility in the market.

    However, I have looked at the earnings and dividends data for US stocks and they are historically high, maybe unsustainable, but nevertheless I would say stocks are not overvalued based on that data.
    Jan 20 08:05 PM | Likes Like |Link to Comment
  • One Way To Look At Equity Prices [View article]

    Please explain your statements. You say the stock market is way overvalued, but at the same time you say corporate earnings are extremely high? If I compare the P/E ratio for the US stock market as a whole, it's the lowest it's been in 30 years?

    Don't get me wrong, there is a high amount of long term risk in the market which justifies these low valuations, so I'm not suggesting everything is bullish from here on.
    Jan 12 10:49 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: What Lies Beyond The Cliff? [View article]
    "The single most important report was initial jobless claims, which are now hitting a pre-recession low."

    I don't know if I'm the only one who sees the glass half empty, but if you draw a trend-line for initial claims in 2012, it is actually flat to increasing. Who knows, maybe Lakshman is right.
    Dec 31 08:35 AM | Likes Like |Link to Comment
  • Australia Is Expensive, And The U.S. Is Cheap [View article]
    All you need to know for the long term:

    Australian public debt per family of 4 = US$ 98,896
    United States public debt per family of 4 = US$ 206,740
    Nov 9 02:22 PM | Likes Like |Link to Comment
  • 25 Years Later: Lessons From The Crash Of '87 [View article]
    "The stock market was wildly overvalued, even by the most bullish methods."

    In my research, I have not come across perceived risk as a factor in any market valuation equation, probably because it is too subjective. However it is important, because it is the reason why there is a discrepancy between the yields on equities and treasuries. In the short term perceived risk/sentiment is a contrarian indicator, however in the long run it is usually correct.

    If I calculate the overall stock market value using consumer sentiment and earnings for 1987, I have to disagree that the market was extremely overvalued - it was just above fair value, and that's probably why the market recovered so quickly. See the graph below.
    Oct 19 04:01 PM | 1 Like Like |Link to Comment