contracontrarian

A Teflon Rally Running on Volume Fumes

A volume statistics based on shares traded,not $ amount traded, obviously isn't very useful,as it heavily overweights large cap penny stocks like C.

Also the trading part of volume usually declines when stocks rise sharply over a short period of time,that's why the 98,03 and current bull markets have not seen a meaningful volume expansion compared to 74 and 82,when short term trading was a smaller % of total volume.

Hedge Fund Strategies: Global Macro vs. Market Neutral

"You might also think that market neutral funds would rely on funding liquidity to employ leverage. When funding liquidity dries up, one might expect that market neutral funds would therefore suffer."

Really market neutral funds don't require any outside funding from a macro perspective - they are funding the long side from the short side,there is no reason why liquidity shocks should affect their leverage or performance. The risks lie in higher margin requirements and uncorrelated movements among different equities,with the latter very unlikely during a market crash.

"ILLIQ” measure (average daily price move over average daily volume)"

The ILLIQ used in this study isn't a useful measure of market liquidity,because volume depends on many other factors. Realistic market liquidity can't be calculated,it can be only guessed based on how the market reacts to larger buy/sell orders.

Unprecedented 200 Day Moving Average Swing: What Next?

We will have to get used to markets overshooting on good/bad news more than they did in the past,as more market participants than ever have the ability and knowledge to change their positioning based on economic/corporate news,because of the internet,cheap trading costs,widely spread use of stop-loss orders..It's pretty certain markets will spend more time 20% above/below long term moving averages in the future,compared to the past 50 years.

John Paulson: Long Financials

"You'd think a hedge fund of their reputation and research ability would know the mathematical flaws inherent in the vehicle they've selected."

There is no flaw in those ETFs,they perform exactly as they are supposed to,all depends on his expectations:

If he expects XLF to move in an uptrend without too much volatility,SKF will lose him less than a similar short position or put options,while he is still protected against an unexpected sharp drop in XLF,if this is what he is hedging for.

China: Beware Bubble 2.0

China shows some similarities to Japan in 1988. Selling it short now might prove too early,as the bubble might reach absurd proportions first,before it collapses in a few years.

Dow Target 6,617, October 25, 2009: Here Is Why

"What I'm finding very interesting and what also shows considerable similarity is the RSI."

If both charts look similar,than the RSIs can't look different,since the RSI is calculated solely based on the chart data and doesn't contain any additional or different information.

Has SaaS Enterprise Software Reached Its Peak?

SaaS today and even more in the future can be hardly compared to SaaS 10 years ago in terms of speed,quality of the offerings and real world usability. A similar question would be: Why wasn't everyone using the internet in late 80s,when it has already existed for decades?

Five Reasons the Market Could Crash This Fall

"If Wall Street did put $50 trillion at risk… and 10% of that money goes bad (quite a low estimate given defaults on regulated securities) that means $5 trillion in losses: an amount equal to HALF of the total US stock market."

Any one particular Wall Street firm can lose everything they have or even more,but other Wall Street firms would earn the same amount at the same time,as they are on both sides of those derivative positions. Alltogether "Wall Street" can not lose money on their derivatives...

When Growth Goes Nowhere, Do Stocks Soar?

" the future growth is coming from companies which either don’t yet exist or haven’t yet listed"

This argument makes much sense,since materials,energy,low-tech industrials and banks financing those highly cyclical industries make up a significant higher % of emerging market capitalisation,compared to developed countries. Should their GDP continue to grow faster for a long period of time (which is in no way assured),it's very likely those industries will have a much smaller % of their total stock market capitalisation in the future,as incremental GDP growth will have to come from other industries - new companies.

Emerging market P/E are also currently skewed to the downside,cyclical industries enjoyed huge profitabily in recent years around the world,it's very likely the average profit margin for many of those emerging market companies will be significantly lower over the next 10-20 years .

Sentiment Overview: Mired in 'No Man's Land'

" at the heart of the market, once you remove all the noise, is a simple supply and demand equation. There are a finite number of dollars chasing a finite number of shares. If you tip the balance in one direction, the market will react eventually."

There was a record amount of stock buybacks and corporate buyouts in 2005-2007,thus reducing supply of shares - same logic applied...

Companies often issue shares or do IPOs,when they believe their shares overvalued.This time financial execs have no other choice,it's more like forced selling - historical comparisons are probably misleading here.

The (In)Efficient Market Hypothesis

Professional investment managers didn't outperform the market in recent decades,because they were the market themselves.
If there was a significant player in the market,who is not thinking (investing passively and indiscriminately) like Index-ETFs, relative performance would very likely increase in favor of pro-investors (except always invested long only funds) over time.

Low cost funds save money for the average investor,but there is a price to pay,he's positioning his money on a lower knowledge (and informations) level. In the end,the performance of stock indices doesn't only depend on the performance of the companies involved,but also on the timing and prices of changes (addition and deletions) in the index.
There are many possibilities for pro-investors to make money at the expense of Index-ETF investors,if they become a big enough player in the market and it will be much easier for them,than trying to beat other pros.

IMO people will be disappointed with S&P 500 ETFs 10-15 years from now.

BRIC Nations: Buddy, Can You Spare a New Reserve Currency?

BRIC dollar talk is ridiculous rhetoric,it's like a mouse in a trap,pretending she's in control,they're not.

There is no other country except US,which can afford and is willing (so far) to run a huge trade deficit against BRIC. Trying to reduce their dollar reserves would kill their economies for decades,and they know it,their local entrepreneurs have influence in politics and will secretly oppose it.

Book Review: Great Depression Ahead

Mr. Harry S. Dent published several bestselling books:

bullish in 1999 " The Roaring 2000s Investor: Strategies for the Life You Want"

bullish in 2006 "The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010"

bearish in 2009 "The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History"

His books are selling well,because he is always writing,what people want to read...

Is This a Sucker Rally or New Bull Market?

Most investors have already learned to sell the rallies. In this kind of an environment a rally either doesn't occur or it is sustainable.
A weak economy/earnings going forward is no guarantee for a weak stock market, a lot depends on the "price" of the stock market in relation to the negative data ahead.

Market Will Bottom When VIX Finds a New Top

"This divergence is a signal that the market has a lot more room to fall."

The VIX and the S&P have acted similarly between July 2002 and March 2003. It was actually a positive indication for the market going forward.