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A Rising Tide Lifts All Ships!


Parsad
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I'm getting quite worried and antsy about this market now.  Too much hubris and too much money flowing into everything.  Is this 1937? 

 

More capital has flowed into stocks last month since February 2000.  Manager letters I read...most are batting very high percentages on their ideas...Tilson says he was right on 7 of 8 ideas since he took over the funds.  ;D  Enjoy the next few months, as I'm concerned about what happens when all this lubrication starts to disappear.  Cheers!

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I understand the concern, but why would the markets not continue to rise when the earnings yield is 5x (or more) than folks are earning in bond funds.  Folks are tired of low rates as they just received their yearend statements reminding them and are moving elsewhere just like the FED wants (I can hear Helicopter Ben saying -- finally).

 

Sell in May and go away!

 

Cheers

JEast

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Guest hellsten

Yes, maybe it's finally time to listen to Hussman and act accordingly:

Present market conditions now match 6 other instances in history: August 1929 (followed by the 85% market decline of the Great Depression), November 1972 (followed by a market plunge in excess of 50%), August 1987 (followed by a market crash in excess of 30%), March 2000 (followed by a market plunge in excess of 50%), May 2007 (followed by a market plunge in excess of 50%), and January 2011 (followed by a market decline limited to just under 20% as a result of central bank intervention). These conditions represent a syndrome of overvalued, overbought, overbullish, rising yield conditions that has emerged near the most significant market peaks – and preceded the most severe market declines – in histor

In any event, it should be evident that present valuations are consistent with near-zero total returns on the S&P 500 over the coming 5-year period. In contrast, a roughly 40% market decline (to a market value/equity ratio of 0.6 or an equity/market value ratio of about 1.7) would be required in order to expect more historically-normal prospective returns near 10% annually.

The only other years where our stock selection approach even modestly lagged the S&P 500 were 2006 and 2007, just before the market imploded. Like then, investors embraced materials stocks, financials, and cyclicals…

 

http://www.hussmanfunds.com/wmc/wmc130204.htm

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I think Jeast you may be right. Europe is Ok for now, lot of stimulus right now as well, bond yields still low now so the market can probably go higher. Any political blow-ups in Europe or bond yields rising or a US recession would reverse the rise in a hurry.

 

Its definitely in the too hard to figure out pile. Although I have been hedged for a few years, even with the market at the current high, I am not feeling great about this being the time/year for the market to finally come down.

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Too hard pile for sure. 

 

So, I stay invested and keep those durations as far out as I can, and leave my FFh position alone.  I have been letting cash from dividends build in my cash free account awhile now.

 

I was at a large work gathering two weeks ago and two guys were debating stocks, specifically Apple and Rim.  The one guy had bought Apple at 600 and sold at 700.  He was feeling pretty smart.  I asked what he felt they might do with the cash (Apple) or how he felt about their earnings potential going forward and was met with a blank stare followed by a quick shift to talking about the price of Rim.  I saved my opinion :-).

 

Things aren't frothy yet but we could certainly see a shakeout, before a resumption upwards.  I guess that is why we all hedge in our own ways. 

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The reason I get worried is because you see stuff like this.   

 

http://finance.yahoo.com/news/sucker-alert-insider-selling-surges-181720960.html;_ylt=Asw147XxuPTbQNTJF_qHtMKiuYdG;_ylu=X3oDMTQ4YmQwdHRoBG1pdANDTkJDIFRvcCBTdG9yaWVzBHBrZwNiNDk2OGEzNi1iOWZlLTM3YmQtYmYxYS05MTZjNTEwZjQwM2UEcG9zAzIEc2VjA01lZGlhQkxpc3RNaXhlZExQQ0FUZW1wBHZlcgM3NmE1NjE1MC02ZmMwLTExZTItYmVlYi02YzJiMWNmYmZlZDk-;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

 

As I mentioned about a month ago...the dumb money is just really starting to flow.  I don't think there is any imminent collapse, but when it comes in a few months...year...two years...it's going to be a painful one because you don't have any other catalysts left to push asset prices back up again.  May be stagnant for a period.

 

Interest rates are at historic lows; deleveraging on the sovereign level is at the very early stages; debt capacity of sovereigns is not high without pushing up rates on their own bonds; pension plans/institutions/endowments have all suffered low returns for a decade...all the buttons have been pushed.  There isn't enough money corporations, hedge funds and private equity firms to bolster another significant downturn without Fed involvement, and the Fed just can't afford to get involved if things turn down. 

 

Just not enough premium for some of the risks out there.  Pick and choose your battles people!  Cheers!

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Pessimism isn’t necessarily deep, nor optimism shallow.

 

10 virtues for the modern age.

http://www.theschooloflife.com/assets/Uploads/Ten-Virtues-For-The-Modern-Age.pdf

 

Plan, I respect you quite a bit, so I hope you can shed some light on this (if you're not an atheist, well, feel free to ignore my rambling!). I'm still searching but I'm currently in the theism camp. Yes, I know we had a thread about this a couple months ago. If you'd rather PM, please feel free to do so. Sanj, if you'd rather not have this start again, please feel free to delete this post, too (not that you need my permission or anything, obviously!) :P

 

As a long time, former agnostic , tell me a bit more why virtues really matter? Love (as we traditionally view it) doesn't really exist.  It's simply a chemical reaction. We should have no preference if our spouse loves us....or if a machine generates these impulses for us. For instance, when a young child looks up at a father, it isn't love the child feels (although a parent might think the child feels that way). The child is simply following his evolutionary instincts to survive (cute, cuddly smile = high probability that the child will survive). The parents is simply following the evolutionary instinct to pass on his genes. Nothing more or less. If love doesn't truly exist, I fail to see why I should sacrifice or have any of the other virtues.

 

When atheists try to pull the "feel good" traits from religion, it confuses me a bit. We all have to be intellectually honest. If something doesn't matter - we shouldn't act like it does. For instance, if my evolutionary desire causes me to stop by Mickey D's for a large cheeseburger and large coke - that doesn't mean I should follow it.

 

So, if there is no "higher power" I don't know why we should pick and choose certain things. As the old saying goes,

you can put lipstick on a pig, but it is still a pig." If man will truly advance past the theism part, then they need to look at reality - not just what makes them feel good.

 

As for my own feelings, I think (and I could be totally wrong) that there is objective morality, ie, if something is wrong, it's wrong regardless of what society says. For instance, if the Sandy Hook killing happened at a Jewish schoolhouse in Nazi Germany, the killer may have been looked at as a national hero. However, objective morality would still cause this act to be wrong. Like I said, I'm still searching and thinking about the topic!

 

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As for my own feelings, I think (and I could be totally wrong) that there is objective morality, ie, if something is wrong, it's wrong regardless of what society says. For instance, if the Sandy Hook killing happened at a Jewish schoolhouse in Nazi Germany, the killer may have been looked at as a national hero. However, objective morality would still cause this act to be wrong. Like I said, I'm still searching and thinking about the topic!

 

Just out of curiousity, if you live withing a social network of theists, how many of them condemn the killings in Tokyo, Dresden, London, Nagasaki, and Hiroshima as terrorism?  Terrorism being defined as the targeting of civilians for political or military gain.

 

In other words, is there even "objective morality" within the true believer networks?  My question being, why is this a topic of "theism" vs atheism if the "theists" don't discuss it as such?  Which national religious leader is going to condemn the US engagements of civilian populations in WWII and demand apologies from the US government?  I'm willing to say none of them, but perhaps I'm exagerrating.

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As for my own feelings, I think (and I could be totally wrong) that there is objective morality, ie, if something is wrong, it's wrong regardless of what society says. For instance, if the Sandy Hook killing happened at a Jewish schoolhouse in Nazi Germany, the killer may have been looked at as a national hero. However, objective morality would still cause this act to be wrong. Like I said, I'm still searching and thinking about the topic!

 

Just out of curiousity, if you live withing a social network of theists, how many of them condemn the killings in Tokyo, Dresden, London, Nagasaki, and Hiroshima as terrorism?  Terrorism being defined as the targeting of civilians for political or military gain.

 

In other words, is there even "objective morality" within the true believer networks?  My question being, why is this a topic of "theism" vs atheism if the "theists" don't discuss it as such?

 

I totally agree with you there, Eric. I find it really strange that a lot of theists are pro gun and other forms of killing, too.  I'ts odd that people are so inconsistent with their alleged beliefs. I know this one guy, who is a preacher, and his profile pic on facebook is his son with a toy gun in his hand!

 

In a similar vein, so many republicans are "religious" and they're all about a totally unjust tax system. I'm just like, "aren't they all suppose value other people?"

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As for my own feelings, I think (and I could be totally wrong) that there is objective morality, ie, if something is wrong, it's wrong regardless of what society says. For instance, if the Sandy Hook killing happened at a Jewish schoolhouse in Nazi Germany, the killer may have been looked at as a national hero. However, objective morality would still cause this act to be wrong. Like I said, I'm still searching and thinking about the topic!

 

Just out of curiousity, if you live withing a social network of theists, how many of them condemn the killings in Tokyo, Dresden, London, Nagasaki, and Hiroshima as terrorism?  Terrorism being defined as the targeting of civilians for political or military gain.

 

In other words, is there even "objective morality" within the true believer networks?  My question being, why is this a topic of "theism" vs atheism if the "theists" don't discuss it as such?  Which national religious leader is going to condemn the US engagements of civilian populations in WWII and demand apologies from the US government?  I'm willing to say none of them, but perhaps I'm exagerrating.

 

This is an interesting question.  In fact, the nature of ethics doesn't appear to be a "theist" versus "atheist" question, at least among the white-coated cognescenti.  Some interesting statistics:

 

http://philpapers.org/surveys/results.pl

 

----------------------------

God: theism or atheism?

 

Accept or lean toward: atheism 678 / 931 (72.8%)

Accept or lean toward: theism 136 / 931 (14.6%)

Other 117 / 931 (12.6%)

 

---------------------------------------

Meta-ethics: moral realism or moral anti-realism?

 

Accept or lean toward: moral realism 525 / 931 (56.4%)

Accept or lean toward: moral anti-realism 258 / 931 (27.7%)

Other

 

 

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No, no, no, I didn't want to start another religious thread  :P. It was just a reference for the quote … a good quote from a good list of values (religious or not) from the new book of Alain de Botton (that I have not read).

 

What was the point? Just a reminder that you don't want to end like Sewell Avery waiting for the next depression and completely sure that the New Deal was the worst thing ever … while Sears Roebuck passes you by.

 

https://twitter.com/PlanMaestro/status/296822619347488768/photo/1

 

Macro threads are distracting enough!

 

PS: this is the book. http://www.amazon.com/Religion-Atheists-Non-believers-Guide-Vintage/dp/0307476820/ref=tmm_pap_title_0

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I'm getting quite worried and antsy about this market now.  Too much hubris and too much money flowing into everything.  Is this 1937? 

 

More capital has flowed into stocks last month since February 2000.  Manager letters I read...most are batting very high percentages on their ideas...Tilson says he was right on 7 of 8 ideas since he took over the funds.  ;D  Enjoy the next few months, as I'm concerned about what happens when all this lubrication starts to disappear.  Cheers!

 

 

This isn't a real move. I have no problem with stocks rising in fact I enjoy and expect them to over time but I don't believe a move when it is this sharp in any direction. When the direction is up to the tune of 7%, while gasoline rises 8% and the fed is printing $100b~ a month it definitely does not bode well. As I write this I am on the phone with my japanese trader at Nomura and we are going through chart after chart of japanese stocks that have gone up 50-100% over the last 3 months.

 

You guys know I don't like ZH but recently he coined a good term which was "food stamps for the rich" That's exactly what this feels like. That's why our net exposure is so low.

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I'm getting quite worried and antsy about this market now. ....

 

Why? When you can still find great companies at near book values and P/E of about 10, why are you worried? May be you are worried about the runaway market that leaves you behind with a huge cash unable to deploy?

 

There hasn't been a period of time in my last 16 years of investing, where I sweated even one night about the market leaving me behind and not being able to deploy capital.  Cash has never burned a hole in my pocket.  Cheers!

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I'm getting quite worried and antsy about this market now. ....

 

Why? When you can still find great companies at near book values and P/E of about 10, why are you worried? May be you are worried about the runaway market that leaves you behind with a huge cash unable to deploy?

 

There hasn't been a period of time in my last 16 years of investing, where I sweated even one night about the market leaving me behind and not being able to deploy capital.  Cash has never burned a hole in my pocket.  Cheers!

 

Agree 100%

 

giofranchi

 

“As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes

 

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Well, everyone thinks we have the Bernank there ready to step in whenever the market goes down. Just like the second coming of Greenspan. This market can keep going higher...means I will lose even more money on my hedges. Watsa and I are getting screwed, I guess we might as well get screwed well.

 

original mungerville,

it is a pleasure to suffer alongside with you and Mr. Watsa!  ;D

Though, to tell the truth, I don’t understand what’s really different now from a year ago… the market that is 15% higher? Well, it is just 7% higher than where it was last march… That cannot be the true reason!

Probably, I am not sophisticated enough!

My firm’s portfolio changed dramatically at the end of 2010, when it was 100% long. Then it has almost stayed the same: very cautious and conservative.

 

giofranchi

 

“As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes

 

 

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As I write this I am on the phone with my japanese trader at Nomura and we are going through chart after chart of japanese stocks that have gone up 50-100% over the last 3 months.

 

The yen  is down about 15% since then. Let say those firms have 50% sales outside japan. That's 7% top line growth.  Consider operational and financial leverage, this can lead to 25% profit growth in some firms, market share gain for others, difference between loss and profit for some others, and P/E expension for all of them for brighter future perspective.

 

 

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Too hard pile for sure. 

 

So, I stay invested and keep those durations as far out as I can, and leave my FFh position alone.  I have been letting cash from dividends build in my cash free account awhile now.

 

I was at a large work gathering two weeks ago and two guys were debating stocks, specifically Apple and Rim.  The one guy had bought Apple at 600 and sold at 700.  He was feeling pretty smart.  I asked what he felt they might do with the cash (Apple) or how he felt about their earnings potential going forward and was met with a blank stare followed by a quick shift to talking about the price of Rim.  I saved my opinion :-).

 

Things aren't frothy yet but we could certainly see a shakeout, before a resumption upwards.  I guess that is why we all hedge in our own ways.

 

LOL, I've stopped having discussions about stocks completely. Tend to listen a lot more and I don't bother giving an opinion.

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Guest valueInv

Too hard pile for sure. 

 

So, I stay invested and keep those durations as far out as I can, and leave my FFh position alone.  I have been letting cash from dividends build in my cash free account awhile now.

 

I was at a large work gathering two weeks ago and two guys were debating stocks, specifically Apple and Rim.  The one guy had bought Apple at 600 and sold at 700.  He was feeling pretty smart.  I asked what he felt they might do with the cash (Apple) or how he felt about their earnings potential going forward and was met with a blank stare followed by a quick shift to talking about the price of Rim.  I saved my opinion :-).

 

Things aren't frothy yet but we could certainly see a shakeout, before a resumption upwards.  I guess that is why we all hedge in our own ways.

 

Well Uccmal, if you want to learn about Apple, all you have to do is ask. Always happy to help:

 

http://www.bloomberg.com/news/2013-02-06/apple-rises-on-report-that-it-s-undervalued-san-francisco-mover.html

 

;) ;)

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