rukawa

I deleted my attachments is this thread with the mcap functionality as they no longer work since bloomberg changed their site. The other thread though has addin attachments that should work with the current bloomberg site. I'm not fixing the mcap functionality unless someone needs it.

Bloomberg changed their site and broke my addin. I fixed it. The attachments in this thread should work now.

I agree with most of what you wrote except what is above. There is something very strong to suggest that it is the single greatest predictor...it fact that its extremely good. See the following graph: http://i2.wp.com/www.philosophicaleconomics.com/wp-content/uploads/2013/12/linearavg1.jpg Its an extremely tight fit. You can compare it to CAPE which has the following graph. CAPE is the best "intrinsic" value indicator and has a much worse fit: http://i2.wp.com/www.philosophicaleconomics.com/wp-content/uploads/2013/12/linearshiller1.jpg Anyways I'm going to update everything this weekend and see what its predicting.

Concluding that markets are cyclical and predicting future returns are two very different things. He predicts future 10 year returns given today's info and he does it better than CAPE and other intrinsic metrics which to me is very impressive. How do you know markets are high as you put it? That is the crux of the issue. He identifies a clear way to determine that. You take for granted something that is enormously important as if its absolutely nothing. It would be like be saying investing is simple...just buy low and sell high. Its not simple because knowing when something is low isn't obvious. And know when its high is also not obvious. Almost all of this thread concerns whether the market is low or high. He gives a way better than any other to figure that out. So you are saying his statements are truisms which implies its impossible for them to be false. Simultaneously you believe the statements to be wrong. His statements cannot be truisms because they predict the future. And your statements above are contradictory...you can't say something is obviously true and simultaneously say I don't think its true. There is absolutely nothing in basic math that can explain any of this. There is nothing that requires equity allocations to mean revert.

I can't. I think its a theoretical possibility but happens rarely in practice. But even if it did, I'm not sure how to screen for debt. Does anyone know how to do screens for debt? Can I just use EQS? The problem with the whole idea is that its very strongly premised on the idea of the debt becoming the equity because otherwise the debt has no "ownership" over the company and so its really nonsense unless this is the case.

I was think about this in the context of RELY. My net-nets are running out so I'm looking further afield. And one thought that came to me was that a company that is getting close to bankruptcy like RELY could become a debt-based net net. In other words if the equity goes to zero and the debt is going to in some sense take over the equity then you can perform a calc similar to net net. In net nets: 2/3*(Current Asset - Total Liabilities) > market cap In debt based nets nets since the Long term debt turns to equity: 2/3*(Current Assets - Remaining Current Debt) > market value of senior debt. Does this make sense?

For Canadian penny stocks , what is the best broker? I think Questrade and IB are out. IB because they charge per share and this will be expensive if you are buying a large number of shares. But in addition both IB and Questrade pass on ECN fees which can be very costly. On the other hand TD Waterhouse eats the ECNs fees. So basically a Canadian investor who buys penny stocks on TD waterhouse is being subsidized by those who don't buy penny stocks. They are paying his ECN fees. I think all the major banks are like this in Canada.

The page appears to be taken down. But I found the graph here: https://www.marketwatch.com/story/nasdaqs-new-high-could-be-the-bulls-last-gasp-2015-06-19 I don't think you are reading the graph right. The graph predicts future stock market returns for 10 years given today's equity allocation. And the correlations are negative not positive because he inverts the return axis on the right compared to the equity allocation on the left. So what he is saying is that equity allocations tend to mean revert. A high equity allocation today means lower equity allocations in the future. And as equity allocations go lower returns will be lower. Thus a high equity allocation implies lower future returns. For example, around 2000 the equity allocation is 65%, and the graph predicts future 10 year returns will be -3% cagr. On the other hand in late 2009 you have a very low equity allocation of 37.5% and the graph predicts future returns will be 14%. So % equity allocation today cannot possibly considered a closely related coincident indicator of future 10 year returns since one is calculated with today's information (equity allocation) and the other concerns information that cannot possibly be known by investors since it happens in the future (the SP500 future return of the next 10 years). Basically what philosophical economics is saying is: Give me today's equity allocation as a % of investor portfolios and I will tell you what the future 10 year SP500 return is.

I don't agree. The transition to indexing could lead to a bubble if it occurs too quickly but indexing in and of itself does not create bubbles. Indexing leads to less trading and possibly if adopted on a very very large scale , wider bid/ask spreads. Philosophical economics has already basically beautifully explained what happens when indexing is adopted on mass: http://www.philosophicaleconomics.com/2016/05/passive/ http://www.philosophicaleconomics.com/2016/05/indexville/ The real question is not about indexing. Its about equity allocation in investor portfolios. If investors increase their equity allocation, it will lead to higher prices. Again philosophical economics provides a great explanation: http://www.philosophicaleconomics.com/2013/12/the-single-greatest-predictor-of-future-stock-market-returns/

By system I don't mean some idea of science that exists in a timeless platonic plane of existence. I mean the actual current real world institutions of science that we confront today. This includes peer review, grant committees, enormous number of graduate students etc. And most importantly an incentive system that primarily rewards based on number of high impact papers as measured by number of citations, the prestige of the journal etc. In that environment, a repeated experiment is indeed a waste of time because it won't help a researcher get more grants or be more highly rated. The system I am describing came into existence post WW2. And when I say science is broke, I mean the post WW2 system of science that was created by men like Vannaver Bush: https://en.wikipedia.org/wiki/Vannevar_Bush Doctors will do whatever they get paid for and not do what they don't get paid for. Doctors don't get paid for washing hands. No one does. Doctors do get paid for seeing more patients. The system pushes doctors in a certain direction (see more patients, do more operations) instead of in another direction (wash your hands, get your patients to exercise, lose weight). In addition the existence of the incentives themselves can be the problem. Sometimes and I think this is especially true for research you just want to take good people and give them the space to do good work. You don't need to incentivize them...it actually makes things worse not better.

Once you start arguing, "its not the system its really just human beings that suck", you have all but outright admitted that your system sucks. See below for something I extracted from Feynman's talk on Cargo Cult science. What I find interesting about this, is this whole idea that replications should not be done because they are a waste of time. Its never ever about time. Its about priorities. And priorities are about incentives. What people really mean when they say something is a waste of time is that the current system is pushing hard them to do certain things (publish more research, get more grants, get more citations) and they don't have the time to do other important things that they aught to be doing. http://www.lhup.edu/~DSIMANEK/cargocul.htm

I think the better question is how would you buy them. Because if you can buy them at a broker than probably the broker could get a prospectus. I imagine the will charge you through the nose for buying them so you might as well at least get them to do some work for you.

Added some market cap functionality. Try attached with formula: =getMarketCap("MSFT:US"). It should return 649,106,000,000.00.

My excel addin does that for you. See link below where I posted it. I''ve got documentation and examples. You should be able to figure it out pretty quickly. Excel addin Find the ticker at the Bloomberg site and then put it in getPrice and you will get the price. For example: =getPrice("7299:JP") will return 5120 which is the price obtained from this URL: https://www.bloomberg.com/quote/7299:JP

Just thought I would post this since we are talking about scam chinese companies. This one doesn't have many subsidiaries but their investment page is hilarious. Probably the funniest investor relations page I have ever read; http://www.sippinternational.com/

There is nothing wrong with it if it makes sense. With most of these companies it doesn't make sense. A 30 million company that has subsidiaries which invest money, run golf courses, operate in social media etc...doesn't make sense.

I think rb is right. If you look at all hyperinflations they basically end up being the result of massive supply disruptions combined with political chaos and large foreign debts. Japan is the exact opposite of this. Zero political chaos, no supply disruptions and debt is both denominated in yen and held by japanese citizens.

In general I disagree. Plenty of deals I'd love to buy at 4%. However, in this case a Chinese state-owned company is trying to buy the largest public Canadian infrastructure company, one that knows how to build and maintain nuclear reactors. Regulators will take a hard look. Tough to handicap. I'm curious as to how you would size such deals?

If its not rational than its doubtful it will retain value over time. Everyone assumes that the tastes of today will be the tastes people will have in 20 years (e.g. tatoos). Now everyone wants to live in a detached house in the city. In 20 years everyone may decide that they want to spend their lives endlessly travelling from city to city worldwide while telecommuting to work. You may find people spending 6 months in temporary accommodations in one city and then another and then another. The idea being stuck in a house in one place may at that time may seem ridiculous and incredibly limiting. Even the idea of raising children in a single location may seem like something only poor bad parents do. In the 1960's people thought that cities were horrible and suburbs were the dream. None of them would be able to understand what is going on today.

Well lets quantify that. This graph shows housing price in Toronto http://i.huffpost.com/gen/5026956/original.jpg Looking at it, if you bought in 1989 in Toronto you would have waited until about 2009 before the price of your house would have caught up to its inflation adjusted buying price. So yes if you are willing to wait 20 years after a peak it will appreciate. I would guess given the fact that this housing bubble is bigger and that Canadian households have double the household debt to gdp of their 1989 counterparts that the length of time may be significantly longer than 20 years...lets say 30 years. https://tradingeconomics.com/canada/households-debt-to-gdp. It should also be noted that this is all assuming your house is new. That means if you bought your house in 1989 and somehow froze it in time for 20 years and somehow its design was still fashionable, only then would it appreciate back to its original inflation adjusted price. But older houses sell for less than newer houses. The following paper attempts to quantify the depreciation and comes up with a rate of 2.5% a year http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.571.5618&rep=rep1&type=pdf. This means that after 20 years your house would be worth (0.975)^20 = 60% of its original value. And after 30 years less than 50% of its original value.

4% is way too small a spread unless you are a merger arb hedge fund.

What are the limits they describe and in what article/book do they describe them?

My comment was not directed specifically at you. Its more of a general argument. Keynes wrote Economic consequences of the peace. A lot of it is qualitative but there is a straightforward quantitative argument where he basically demonstrates that it will be impossible for Germany to meet its treaty obligations. You included various graphs and numbers in your initial post but what I am getting at is that we need some argument that connects the numbers to some unassailable conclusion. Its not necessarily the case that any such argument can even be made. It could be that we are in a situation that doesn't necessarily need to lead to any particular conclusion. Unlike the subprime crisis or the Treaty of Versailles. My view is that for macro to be valuable it needs to provide us with, in at least some particular case, a prediction that we can rely on. Let me try.... US household debt is 80% of GDP. GDP is 18 trillion, number of households is 128 million...so I get something like 150K debt per household. Assuming interest costs of 5%, we get $7500 per year interest service costs. Median household income is about 60k. To me this appears reasonable. Most US households should be able to handle this. Your initial post had I think even lower servicing costs...10% of DI which seems pretty low to me. So as far as I can see there is no problem here. I think i would be scared at around 30% of DI. Now corporations. They have 6 trillion in debt. Well what are their total profits? 1.6 trillion. Again if we assume 5% interest servicing then we get 300 billion which is 18% of their net income. This number is big enough that I doubt corporations could continue their buybacks at the same levels but I still think they should not have a problem paying the debt off.

Its basically a dis-qualifier for me if a small company has more than 5 subsidiaries. I have found that its frequently the case that there are small Chinese companies with tonnes of subsidiaries such as this one: emperor watch subsidiaries or this one: easy repay The subsidiaries have weird names like super luck investments or happy good ltd. I just wonder if there was anyone who has insight into the game that is being played. I have no intention of investing in these companies. I just want to know why they do all this.

This is the reason I think macro adds little. In the end in come down to vague impressions and prejudices that don't have strong predictive value. The most brilliant Macro argument I have ever seen in my life is this one: http://www.gutenberg.org/files/15776/15776-h/15776-h.htm So its possible if your brilliant. We need numbers and arguments based on numbers with a reasonably connected supporting story. Without that all we have are vague intuitions. I guess what I am looking for is something like: "The average American consumer is indebted to level X. Interest rates are level Y. This implies debt servicing costs of Q. These costs are unsustainable because....etc"