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Why Money Managers Are "Paralyzed In Their Decision-Making Process"
Bizarro market got you paralyzed with inaction (and unwilling to generate trading commissions for Goldman) as you try to make sense of an insane world in which first rising (but not too much) bond yields were desperately spun as positive for the economy and thus stocks because it means inflation is finally on the way, only for the same spinners to turn around and now allege that plunging bond yields are great for the Equity Risk Premium so you must, you guessed it, buy stocks? Fear not: you are not alone: according to the following note from FBN, what JPM, Citi and Goldman are lamenting, this era of a new permanently high equity plateau, and a permanently low vol and yield ravine, is driving pretty much everyone insane.
From FBN's JC O'Hara
Perceived Discrepancies with New Highs
The market once again made a new high. This continues to be a market you cannot bet against. There are many perceived discrepancies between what one would expect to find at new highs vs what we currently have. Small Caps are lagging, yields continue to decline, new highs are scarce, and the average stock is still -11% from making a new 52 week high. Combine that with depressed readings from the VIX, credit spreads, and other market stress indicators and you have managers that are paralyzed in their decision-making processes. Many market forces and technical studies are giving contradictory signals. At the end of the day we cannot discredit the markets new high.
Sure, this may be a late stage market breakout, and according to the masses, a pullback is ‘needed’, but money continues to find its way into stocks. Someone likes the market so much they are willing to add exposure at all-time highs. We want to highlight that this is not just a US market rally, but a global developed market rally. The MSCI Developed Market Index just surpassed its 2007 highs. New Highs have the power to quickly change sentiment. We are at multiyear high levels of neutral readings according to AAII. According to NAAIM, the average manager is under exposed to where we would expect them to be positioned at new highs. This creates a market chase scenario which is dangerous. While we do not love our dance partner we are still on the dance floor and the music continues to play...
Because dancing on the edge of the latest bubble is what it is all about. And now keep calm and carry on listening to the music, paralyzed.
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you know its bad when you are too frozen to do what you normally do, to wit, closet indexing
When you throw a large stick into a pack of dogs, it's not hard to figure out which one got hit, he'll yelp.
"Money Managers" is an oxymoron now
So no wonder they're all going "404"
Musical chairs with shotguns.
the ghost of chuck prince is doing his travolta-bee gees thing
http://www.youtube.com/watch?v=_JoZS6LgqYI
Since the only paper I own is a mortgage (own, lol) I sleep well and enjoy old music while watching the blathers on mute. Good show, hope it lasts a little longer just for the entertainment value.
OTOH maybe lower yields means bonds usually get it right and there's horrifically poor economic activity.
The truth is, everyone needs to manage their own wealth/money and these useless fucks needs to be turned into fertilizer.
Upvote on human nitrogen nodules.
Just another symptom of fundamentally transforming America.
boogie woogie? cha-cha? or death's dance?
It is an error to ascribe anyone’s action in the stock market to independent thought. We are witnessing the influence of human herding instinct in action. Intelligence provides no antidote to herd behavior. All deny it and all practice it even as it is being denied. Technical analysis dogma is obsolete but fools try and employ it as if nothing has changed.
http://quillian.net/blog/
When the herd has been corralled, it's hard not to act like a 'herd.'
Added to stack today, and no, I don't feel paralyzed, thank you. Feel about 1% richer actually.
Argument will be that if you followed fundamentals then you would have missed out on upside.
But this only makes sense if you assume you get out. And if you dont get out based on fundamentals then what?
If or when this fucked up market finally breaks it will be an interesting trst of Market Risk and Career Risk. Sure you follow the market down but so does everybody else so you're ok right? Maybe 10 years ago. Today who knows.
This time will be different - this time I'll know to sell when the dips stop being dips.
Its really not complicated.
The managers don't get paid to win, they get paid just by the dollars they manage through fees so their main job is PR and sales.
Their situation is this.
Get out and look like a genius if the market happens to go down or under-perform due to cash drag if we go up and lose fund, lose their profits and maybe job.
Stay all in and track the market, if the market happens to go down well everyone else lost money so not their fault, they did their best, if the market goes up they met their averages so everyone is happy.
There is no incentive for managers to get out, also most funds have a max cash percentage in their structure and they are not allowed to be short.
Totally agree. Just thinking that this market will eventually screw everybody. Even the managers who follow market down in comfort of knowing everybody else is in the same boat. Until the boat gets downsized to cut costs as assets flee. Hoping that somebody pays for this may be too much to hope for. Fuck hope.
Why it's all just a state of mind now isn't it?
Just write a few checks to cover your bets...
Your Welcome.
Regards,
EF Hutton
Idiots...can't comprehend this...
Just try thinking: "It's fake. It's MONEY-PRINTING."
Dummies.
just keep raising cash.
eventually you'll be paid so much in dividends even if all your principal gets wiped out in a crash you will have made your investment many times over.
"sell any company that slashes its dividend...trust no company that did so in the past."
I would have no use for General Motors or Chrysler as once you've been bitten by the bailout bug...you never let it go.
"...eventually you'll be paid so much in dividends even if all your principal gets wiped out in a crash you will have made your investment many times over."
...except that price inflation in real assets will eat the purchasing power of that paper money many times over by then.
Avg down on vix....you'll thank me later
We dont give too much credibiluty on such reports and expect also this year a 20% return on S&P500 index. We see good momentum ahead of the year and we could easily see the s&p's trading around 2300 at year's end.
http://www.bloomberg.com/news/2014-05-27/fed-likened-to-poker-player-as-...
MetLife Inc. (MET), the largest U.S. life insurer, is struggling to understand what to expect from the Federal Reserve as regulators in Washington weigh how to increase oversight of the industry.
Tis hard isn't it?
this can last forever. Banksters have fresh cash everyday as much as they want + they have computers, algos, HTF criminals to help them + no liquidity. They control almost everything. With friends on other side of trade, I imagine controllers really stole tens of billions so far ... I sell you, you sell me and we both waiting for suckers to bring in fresh cash and , of course , short optimists are also welcome for squeezing - they are bankster favourite sheep beeee beeee beeee
PimpCo Dam Builders: Consulting Bullworks Against Nature
How’s that replacing a local tyrant with a global on working out for you?
Nothing, nothing has changed about politics in 5000 years. Something for nothing behavior distills Nazis up the empire food chain. The organizer can only become the tyrant. Peer pressure behavior can only result in predation. Joining a group makes you weaker, not stronger. The choice isn’t between minimum wage and cartel unions. Choose C, your own path.
You are born in legacy or one of the middle class event horizons, but there is no natural law requiring you to stay there, and accept its assumptions. Empires arbitrarily organize existing economies, distilling out real marriage to do so. As you can plainly see, the printers and the legislators have zero effect on economic mobility, but are entirely dependent upon it.
DC control of Ac is all about harnessing AC, in hopes of getting something for nothing, which ‘works’ in the short term, but is catastrophic in the long term, and adding redundant resistors doesn’t help. This planet did not grow humanity to replace itself with a machine. It doesn’t take a rocket scientist to replace humans with machines, talking to each other to produce a market. Humans serving machines as a growing intermediary is as stupid as it gets.
Efficient specialization on a one-way trip, the virus, is a path to death, for the organism, and the host, if the host is stupid enough to accept the virus as a fact of life. The virus has a place in the ecosystem, but not as the predominant character. Go over to Asia and look at the demographics for yourself. What you read in the papers and see in the movies is not reality.
There is absolutely nothing new about consumers herding up to extort production, and being preyed upon from behind as a result. Of course the herd is bipolar, looking backward to the past in fear, and stampeding, leaving its most vulnerable, its children, behind, in a positive feedback loop with the predators. Don’t choose A or B and expect not to be part of the human farm system, locked in spacetime.
If you look, you will see that legacy lives on artificial variability, moving the herd from pasture to pasture, stock and bond rotation, it is feeding, and those with $500k ‘properties’ are next. The hedge fund managers are managing ‘reality’ for the bankrupt pension funds, and being paid with debt to do so, hoping to avoid being fed upon themselves. What do you suppose happens when the lion tamer runs out of food?
Of course Freddie, Fannie and all the other ‘bad bank’ corporations are being topped up, with digital money. Facebook, like Microsoft before it, produces nothing, for something. Because there is nothing to steal from the brats waiting in line to please it, it is growing a herd in Canada, which has delivered more morons for the purpose. That’s going to fix it.
Of course San Francisco and Seattle have the highest rates of real estate inflation and income inequality. Of course the morons are proposing them as models for best business proliferation. The consultants / public speakers / thought leaders are scam artists, big surprise. Politicians are paid in debt to pit populations against each other.
Even if you are a relatively effective consultant, the best you can do is push on a balloon, which will return to equilibrium the moment you leave, because you are simulating demographic balance as the output and returning it as the input. Great, you are a rockstar of rockstars, for the morons, for the moment. And M&A doesn’t change anything; all it does is grow bad banks off sheet, parking structures for the like of Detroit.
Constantly rebuilding San Francisco isn’t any ‘smarter’ than demolishing Detroit. They exist in the same circuit. If you want to collect a lot of debt, go manage a bad bank. That’s what politicians do, park dead inventory off sheet and sell a few pieces on the side in the resulting inflation. El Erian didn’t work out at Pimco because he actually wanted to accomplish something.
Ever watch critters that wake up late. Your day is nearly done and they assume the day is just beginning, as they get into the first line, of many lines, in the day. By the time the critters see me in the coffee shop at 9:30am, washing down with a double Caesar, my day is nearly done, and they assume that they can vote me off the island and hire many below them to replace me at less cost, to continue feeding the ponzi.
Immigration is locked up because the global population is slowly waking up to its predicament, that the ponzi is collapsing for lack of economic mobility and they have ‘secured’ themselves against economic mobility, with inflation, baked into their habits. Don’t walk through a door with nothing but bad outcomes on the other side.
Legacy is quite capable of withstanding deflation and is doing so, by scooping up all the real estate as the flies die. Its problem is the rapidly increasing awareness to the polarity scam. And regardless of what happens, where the war goes, legacy has no idea what to do with all that real estate, because no matter how many children you have, you are not going to put a dent into the demographic collapse, which is taking legacy with it.
If you have skills, your landlord doesn’t have to participate in the extortion racket. Choose a landlord with at least that much intelligence. The old-timers both recognize the problem and are in a position to do something about it, but they have already sent their children and grandchildren out into the world. They don’t want to watch TV or catch another fish. They want to watch productive young people build something productive, and unexpected.
That is the supply and demand that matters. If you eliminate the empire probable, what remains is the probable. That is quantum statistics in a nutshell. Consult WITH nature, instead of against it. If you want to explore the universe, instead of thinking about it, you have to accept the universe. That’s the contract.
Civil Law, Empire Manifest Destiny as the basis of Family Law, the DNA return line, has never worked, but go ahead and keep trying, expecting a different outcome if you like. Not everyone is stupid enough to be caught in a dead zone expecting a tailwind, ignoring the approaching storm ahead, because their technology is telling them to do so.
Make your own day. Humans are newbies. Watch the other critters to set your distance. Life is not about domestication. If you want to understand the problems associated with domestication, look at what the successful undomesticated critters are doing. You are not going to learn anything in a sink hole of the lowest common.
That the Fed is a hedge fund of hedge funds with rigged pegs surprises who?
Getting into the casino is easy. Artificial sex in a bait and swap doesn’t require a brain or a conscience, and the majority is always selling, itself out. The fine pixels aren’t any smarter than the fine print.
Go ahead; start up that train on the basis of last year’s capital gains taxes on dead inventory, digital debt as money. Albany doesn’t have crews dodging traffic full time to patch holes in the freeway by accident.
Detours ahead; don’t waste your time sampling the status quo.
great article - thanks
I gave up on trading. Now I spend most of my free time photoshopping dicks into Maria Bartiromo's mouth.
BTFATH
Brevity is the soul of wit.
Any money manager who abandons risk assessment and diversity in this crazy circus will be held accountable by his/her clients after the circus leaves town.