gary17 Posted October 28, 2013 Share Posted October 28, 2013 Really liked this post here: http://philosophicaleconomics.wordpress.com/2013/10/25/margin-debt/ Again shows how we are hardwired to see paterns everywhere while they might in fact not really be there. Nice article. I'm reading George Soros' book on reflexivity and now I'm seeing his theories in action everywhere :D can you please share may be one or two things that you are seeing the theory in action... just like to get a sense of if it's something I'd want to pick up a copy too thx!! ;D Link to comment Share on other sites More sharing options...
CorpRaider Posted October 28, 2013 Share Posted October 28, 2013 Hellsten, which one is that? The collection of essays? The revised version published in 2003: http://www.amazon.com/Alchemy-Finance-Wiley-Investment-Classics/dp/0471445495 Thanks. Link to comment Share on other sites More sharing options...
bmichaud Posted October 28, 2013 Author Share Posted October 28, 2013 Good comments today by Jeff Saut on the likelihood this market isn't going anywhere (on the downside that is) anytime soon.... http://www.raymondjames.com/multimedia2.htm?url=Saut_Daily.wma&player=wmp&target=int&width=300&height=0 Link to comment Share on other sites More sharing options...
Guest hellsten Posted October 29, 2013 Share Posted October 29, 2013 Really liked this post here: http://philosophicaleconomics.wordpress.com/2013/10/25/margin-debt/ Again shows how we are hardwired to see paterns everywhere while they might in fact not really be there. Nice article. I'm reading George Soros' book on reflexivity and now I'm seeing his theories in action everywhere :D can you please share may be one or two things that you are seeing the theory in action... just like to get a sense of if it's something I'd want to pick up a copy too thx!! ;D I posted my thoughts here: http://www.cornerofberkshireandfairfax.ca/forum/books/the-alchemy-of-finance-george-soros/ I'm not sure they make any sense ;D Link to comment Share on other sites More sharing options...
bmichaud Posted November 18, 2013 Author Share Posted November 18, 2013 Good note here by Lance Roberts on how there is too much bubble talk in the markets right now. Further support, IMO, for NDR's call that we are in a secular bull.... http://stawealth.com/daily-x-change/1881-too-much-bubble-talk.html Link to comment Share on other sites More sharing options...
stahleyp Posted November 18, 2013 Share Posted November 18, 2013 Good note here by Lance Roberts on how there is too much bubble talk in the markets right now. Further support, IMO, for NDR's call that we are in a secular bull.... http://stawealth.com/daily-x-change/1881-too-much-bubble-talk.html I don't know who Lance Roberts is (maybe he is great and I'm just ignorant). Do you know of any great value investors that agree with him? I've been super aggressive the last few years. I've toned in down a bit the over the past couple months. Secular bulls sound great but when legendary guys are telling me to be careful, I tend to listen. That doesn't mean we're in a bubble though. Link to comment Share on other sites More sharing options...
bmichaud Posted November 18, 2013 Author Share Posted November 18, 2013 He is nothing to write home about. He writes a newsletter and manages around $600MM. I only posted it b/c he happened to touch on something I've been observing quite a bit over the past month - i.e. everyone is talking about the equity markets being in a bubble. This is entirely antithetical to my inherently bearish nature, but given the psychological effect monetary policy has on equity market participants, I can't help but view the following as support for a true equity bubble reaching 30 to 35 times normal earnings: 1. Given the market is still talking about "tapering", I believe the market is potentially underestimating just how "easy" Janet Yellen is 2. The BOJ is going to do "whatever it takes" to arrest Japanese deflation, and is thus likely to keep the pedal to the medal for an extremely long time 3. The Eurozone is near if not at deflationary levels, and the only logical response is all-out quanitative easing since rates are now nearing 0% If normal earnings are $80 to $90 per share, a bubble-like level would be anywhere between 2,400 and 3,150. I agree with Lance - once things reach these levels, then investors will begin talking about a "new normal". Link to comment Share on other sites More sharing options...
enoch01 Posted November 18, 2013 Share Posted November 18, 2013 Good note here by Lance Roberts on how there is too much bubble talk in the markets right now. Further support, IMO, for NDR's call that we are in a secular bull.... http://stawealth.com/daily-x-change/1881-too-much-bubble-talk.html Are we currently witnessing a market bubble? It is entirely possible, but if it is it will be the first market bubble in history to be seen in advance. Rhetorically powerful, and incorrect. No, it wouldn't be the first one to be seen in advance. 5 minutes of googling will falsify this. From a contrarian investment view point, there is simply "too much bubble talk" currently which means that there is likely more irrational excess to come. This is practically a Pyrrhic victory. Are we supposed to be heartened by the prospect of "more irrational excess to come"? I guess he is admitting that there already is irrational excess? Link to comment Share on other sites More sharing options...
bmichaud Posted November 18, 2013 Author Share Posted November 18, 2013 It would be the first one to be seen in advance by the "crowd". The crowd was not calling for a market bubble during the tech bubble or the housing bubble. His general point is that when everyone is saying the same thing, it's likely already discounted in the price level. Link to comment Share on other sites More sharing options...
giofranchi Posted November 18, 2013 Share Posted November 18, 2013 It would be the first one to be seen in advance by the "crowd". The crowd was not calling for a market bubble during the tech bubble or the housing bubble. His general point is that when everyone is saying the same thing, it's likely already discounted in the price level. This makes little sense to me: if everyone think we are in a bubble, why do the markets keep going up? The answer might be: we might know we are in a danger zone, yet the Fed is yelling: “you must dance, until the music stops!!”. And we cannot but heed the call… Crowd psychology can go just that far… If prices keep diverging from economic values, a bubble will form, either we are aware of it or not. Gio Link to comment Share on other sites More sharing options...
Palantir Posted November 18, 2013 Share Posted November 18, 2013 What is a "bubble"? Link to comment Share on other sites More sharing options...
bmichaud Posted November 18, 2013 Author Share Posted November 18, 2013 What is a "bubble"? According to the Financial Times lexicon: asset bubbleWhen the prices of securities or other assets rise so sharply and at such a sustained rate that they exceed valuations justified by fundamentals, making a sudden collapse likely - at which point the bubble "bursts". http://lexicon.ft.com/Term?term=asset-bubble Link to comment Share on other sites More sharing options...
bmichaud Posted November 18, 2013 Author Share Posted November 18, 2013 if everyone think we are in a bubble, why do the markets keep going up? Wall of worry. Link to comment Share on other sites More sharing options...
Palantir Posted November 18, 2013 Share Posted November 18, 2013 So if this bull market doesn't "burst", we're not in a bubble then? whew. Link to comment Share on other sites More sharing options...
giofranchi Posted November 18, 2013 Share Posted November 18, 2013 if everyone think we are in a bubble, why do the markets keep going up? Wall of worry. Difficult… Wall of worry usually is about the economy… That would make sense to me… Not prices! If everyone thinks prices are extremely high, who is buying?! Would you buy, because you worry that prices are high?! I don’t understand… Gio Link to comment Share on other sites More sharing options...
bmichaud Posted November 18, 2013 Author Share Posted November 18, 2013 if everyone think we are in a bubble, why do the markets keep going up? Wall of worry. Difficult… Wall of worry usually is about the economy… That would make sense to me… Not prices! If everyone thinks prices are extremely high, who is buying?! Would you buy, because you worry that prices are high?! I don’t understand… Gio If everyone thinks prices are high and is thus underinvested, by definition that creates buying power. Conversely.... If everyone thinks "this time is different" and is thus fully invested, by definition all of the buying power is used up. Link to comment Share on other sites More sharing options...
giofranchi Posted November 18, 2013 Share Posted November 18, 2013 if everyone think we are in a bubble, why do the markets keep going up? Wall of worry. Difficult… Wall of worry usually is about the economy… That would make sense to me… Not prices! If everyone thinks prices are extremely high, who is buying?! Would you buy, because you worry that prices are high?! I don’t understand… Gio If everyone thinks prices are high and is thus underinvested, by definition that creates buying power. Conversely.... If everyone thinks "this time is different" and is thus fully invested, by definition all of the buying power is used up. Ok, this might be true. Anyway, take a look at the poll: 36 to 38… It is clear enough to me that we just don’t know… So, make sure you are going to make money both if the market keeps advancing and if the market suffers a steep correction! ;) Gio Link to comment Share on other sites More sharing options...
bmichaud Posted November 18, 2013 Author Share Posted November 18, 2013 So, make sure you are going to make money both if the market keeps advancing and if the market suffers a steep correction! ;) Well that's a given 8) Link to comment Share on other sites More sharing options...
oddballstocks Posted November 18, 2013 Share Posted November 18, 2013 He is nothing to write home about. He writes a newsletter and manages around $600MM. Quite a set of accomplishments to be "nothing to write home about." I would say that he has something going on if he can attract $600MM in assets, attracting significant amounts of capital isn't easy. If he's kept it then I'd presume his clients are satisfied with his performance as well which is something to speak of as well. Link to comment Share on other sites More sharing options...
bmichaud Posted November 18, 2013 Author Share Posted November 18, 2013 He is nothing to write home about. He writes a newsletter and manages around $600MM. Quite a set of accomplishments to be "nothing to write home about." I would say that he has something going on if he can attract $600MM in assets, attracting significant amounts of capital isn't easy. If he's kept it then I'd presume his clients are satisfied with his performance as well which is something to speak of as well. I should have been more specific. From a public recommendation standpoint, from what I've observed he has not been phenomenal - i.e. he is not particularly actionable. Link to comment Share on other sites More sharing options...
bmichaud Posted November 18, 2013 Author Share Posted November 18, 2013 http://finance.yahoo.com/blogs/breakout/dow-16-000-explosion-bubble-speak-bullish-stocks-180149807.html Link to comment Share on other sites More sharing options...
wisdom Posted November 18, 2013 Share Posted November 18, 2013 This can only be known after the fact. Why waste your time speculating whether it is a secular bull or not? It is far easier to consider if opportunities with large margin of safety are abundant or not. Why complicate something that can be kept simple, or is it a reflection of lack of opportunities - the fact that we keep discussing macro to entertain outselves while we wait. Link to comment Share on other sites More sharing options...
wisdom Posted November 18, 2013 Share Posted November 18, 2013 http://www.theglobeandmail.com/globe-investor/carl-icahn-warns-market-could-have-big-drop/article15491901/ Icahn about earnings being fueled by low borrowing costs rather than good management. Link to comment Share on other sites More sharing options...
wisdom Posted November 18, 2013 Share Posted November 18, 2013 http://www.bloomberg.com/news/2013-11-18/credit-driven-china-glut-threatens-surge-into-bank-crisis.html Chinese debt and over capacity. Link to comment Share on other sites More sharing options...
bmichaud Posted November 19, 2013 Author Share Posted November 19, 2013 Phenomenal stuff out of GMO's latest quarterly. Grantham's conclusion on where the market currently stands, on page 13: My personal guess is that the U.S. market, especially the non-blue chips, will work its way higher, perhaps by 20% to 30% in the next year or, more likely, two years, with the rest of the world including emerging market equities covering even more ground in at least a partial catch-up. And then we will have the third in the series of serious market busts since 1999 and presumably Greenspan, Bernanke, Yellen, et al. will rest happy, for surely they must expect something like this outcome given their experience.GMO_Quarterly_November_2013.pdf Link to comment Share on other sites More sharing options...
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