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5 Things To Ponder This Weekend: "It's A Wrap"
Submitted by Lance Roberts of STA Wealth Management,
As we slide into the last weekend of 2013, I read several articles this week that got me thinking about where the markets and economy are likely headed in 2014. However, before we get into today's list of "Things To Ponder This Weekend" I just wanted to wish you a happy, safe and prosperous New Year.
1) The Year The Fear Bubble Popped by Eddy Elfenbein
I have written several articles in the past discussing that there was currently "Too Much Bubble Talk" for a bubble to exist currently. Just as with Alan Greenspan's infamous "irrational exuberance" call in 1996 - the bubble actually popped four years later. Eddy's discussion of the "bubble in fear" follows a bit of the same logic suggesting that there is "no bubble" in assets, it has been in people's "fear" of another market crash.
"Lately, many investors have been tripping over themselves in an attempt to call the current stock market "a bubble." Me, I'm in the doubter camp. But what's interesting is that this question misses a much larger point — we've been watching a bubble pop all year. The bubble was in fear."
He posts several charts to support his thesis of how the "fear trade" has gone horribly wrong with gold plummeting, bonds getting smashed and even "safe haven" stocks underperforming.
However, here is an interesting question to ponder this weekend:
"The lack of 'fear" has been a hallmark of every market bubble in history. Therefore, is Eddy's thesis of a "pop in the fear bubble" a tell-tale sign of an asset bubble in the making?"
2) The Limits Of Expansion by Edward Lambert
The discussion of the "lack of fear" got me to thinking about the real long term driver of the financial markets which is economic growth and corporate profits. Edward Lambert posted a very interesting discussion of aggregate profit and capital income stating:
"The most recent data implies that the economy is reaching the limit of its expansion. Capital income's savings rate tends to decline to a level around 59% since the 80′s. Then it rises before a recession. It jumped briskly up in the 3rd quarter 2013. You really only see increases like that before and during recessions.
I realize many economists celebrate the strong real GDP growth of over 4% in the 3rd quarter 2013, and they forecast more strong growth for years to come... Many people get enthusiastic too. It is easy to celebrate the height of an expansion. However, everything needs to be put into the context of a larger picture. The dynamics of profit and savings for capital income are signaling the limit of the economic expansion."
3) A Great Ride, But Reality Is Returning by Jeff Sommer, NYT
Jeff did a nice analysis of the 2013 stock market run and the drivers behind it. It is well worth reading.
"It's been the kind of year that makes an average investor feel like a genius: You could just put your money in a stock index fund and watch the market speed ahead. Why not take a few moments to savor it?
Let's reflect on how remarkable the American stock market has been lately, and on how well it has been weathering the first few days of a late-December shift in Federal Reserve policy. And then let's get used to worrying again, because stormier times are coming, probably fairly soon. What we've been experiencing is outside the typical range of market behavior over the last 100 years.
It's just that a basic law of finance — that you need to take risks in order to get higher returns — may become more obvious. Risk has been suppressed. It may be coming back"
4) Bullish Sentiment Surges by Pragmatic Capitalist
"The most hated bull market in history is slowly but surely turning into one built on perennial optimism. If there was one major insight from 2013 it was that the stock market, increasingly, is rallying on true optimism rather than merely overcoming what long looked like negative expectations. The S&P 500′s meager earnings growth this year combined with strong multiple expansion makes this clear.
This week's Investor's Intelligence survey was another sign of strong optimism as the bulls surged to 59.6%. This is fast approaching the "danger zone" according to the survey. Levels above 60% are extremely rare and were last seen in October 2007 when the market peaked."
5) Chart Of The Day via Zero Hedge
Tyler Durden at Zerohedge posted a terrific chart that really sums up 2013 and sets the stage as we ponder the outcome of 2014.
There are many high hopes going into 2014. Mid-term election years have a 67% chance of sporting positive returns, interest rates remain subdued along with inflationary pressures and the Federal Reserve is still pumping in $75 billion a month.
Markets rising are not what we as investors should be thinking about. Rising stock markets are easy. What we should be pondering are the rising risks that could potentially take it all away when we least expect it. Complacency has never been a hallmark of investor success.
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The real pondering question for the weekend is how to not only survive the coming collapse but to actually profit from it.
I am taking a more modest approach.... survive the collapse, protect most of my assets, and grow tons of blueberries!
Blueberries mmmm..... BTW great avatar, watch Opus last week just as I have done for years.
I'm shorting yen, momo, and Chinese financials.
Ponder this:
Heads I win; tails I lose.
Heads the Wall Street banks win; tails the Wall Street banks win...all with my and other taxpayers money to insure the Wall Street banks never lose.
So what if there is a crash. The Wall Street banks are protected.
I tried to explain to some people that 2014 might look bad. They all agreed... that that was impossible. There's no crisis and there will never be a crisis anymore.
Nobody gives a fuck anymore.
I've decided to never talk about it anymore and tell all the lemmings what they want to hear.
But never the less, I'm a stacker and I'll keep stacking untill the game ends or I'll retire.
To finish the job properly you need to go back and tell everyone you previously warned that you have now decided that they were right all along ... and now that you have seen the error of your ways you have sold ALL of your PM's at a terrible loss and you are now deep in crushing debt.
If you don't... when the shit hits the fan... and make no mistake it WILL... they will likely come looking for you and your precious metals lifeboat to save themselves...
I just told everyone I had a terrible boating accident. Then I offer to sell them a map and rent them a boat .
Yup... It's way cheaper than feeding all those hungry crocs chicken at your reptile farm Long John...
How is it possible you know anybody sane?
"I've decided to never talk about it anymore and tell all the lemmings what they want to hear."
If the markets rally for another 3, 5, 10 years will any of you consider you might just possibly have been all wrong or are you more like the 9/11 hijackers and so convinced your right you'll "go down with the ship"?
Fuck the markets... it's the real economy that matters and it ain't doing so shit hot right now.
"will any of you consider you might just possibly have been all wrong"
Wrong about what - the timing? Have you ever bothered to think about the $200 Tr. in USG's unfunded liabilities and what's going to happen when we have 200 Detroits and the USG belly up? So while it does matter when - if it's 1, 5 or 10 years away - the reality of that debt implosion will happen, and all of us are simply trying to prepare for ourselves and our families the best way we know how from study of history, and comprehension of economic reality.
I believe in keeping with the article thumbnail, there's one answer to the fascist government.
http://hvemerjohngalt.files.wordpress.com/2012/07/flip-the-bird1.jpg
5 Things To Ponder This Weekend:
1. Don't know -- keep finger close to the trigger.
2. six miles, about 1 hr 12 minutes
3. 50 shades of grey
4. 2 years ago -- tacchycardia.
5. 2 hours, or 3 if you want a crispy skin.
Let us make it six things to ponder for a little weekend humour.
60 People injured in Piranha Attack.
My favourite comment is the following.
"The attack is being blamed on warmer than usual temperatures."
Is it now? It is not because the Pirana river has piranhas in it?
I may need a spot of global warming brandy at this time.
Ponder this.
You are here
.
This is my sixth for the weekend and maybe a game changer. Upcoming is a split week of the old year and the new year and the most perfect week to pull off a "Bank Holiday", it has been roughly 80 years sense the last one was used. Two business days, off day followed by two more business days and the weekend. There's actually nine working days for a non evasion of overall government Internal Revenue Service operations (back to back)...
ponder a fifth, take the fifth...six is one beyond my limit. https://www.google.com/search?q=fifth+of+wild+turkey+pic&rlz=1T4TSNO_enU...