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Are We There Yet? Is the Range-Bound Market Over?
For the next dozen years or so, the U.S. stock market will be a wild roller-coaster ride—setting all-time highs and multi-year lows in the process. While the twists and turns of this ride are still to be written by history, the long-term, sideways “range-bound” trajectory has already been set by the eighteen-year bull market that ended in 2000.
When the dust settles, only those who adapted their investment strategies to this range-bound market will have captured any meaningful profits. This is how I started my book Active Value Investing: Making Money in Range-Bound Markets (Wiley, 2007). The following presentation/speech answers the question: Are we there yet? Is the Range-Bound Market Over? (okay, two questions)
Here is a link to the presentation/speech of my book. This presentation/speech almost qualifies as a second (free) edition of the first part of my book – the part that explains why we are likely suffering through a range-bound market. I updated the data; found a better way to explain old and new topics; changed my mind on some things; and answered questions that have been raised by readers. I have to warn you this PDF is 20 pages long. However, a lot of space is consumed by charts and tables thus don’t let the size scare you. Kill some trees, don’t kill your eyes – print it.
I hope you enjoy this and more importantly find it beneficial. You are welcome to share it with your friends (and enemies).
Vitaliy N. Katsenelson, CFA, is a portfolio manager/director of research at Investment Management Associates in Denver, Colo., and he teaches a graduate investment class at the University of Colorado at Denver. He is the author of "Active Value Investing: Making Money in Range-Bound Markets" (Wiley 2007). To receive Vitaliy's future articles my email, click here.
this link works
http://en.wikipedia.org/wiki/Nikolai_Kondratiev
this one works:
http://en.wikipedia.org/wiki/Nikolai_Kondratiev
http://en.wikipedia.org/wiki/Nikolai_Kondratiev
seems like you are always selling something :-)
http://en.wikipedia.org/wiki/Kondratiev_wave DOES NOT WORK? most interesting
http://www.google.com/search?hl=en&q=kondratieff&btnG=Search&aq=f&oq=&aqi=
well know, thats REALLY weird, cleverly wicked even, you can NOT go DIRECTLY to the actual reference i intended ! but a dummy page on the wiki !
no problem TRY THIS there is lots and lots very comprehensive
http://en.wikipedia.org/wiki/Kondratiev_wave -
so i need not go over all THAT quite thorough in the reference. Yes, in the small, you have pinned down the basic 'timing' the market 'overvaluation' and 'undervaluation' using the metrics of P/E and a few others. great, but in the 'large' is the fact that today's factory is tommorrows 'rust belt' as surely you been thoroughly schooled in Leninism that in 1920, 'electrification' was the continuing theme somewhere assumed in each 5 year plan, along with the de-programming of both the intelligencia and the masses 'away from' the middle class behaviours within which is hidden defeat, self contradiction, all THAT stuff.
Kondratiev was executed, for not being not consistent with the party program, and suspiciously a hidden Malthusian kill-joy, a disbeliever in the 19th century incantation and incarnation (as a result) of ever lasting progress.
You, i think still believe in PROGRESS, right, but of course, just a tweek here and there, and investors 'heads up'....for instance you have no doubt that the actual physical-economic foundations are sound, but that due to the ever increasing population of investors = ever increasing amount of securities 'on offer' in the market has come to a near zero sum stablization, investing THEN, therefore becoming a matter of 'timing' the waves/ripples in the stream
Well, let me give you a gift, i'm am near 99.99% sure that you will not have hear some of the details of Murmansk in World War 2, of the Liberty Ships and Victory ships that arrived there with USA supplied war materials, of the decision of Stalin to allow, intend that those SAME Liberty Ships be NOT allowed to leave, once delivered, to be 'targets' for the Germans bombing, you see Stalin was clever indeed, knowing that American in its ship yards at Richmond California, and Sausalito, and elsewhere could build more ships and that the RETURN TRIP had no value to Russia, near as much as being sitting ducks in the harbor of Murmansk
Read this book, edifying as story, but also, as Understanding Political Economics as it really is 'RealPolitic'
"Diary of a Murmansk Survivor" R. Montegue Anderson c.1996 no ISBN private publisher Two Star Enterprises, 858 third ave, Chula Vista 91911 California
THEN write your next book
regards
I think I like my odds at the casino better. The rules are fairly certain along with the odds. Better risk-reward scenario.
So the article is referring to a range between 6000 and 10000 on the Dow? Or are we talking 6000 to 14000? Either way, that's a pretty big range. Enough volatility to swing futures on an hourly basis for sure.
I use FCF (free cash flows) in combination with other valuation tools when I value stocks. However, there is no free cash flow historical data as I know of.
How far back can you get?
I know when I look at acquiring companies I don't need 50 or 100 years of historical data to make my investment decision. It is about REAL businesses and real profits/cashflows. We have come way to far and complicated the valuation process in order to hide shitty businesses and IPO's in this country. We no longer price anything on actual value but rather model and projections....
I understand you are chasing a macro theme but I am afraid in order for you to draw assumptions of any statistical or fundamental relevance you must have unbiased and uncorrupt data...the data has been so jaded that your attempt to rationalize these markets using your theories is almost pointless in my opinon.
I am not trying to be critical because we are all searching for justification or validation of investment themes...but look at more stable variables to form your assumptions. Also a top down needs to be first and foremost considering the securitized markets have all but collapsed.
I am not a fan of P/E as you can see with the all to pervasive accounting rule changes which materially impact your analysis. Earnings are an accounting function with incredible volatility relative to business cycles as your chart clearly shows.
You discussed the "one time charge" effect and if you look at this alone it has exploded only to further expand accounting profits and artifically inflate the notion that eartnings are 'growing.'
Try paying bills or making payroll with accouting earnings.
I think you would be better off doing an analysis on FCF as this metric isn't jaded by accounting rules and shows true business value and sustainable long term viability.
FCF will also provide you with some analysis on a margin of safety relative to the interest rate shock that is coming via our red friends.
I think an easier way to put this is watch money supply. If it goes up, then equity and commodities markets will go up as well. If it goes down, then it will go the other way.
In short... No post industrial nation lives in a fundamental economy anymore. They are simply driven temporary on money supply flows. In time this will be a major problem, but in the medium term the best way to invest is to just watch the flows.. Today is a great example of this. Even with all of the bad news (aka higher unemployment, higher foreclosure data) actively trying to "talk down the market", it is rising anyway. The reason has nothing to do with fundamentals, but rather simply how much money (aka credit) is pushed into the system.
Oh, okay, the markets have been terrible because P/E ratios aren't high ENOUGH. This isn't a bear market. It's just waiting for better multiples to come back in style. Phew. Everybody, you can relax and head home now.