Another week of volatility, but with no real resolution to the burning question of “where do we go next?”
Should you “sell in May and go away?” That decision is entirely up to you. There is never certainty in the market, but the deck this summer seems much more stacked than usual against investors who are taking on excessive equity based risk - throw into the mix ongoing high-valuations, uncertainty about what actions the Federal Reserve may take, ongoing geopolitical risks, concerns over China, potential for a stronger dollar or further weakness in oil – well, you get the idea. The question you really need to answer is whether the “reward” is really worth the “risk?”
“The market does what it should do, just not always when.” – Jesse Livermore
Dr. Ed Ward has documented what he believes is strong evidence suggesting that up to three thermonuclear devices were detonated at the World Trade Center site on 9/11.
The problem with forward earnings estimates is that they consistently overestimate reality by roughly 33% historically. The illusion of“permanent liquidity,” and the belief of sustained economic growth, despite slowing in China, Japan, and the Eurozone, has emboldened analysts to continue push estimates of corporate profit growth higher. Even now, as the earnings recession deepens, hopes of a sharp rebound in profitability remains ebullient despite the lack of any signs of economic re-acceleration.
Experience is an expensive commodity to acquire, which is why it is always cheaper to learn from the mistakes of others.
“If you run out of chips, you are out of the game.”
Declassified U.S. Government Report on Fukushima: “100% of The Total Spent Fuel Was Released to the Atmosphere from Unit 4”Submitted by George Washington on 12/10/2015 22:22 -0400
Wait, WHAT?! ...
This past week has seen a continuation of market volatility unlike anything witnessed over the last several years. Of course, this volatility all coincides at a time where market participants are struggling with a global economic slowdown, pressures from China, collapsing oil prices, a lack of liquidity from the Federal Reserve and the threat of rising interest rates. It is a brew of ingredients that would have already likely toppled previous bull markets, and it is only by a hairsbreadth the current one continues to breathe.
The economic data has continued to disappoint on virtually all fronts, earnings are weak and markets are grossly extended. Yet, investors are more bullish than ever...
Anthrax Was As Important As 9/11 In "Justifying" the War on Terror, the Iraq War, and the Patriot Act
Everyone has heard of "inflation" and "deflation" and, when things go really bad and another recession is just around the corner coupled with soaring prices and plunging wages like in Japan for example, "stagflation." But have you heard about its optimistic, happy-go-lucky cousin?
As an investor, it is simply your job to step away from your "emotions" for a moment and look objectively at the market around you. Is it currently dominated by "greed" or "fear?" Your long-term returns will depend greatly not only on how you answer that question, but to manage the inherent risk. “The investor’s chief problem – and even his worst enemy – is likely to be himself.” - Benjamin Graham
Though, if history is anything to go by, it offers a potential for outsized returns
The worst thing about the government’s reckless response to the financial crisis of 2008, even worse than the trillions in taxpayer bailouts and backstops granted to the financial criminals that created the disaster, is the primary lesson that it sent to American society as a whole. Some people like to call it “moral hazard,” but in more pedestrian terms it really just boils down to: The Bad Guys Got Away with It... "The California Highway Patrol officer accused of stealing nude photos from a DUI suspect’s phone told investigators that he and his fellow officers have been trading such images for years, in a practice that stretches from its Los Angeles office to his own Dublin station."