Saturday, May 27, 2017

Quote of the Day

I can virtually assure you, any ad for a sure fire investing/trading system isn't worth the cost of whatever medium utilized to bring it to you (in the olden days we said "the paper it's printed on").

Why? Because the system's seller wants to, well, sell it you. I.e., the person is out to make a buck. I mean, if the system works, the last thing in the world it's inventor would do is advertise it.

Per this quote from Rishi K. Narang's revealing Inside the Black Box: The Simple Truth About Quantitative Trading 
"I'd sell you my kids before I'd sell you my data, and I'm not selling you my kids."
---Anonymous quantitative futures trader 

Thursday, May 25, 2017

This Week's Message: What Motivates the Seers

RBC's guy feels very good about the market these days:              emphasis mine...
(Bloomberg) -- Risk assets should continue higher amid an economy that’s in good shape, barring “some exogenous event,” and “bearish arguments appear to be increasingly contrived,” RBC strategists led by Jonathan Golub write in a note. * Drivers of market upside include: synchronized global pickup, easier lending conditions, improving consumer situation, renormalization of rates and corporate profits.....
And, clearly, he's in no mood for dissenting opinions.

Sunday, May 21, 2017

Four Types of Investments -- AND -- This Week's Video

I play a lot of basketball, and, as my son and the dudes I play with will attest, I like to attempt three-pointers. In that success enhances the enjoyment of virtually any endeavor, I knew from the start (my late start [not surpassing the 5'5" mark till after highschool and, thus, being a wrestler during my formative years]) that if I was to score enough to justify my itchy trigger finger, I had to learn good shooting fundamentals. While I'm fully aware that 100% from the field is infinitely beyond my reach, I know that if I can stay in rhythm, if my form is sound and if I practice good shot selection, my odds of maintaining a respectable enough percentage to keep me from being the lowly last pick come time to select the teams increase dramatically.

America: A Talent Magnet!

Edward O. Thorp, one of history's great investors, has lived a fascinating life! While nearing the end of his amazing, and instructive, autobiography A Man For All Markets, I found myself pondering the heightened nationalist sentiment that (recent French election notwithstanding) seems to be gaining traction throughout the developed world.

Friday, May 19, 2017

This Week's Message: The Cure Can Hurt a Little - OR - The Unavoidable Fact - OR - They Come and They Go

I sense a little hesitation among some clients these days -- that is, a hesitant feeling about global markets. This, frankly, I welcome, especially during a bull market. It speaks to our clients' understanding that stock prices forever fluctuate. It says that they're not the typical bleary-eyed individual investors who tend to embrace the prevailing emotion of the crowd.

Wednesday, May 17, 2017

Bonus Video: This Morning's Selloff and Past Presidential "Panics"

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Quote of the Day: The term "Watergate" got you jumpy?

From Bespoke Investment Group's morning commentary (also, I shot a 5 minute video on past US political turmoil and the market that I'll be sending shortly [the YouTube upload is very slow this morning]):
The term “Watergate” has been thrown around a lot to describe recent events. Whenever any mention of Watergate comes up, you can forgive investors for becoming a bit jumpy. The S&P 500 fell nearly 50% between the week prior to the sentencing of the first five Watergate burglars in January 1973 and the month after the resignation of President Nixon. Of course, it’s ludicrous to pin that whole drop on Watergate. Inflation was making a parabolic move to double-digits YoY as the US economy choked on the 1973-74 oil embargo by OPEC in response to US foreign policy supporting Israel. The economy entered recession, and the unemployment rate spiked as high as 9%. President Nixon had rescinded gold convertibility of the dollar (dropping the gold standard, back in 1971. So to reiterate: it’s not the same, and nobody should expect a 50% decline in the US stock market on political headlines alone! Also, remember that back in 1998/1999, the Clinton-Lewinsky scandal and subsequent impeachment proceedings had little ultimate impact on equities.
As much as we like to focus on the day to day drama out of Washington, the financial markets are much bigger. That hasn’t changed with the most recent revelations, and the tiny fraction of decline we saw last night hardly foretells calamity ahead.
Emphasis mine... 

Tuesday, May 16, 2017

This Week's Video: Potential Fuel Going Forward

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:


Chris Ciovacco's recent excellent analysis inspired this week's message...

One minute of pure inspiration for our kids and grandkids!

Thursday, May 11, 2017

This Week's Message: Why Didn't Brexit, or Trump's Victory, Derail the Market?

The great conundrums of the past year have been Brexit and Trump. Pundits, en masse, had global markets tanking should either, let alone both, succeed. Well, as you know, both succeeded and, go figure, a number of the world's equity markets marched to all time highs in the aftermaths.

So, is it that Brexit and the President's proposals/policies/positions are -- contrary to early "expert" opinion -- inherently good for markets? Or is it something else altogether?

Wednesday, May 10, 2017

This Week's Video: Trend Line Perspective

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Tuesday, May 9, 2017

Chart of the Day: Housing Stats

Have you been thinking that since, in some areas, home prices have moved back into record territory, that there exists yet another housing bubble just waiting to pop? Well, trust me, you're not alone. Although, while I completely understand, I wouldn't be one who presently shares your concern.

Monday, May 8, 2017

Chart of the Day: Not rethinking our bullish Euro Zone view just yet...

Just a quick note regarding market action immediately following the French election -- which yielded the result the market was hoping for.

So, if the market was hoping for a Macron victory, which it got in landslide fashion, why would Euro Zone stocks be trading down 1.6% as I type? And why would the Euro trade notably lower as well (recall that I hinted in yesterday's blog post that the initial spike higher could've simply been a knee-jerk reaction)? I mean, yesterday's financial news offered up pieces that, for example, talked of the Dow stocks to own in a rising Euro environment.

Stat of the Day: Industrials Look Compelling

The industrials sector ties for the 2nd largest (along with tech and materials) target weighting within our portfolios. Obviously, we believe the setup (technically and fundamentally) to be presently quite favorable.

During each earnings season Bespoke Investment Group produces a periodically updated list of the companies they call "triple plays". These are the ones that beat analysts' estimates on earnings, revenue and forward outlook. Last week they refined the list to 14 names that they see as showing unusual technical strength as well.

Here's a look at the sectors that house each name:


While tech actually takes the top spot on the unrefined triple play list, I found it interesting (although not surprising) that industrials dominate the best-trending list.



Sunday, May 7, 2017

Charts of the Day: French Election Exit Polling and the Euro

Two weeks ago, herein, we focused a bit on round 1 of France's presidential election. In our view (totally based on the polls and the odds makers), the election was essentially decided in the first round. Any divergence from the trend in polling and/or in the odds would've inspired additional commentary from me.

Friday, May 5, 2017

Stats of the Day: What's up (or down as the case may be) with the dollar?

One of 2017's conundrums has been the non-rally in the U.S. dollar.

Here's a look at the net long position among futures speculators in the U.S. Dollar Index over the six months leading into this year:

Traders were the definition of bullish on the dollar to start the year.

Thursday, May 4, 2017

Economic Update Part 3 and Your Weekly Message: Levels of Stress in the System

We'll make part 3 of this week's look at the economy our weekly message as well. As you noticed in the previous two updates (here and here), U.S. consumer and business activity is not sending signals that we should be fretting the next great recession just yet.  

As I've stated here before, there's no better place to look for stress in the system than in the credit markets -- so we'll explore some key indicators to paint the present picture. 

Wednesday, May 3, 2017

Quote of the Day

When you find yourself stressing over market volatility, think the following:
By their actions, negative feedback traders provide a check on positive feedback and, in effect, regulate the trend. Without constraints introduced by contrarians, the market would be at risk of runaway, and possibly terminal, positive feedback.
Gary E. Anderson. The Janus Factor: Trend Follower's Guide to Market Dialectics








Tuesday, May 2, 2017

Economic Update Part 2: The Business Outlook

In part 2 of this week's look at the economy, we'll highlight a few key indicators that point to the general state of business in the U.S.

The following charts (click to enlarge) go back as far as the data allow. Note the trends leading into past recessions (red-shaded bars) and compare to the present. I highlight each title green, yellow or red to reflect my view of the prevailing trend.

Monday, May 1, 2017

Quote/Message of the Day: We'll defer to the market...

Just finished James Owen Weatherall's The Physics of Wall Street. I found it fascinating, although I suspect others more tightly wed to Wall Street dogma have a number of understandable bones to pick with the brilliant young physicist, mathematician and philosopher.

I will say that I'm glad I didn't read the book back when it was published in January 2013. For, being so impressed with the author's intellect, I might have been swayed by his gloomy assessment of the global economy at the time. Per his epilogue:

Economic Update Part 1: The Consumer

This week we're focusing on the economy. In that we track too many data points to bury you with one blog post, we'll break it up. I'll summarize at the end of the week.

Today we'll highlight a few of the key indicators that speak to the health of the consumer (consumption btw is 2/3rds of the U.S. economy):

The following charts (click to enlarge) go back as far as the data allow. Note the trends leading into past recessions (red-shaded bars) and compare to the present. I highlight each title green, yellow or red to reflect my view of the prevailing trend.