tag:blogger.com,1999:blog-189058612024-03-07T13:32:09.697-08:00A Bourse DiaryThoughts on stocks, speculation and ... lifesavianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.comBlogger68125tag:blogger.com,1999:blog-18905861.post-71514447865133063712007-03-08T01:58:00.000-08:002007-03-08T02:01:00.884-08:00What China can learn from historyThere is an analysis of Lawrence Summers of what lessons China can learn from economic history. It is published in Financial Times Germany (in English though): <a href="http://www.ftd.de/wirtschaftswunder/index.php?op=ViewArticle&articleId=283&blogId=16">History holds lessons for China</a>.<br /><blockquote>It was a cliché in US-Japan relations during the late 1980s and early 1990s that the US-Japan link was the world’s most important bilateral relationship. Given China’s greater scale, more rapid growth and the greater level of imbalances in today’s global economy, Chinese economic policy and its international economic relations are even more important. By learning from a rather unfortunate history, policymakers on both sides of the Pacific can avoid repeating its mistakes.</blockquote><br /><br />For how the author suggests some crucial point are to be addressed, read on the article. <br /><br />I could add - in the 80s I remember, everyone was scared and excited by Japanese growth and financial power. Voices of Japan buying out America (from Empire State Building to Hollywood Studios) were omnipresent. Often they spoke of new shift of global economic power balance to Asia (at that time with Japan in focus). Watch out! Back there, we spoke of Japan with more or less stable democratic political system and - this for sure - with much more developed economy. Now we talk about - please don't forget about it - a authoritarian regime, non-present democracy, mostly poor and underdeveloped China. <br /><br /><span style="color: rgb(51, 51, 51);font-size:78%;" ><strong>Disclaimer</strong> - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site </span></span>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-73474269738887880022007-02-22T03:22:00.001-08:002007-02-22T03:22:08.559-08:00Ken Fisher on housing<div xmlns='http://www.w3.org/1999/xhtml'>I like the optimism of Ken Fisher...<br /><br />Currently the big concern for the US economy appears to be the housing slowdown. Some commentators already speak about crunch, crash, disaster and so on. Quite too early - we really do not need the "dreams" of the bears - for now ...<br /><br />So Ken Fisher is writing in his Forbes column: <br /><blockquote>For months now the debate has been over whether America will have a hard landing or soft landing, the answer hinging on how big 2007's housing disaster turns out to be. Well, there won't be any housing disaster. We won't have a landing at all, soft or hard. Right now the U.S. and global economies are both accelerating.<br /><br />You can see right through the housing crash story by looking at the prices of housing stocks. The market knows what the economic worrywarts do not, which is that the housing sector is already making a comeback. In the last six months housing stocks are up 24%, well ahead of the overall market. If housing were destined to fall apart in 2007 these stocks wouldn't be so strong now.</blockquote> <br /><i><a href='http://www.forbes.com/free_forbes/2007/0226/110.html'>Housing Boom! </a> </i></div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-11825200504051458642007-02-19T15:55:00.001-08:002007-02-19T15:55:15.060-08:00Fed guess by Capmarketline<div xmlns='http://www.w3.org/1999/xhtml'>All the data suggests a coming monetary easing. But I have a strange feeling. I am not that convinced the Fed will be inclined to ease so soon - maybe because everyone, especially the stock market, is appreciating this so much. The relief would be too furious and the job of crunching down inflation not done.<br></br><br></br>And in <a href='http://capmarketline.blogspot.com/'>Capmarketline I have found some interesting thoughts</a>, which go in my direction:<br></br><br></br><blockquote>My guess is the Fed sees the run offs of excess housing and goods inventories as the prelude to eventual recovery of production and later, housing investment. So, the Fed is forecasting that rising final demand for consumer goods, services and exports will lead to this upcoming recovery of production and housing. Implicit of course, is the notion that weaker production and housing will not produce increases in joblessness and weakened confidence that could bring the economy down. The Fed may also not mind if the economy stagnates for a few months, if it makes it easier to squelch<br></br>inflation pressure further and create enough slack to goose the economy later this year for a clean run through 2008.<br></br></blockquote></div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-31841254256367982262007-02-19T15:47:00.001-08:002007-02-19T15:47:58.774-08:00Bearish toughts<div xmlns='http://www.w3.org/1999/xhtml'><blockquote>My sentiment is bearish. The market is much higher than when I first, incorrectly as it turned out, became bearish. The defensive action taken last summer was far from extreme, and I am less defensive than I was a few months ago. Technically speaking we are closer to the next correction than we were six months ago.</blockquote><br></br><br></br>This is <a href='http://randomroger.blogspot.com/'>Roger Nusbaum</a> at SeekingAlpha: <a href='http://usmarket.seekingalpha.com/article/27461'>Bearish and Long</a>.<br></br><br></br>I really gladly hear bearish thoughts. My perception is, more bloggers (in particular) are bearish. But they are forced to follow the trend. Roger speaks of his equity exposure to have risen - but we don't know how high it was. And, yes, surely it has risen - most probably due to the strong market, not new investments. <br></br><br></br>The correction - much anticipated - will come. I also suggest that we are near a short turn "relief". But "a bearish sentiment" means to me to expect a mid term market top followed by an extended bear market or pronounced weak period in stocks. And I do not see this coming: correction - yes, please, but this is not the top of this bull run.<br></br><br></br>In my humble opinion, of course.</div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com2tag:blogger.com,1999:blog-18905861.post-53194674616467290892007-02-15T06:53:00.001-08:002007-02-15T06:53:53.493-08:00An interesting study on productivity<div xmlns='http://www.w3.org/1999/xhtml'>The Federal Reserve Bank of New York publishes a new study on tracking and evaluating of productivity trends in the economy.<br /><br />In the summery of the research is stated:<br /><blockquote>Authors James Kahn and Robert Rich conclude that long-run productivity growth, also known as trend productivity growth, continues to be nearly 3 percent per year, based on a new model designed to track underlying national productivity trends.<br /><br />Kahn and Rich developed their model to facilitate more timely and accurate assessments of evolving productivity trends. These trends have important implications for living standards and the nation’s overall economy, and hence for the decisions of economic policymakers.<br /><br />According to the authors, their model identifies changes in productivity trends within a year or two of their onset. They observe that the model would have been especially revealing as productivity began to increase in 1996 in an early manifestation of what became known as the "new economy."<br /><br />Kahn and Rich also conclude that their model, had it been in use, would have given clear indications to policymakers that despite cyclical moves in data linked to the nation’s 2001 recession, long-run productivity growth was unaffected during that period.<br /><br />The authors’ model incorporates additional labor market and consumer spending data to help screen out transitory movements in productivity related to business cycle conditions.<br /><br />James A. Kahn is a vice president and Robert W. Rich a research officer in the Macroeconomic and Monetary Studies Function of the Research and Statstics Group.<br /><br /></blockquote><a href='http://www.newyorkfed.org/research/current_issues/ci12-8.html' target='_blank'>Tracking Productivity in Real Time<br /></a></div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-66640754870595760292007-02-15T02:12:00.001-08:002007-02-15T02:12:50.891-08:00Hedge Funds do not bear just risks<div xmlns='http://www.w3.org/1999/xhtml'>The G7 summit put hedge funds on its agenda and caused additional uncertainty about the health and stability of the financial system. Especially the Yen carry trades, the vast volume of the managed assets as well as the often involved leveraged trading positions were a main source of concern and were widely covered by the mass media.<br></br><br></br>Though, looking in some details one could suggest, that the G7 politicians do not understand the role of the hedge funds to the full. For example Fed chief Bernanke made more cautious statements on the need of regulations and pointed some important "positives" of the hedge funds activity:<br></br><br></br><blockquote> "I would be very reluctant to get involved in heavy-handed, direct regulation of hedge funds," Bernanke told the Senate Banking Committee in response to a question during semi-annual testimony on monetary policy.<br></br><br></br>"One of their key characteristics is that they are very nimble ... and that is good for the economy, because they help to create liquidity in markets, they help to spread risks around more broadly, and a regulatory regime that inhibited that flexibility and nimbleness would eliminate a lot of the economic benefits," he said. </blockquote><br></br>Reuters.com, <a href='http://www.reuters.com/article/governmentFilingsNews/idUSWAT00697320070214'>Fed's Bernanke - don't over-regulate hedge funds</a></div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-18997671275069245202007-02-12T03:42:00.001-08:002007-02-10T11:51:01.437-08:00Much ado for what?<div xmlns='http://www.w3.org/1999/xhtml'>Hedge Fonds have under management ca. 1% of all world's financial assets, but represent up to 20-30% of trading volume. This is the result of a recent industry report as <i>Vincent Fernando</i> points on SeekingAlpha: <a href='http://seekingalpha.com/article/26744' target='_blank'>Hedge Funds Manage 1% of Global Assets, 25-60% of Global Trading</a>.<br></br><br></br>In the abstract we read: <br></br><blockquote>On the latter score, U.S. hedge funds shoulder two-thirds or so of worldwide margin debt, or something in the neighborhood of $300 billion. Truly staggering, furthermore, is the Dresdner Kleinwort estimate that hedge funds account for between 25% and 60% of the trading in global major markets. And, we're reminded, it's the marginal trader that makes the market.</blockquote><br></br><br></br>And transaction costs sum up to 4%-5%, which is actually much. So no wonder, the hedge fonds have a tough game to play - and given their recent growth even harder in the future.<br></br><br></br>But why not ask: so much <strike>action </strike>trading - what for? Is the performance good? No, no. But they just can't sit still. </div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-6138352819513353372007-02-10T11:51:00.001-08:002007-02-07T07:25:38.063-08:00Still cheap money<div xmlns='http://www.w3.org/1999/xhtml'>The interest rates - are they the key to today's financial markets? If you can understand the forces behind them you should be in a very good position to predict the direction of the stock markets.<br></br><br></br>The striking point viewing the interest rates development is - they are permanently so low. Yes, beside an uptick in the summer 2006, the long-term bonds yield remains quite stable, low, moderate... <br></br><br></br>In the BusinessWeek.com we read:<br></br><br></br><blockquote>When the rate on the 10-year Treasury bond plunged from 6.5% in early 2000 to an average of 4% or so in 2003, the explanations were easy: tech bust, recession, weak capital spending, low inflation, steep rate cuts by central banks around the world. The low rates seemed perfectly normal—and sure to reverse on a dime when conditions changed.<br></br><br></br>Since then, plenty has changed. The Fed has hiked short-term rates by more than four percentage points. The global economy grew by 5.1% in 2006, the second-strongest performance in 25 years. Europe and Japan have recovered. Even tech spending seems to be on the rise, judging from Cisco Systems Inc.'s (CSCO ) strong earnings report on Feb. 6. And yetand yet!—10-year Treasury rates have risen only three-quarters of a percentage point. Real rates, which adjust for inflation, have barely budged.<br></br><br></br>It isn't only a U.S. phenomenon. Ten-year euro bonds are yielding around 4% today, no higher than in 2003, despite much faster growth in the region. Real rates in the euro zone are up only a bit.</blockquote><br></br>BusinessWeek.com, <a href='http://www.businessweek.com/magazine/content/07_08/b4022001.htm?chan=top+news_top+news+index_businessweek+exclusives' target='_blank'>It's A Low, Low, Low, Low-Rate World </a><br></br></div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-56269247653985393802007-02-07T07:25:00.001-08:002007-02-07T07:25:39.357-08:00Good news for inflation outlook<div xmlns='http://www.w3.org/1999/xhtml'>The inflation outlook should be more favourable for the investors' community after the good data provided today:<br /><blockquote>U.S. worker productivity grew at the fastest rate in almost a year last quarter and labor costs rose at a slower pace, suggesting wages may pose less of an inflation threat.<br /><br />The 3 percent gain in productivity, a measure of how much an employee produces for each hour of work, followed a revised 0.1 percent decline in the third quarter, the Labor Department said today in Washington. A measure of labor costs increased 1.7 percent after rising 3.2 percent.<br /><br /></blockquote><br />Bloomberg.com: U.S. Economy: Productivity Accelerates, Cost of Labor Slows <br /><br />Wait for the market reaction. Normal mode is UP. And if the data flow goes further this way - not only for today...</div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-51345365966419564082007-02-07T04:32:00.001-08:002007-02-07T04:32:38.557-08:00Sentiment Charts - do not trust them<div xmlns='http://www.w3.org/1999/xhtml'>Always be sceptical when you see statistics. With graphs it can get even worse:<br></br><blockquote>In the investment world, this takes the form of scores of misleading systems, charts, and tables, all purporting to show a relationship that does not really exist. The process of extracting information from data, or data mining, requires great skill if the results are to be meaningful. Since the untrained analyst takes all of the data and examines thousands of different possible relationships, something will always turn up. Statisticians call this "data dredging".<br></br><br></br>Sometimes it is not obvious that hundreds or thousands of combinations have been tested. This is particularly true when the result is a graph showing what appears to be a compelling relationship. In the investment world, these graphs appear all of the time.</blockquote><br></br>Via: SeekingAlpha, <a href='http://usmarket.seekingalpha.com/article/26316'>Homebuilder Sentiment and the Stock Market</a><br></br><br></br>I have studied statistics long enough to at least know that reading them properly is not that easy. Variables can appear to be in a relationship, but in fact there is some other factor which determines those variables, and so on... In the financial world, unfortunately, just few investors care about proper analysis. The mass of them just takes a look on some constructed chart or relationship and makes decisions. It's ridiculous. </div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-25563200861637672052007-02-02T08:30:00.001-08:002007-02-02T08:30:46.012-08:00Payrolls and Wages increased less than expected<div xmlns='http://www.w3.org/1999/xhtml'>Via seekingalpha: <a href='http://usmarket.seekingalpha.com/article/25910'>U.S. Payrolls, Wages Increased Less Than Expected in January</a>:<br /><blockquote>U.S. employers hired 111,000 workers in January, lower than the 170,000 economists forecast, and unemployment unexpectedly rose 0.1% to 4.6%. It is the first time in three months unemployment rose.</blockquote></div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-56897843391328627132007-01-24T05:20:00.001-08:002007-01-24T05:20:45.503-08:00Nice point on oil<div xmlns='http://www.w3.org/1999/xhtml'>In the blog capmarketline I read a good point on the oil development:<br></br><blockquote>In short, the market has begun to return to balance, and because new supply comes on in size and not in drips and drabs, there may be a moderate build up in spare capacity over the next few years, even as demand grows. These developments have led to a groundswell of comments by industry observers about how low the price of oil could go over the next year or so. I'll have none of that. With demand now over 85 million bd worlwide, the industry needs a higher margin of excess capacity to provide<br></br>assurance to economic growth. Moreover, I could be on the low side with my cost estimates, as new supply will come on with<br></br>higher finding, development and lifting costs embedded. So, oil at $45 bl. is fine by me as a working assumption.</blockquote><br></br>Source: <a href='http://capmarketline.blogspot.com/2007/01/oil-market.html'>Oil Market</a><br></br><br></br>With a price correction of ca. 40% (with a quite favourable background for global growth actually), the price of oil should have seen the worst. I have been sceptical during all that oil-bull-time because of very similar position as capmarketline. Now, seeing the market go that rapidly down - hey, some will call it a pure bear market! - its supposedly time to be more balanced: Oil is down, thats good news for all of us, who are bullish on stocks. The economy has shown, it can manage huge price increase without major problems; inflation pressures are to calm, production costs sink. World is better...<br></br><br></br></div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-33450525613234595492007-01-15T07:35:00.001-08:002007-01-15T07:35:21.415-08:00Real estate worries<div xmlns='http://www.w3.org/1999/xhtml'>The real Estate market outlook plays an important role for assessing the general financial markets trend in 2007. There appears to be a large chorus of worried voices. For example:<br /><br /><a target='_blank' href='http://www.forbes.com/guruinsights/2007/01/10/recession-commodities-housing-pf-guru-in_gs_0110soapbox_inl.html'>A Dozen Reasons To Worry </a>(Forbes, Jan.10th): "Unlike earlier U.S. housing booms and busts that were driven by local business cycles, such as the rise and fall of the oil patch along with oil prices in the 70s-80s, this [housing bust] is national and, indeed, global. And since houses are much more widely owned than stocks, the bubble’s likely demise will shake the economy more than the earlier bear market in stocks. A major housing prices decline will precipitate a full-blown U.S. recession, sending corporate profits down… China will suffer a hard landing due to domestic cooling measures and U.S. recession."</div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-23763682604851017562006-12-18T06:28:00.001-08:002006-12-18T06:28:09.682-08:00Fund managers once again disappointing - but why this time?<div xmlns='http://www.w3.org/1999/xhtml'>Everytime there is an excuse for the weak performance of the professional fond managers - unforeseeable events, political tensions, unexpectedly high oil prices or the unlucky action of the fed, and many more of course.<br /><br />Why this year? - quite simple, as it seems: they were too cautious, holding too much cash since the cold shower from (early) summer. This at least suggests TheStreet.com columnist Brett Atends in <a href='http://www.thestreet.com/funds/mutualfundmonday/10326756.html'>All-Star Managers Fail to Make This Year's Cut</a>.<br /><br />There is something true about it. </div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-72027077325705491582006-12-12T09:03:00.001-08:002006-12-12T09:05:03.002-08:00Marc Faber points at bubbles<div xmlns='http://www.w3.org/1999/xhtml'>Marc Faber in <a href='http://www.ameinfo.com/103036.html'>The Dow Jones all time high and the coming correction!</a> :<br></br><br></br><blockquote>Bubble trouble<br></br><br></br>I hope that everybody understands that this is in the long run a suicidal monetary policy because it leads to one asset bubble after another. So, after the NASDAQ in 2000 and housing in 2005/2006, where is the next big bubble going to occur? In my opinion, two asset classes stand out as asset bubble candidates: grains and Asian assets. <br></br><br></br>Wheat and corn have led the grain and agricultural commodities price advance over the last two months. But now, it is very likely that the entire sector including especially soybeans, sugar, coffee, and cattle, will follow. Other 'bubble candidates', are Asian currencies, stocks, and real estate prices.</blockquote><br></br><br></br></div>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-1157652541225999312006-09-07T10:57:00.000-07:002006-09-07T11:09:01.243-07:00Will we soon have to talk about oil?Signs of cooling off? For most of the investors not really unexpected. In all the course of this bull market (still a bull market, isn't it?) investors have worried about a weakness in economic growth, in profits growth and so on. On every little soft spot they have thought "This is now the end". Ok, at some point it will be an end. And we are probably approaching it now. <br /><br />But in the meantime, all this worries have hold stocks back. They didn't raise a lot to spark a speculative cycle, they did not went ahead of earnings - just the opposite - measured by earnings stocks became cheaper and cheaper.<br /><br />Yes, I will not "teach" you EPS is all you need to know. EPS is misleading very often. But the market sense is a "approximation of approximations". All the public has been so "cautious" and "wise" to not expect an ever growing business and earnings, to be prepared for a downturn, that it seems to me it may be time to just bet on the "pure facts of earnings power".<br /><br /><a href="http://technorati.com/tag/stocks" rel="tag">stocks</a> <a href="http://technorati.com/tag/bourse" rel="tag">bourse</a> <a href="http://technorati.com/tag/supply" rel="tag">supply</a> <a href="http://technorati.com/tag/demand" rel="tag">demand</a><br /><br /><span style="font-size:78%;color:#333333;"><strong>Disclaimer</strong> - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site </span>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-1155592435031425122006-08-14T14:42:00.000-07:002006-08-14T14:53:55.050-07:00Not bearish?The Big Picture titles a recent post "<a href="http://bigpicture.typepad.com/comments/2006/08/mirror_mirror_o.html">Mirror, Mirror on the Wall... Who is the Most Bearish of Them All?</a>" and, astonishingly to me, states there are just few bearish voices in the market.<br /><br />I see it definitely other way: the bearish argumentation is making its way through the public. It may not be that convincing yet, though all recession-inflation-high energy-collapsing dollar concerns are well known and massively discussed.<br /><br />The still mainly positive news counteract the psychology somewhat and I will suggest that there is some more way of (some) pain ahead. If more signs of cooling economy appear and at the liquidity situation, which can't change that rapidly, the downward pressure could increase.<br /><br />But sentiment is maybe cooling off more rapidly than fundamentals. I do not see more optimistic voices than pessimistic (which of course call themselves realistic). <br /><br /><a href="http://technorati.com/tag/stocks" rel="tag">stocks</a> <a href="http://technorati.com/tag/bourse" rel="tag">bourse</a> <a href="http://technorati.com/tag/sentiment" rel="tag">sentiment</a> <br /><br /><span style="font-size:78%;color:#333333;"><strong>Disclaimer</strong> - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site </span>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com1tag:blogger.com,1999:blog-18905861.post-1153937374125623672006-07-26T10:36:00.000-07:002006-07-26T11:09:34.186-07:00Could you play different tightening cycles?One more article I just read on <a href="http://seekingalpha.com/article/13252">SeekingAlpha: How to Play the Current European Tightening Cycle</a>.<br /><br />There is some "food for thought" with taking a view on the demand and supply balance for goods. It seems to me to "economical", but ... well ... <br /><br />The point of the author Dr Enzio von Pfeil is that European tightening cycle is lagging behind of the US (right!) and should go considerably further that widely anticipated (maybe!). Currently there is excessive demand for goods in Europe, which is providing a stable basis for business. In the USA he sees this phase of monetary environment (almost) over. So his bet is stay in Europe as long as the conditions are like this, and avoid America (have I understood right?).<br /><br />I have to think it over a little. <br /><br />Of course, as I have said many times, we go now through a sensible phase on the bourse. The tightening cycle of the Fed went so far, that the markets had to response. My guess from the beginning of the year was so far right, that the US stocks will provide a more safe investment in the months ahead. For a final assessment of this call, we have to wait a little more...<br /><br />This was all said with the believe (still unchanged) that one should stay in that bull market (which I think is far from being over). But - and this is a special "but" - the monetary policy (in combination with other factors as oil prices etc.) became much less favorable for stocks. This was my main concern to say: one should stay, but please ensure to stay in possibly safe market.<br /><br />The thoughts of different tightening cycles do of course make some sense. But simple experience shows, that the stock markets go up and down quite in a synchrony. I would not bet on Europe thinking Wall Street will perform poorly. If one believes some fundamental and monetary conditions now favor European stocks, it will just make them this "more safe" investment place to stay until we go through this flat phase (or may be phase of some correction). <br /><br />After the recent declines in stock prices (Europe more than US) I see the chances now almost equal. <br /><br /><br /><a href="http://technorati.com/tag/stocks" rel="tag">stocks</a> <a href="http://technorati.com/tag/bourse" rel="tag">bourse</a> <a href="http://technorati.com/tag/supply" rel="tag">supply</a> <a href="http://technorati.com/tag/demand" rel="tag">demand</a><br /><br /><span style="font-size:78%;color:#333333;"><strong>Disclaimer</strong> - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site </span>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-1153934027692164202006-07-26T10:04:00.000-07:002006-07-26T10:13:47.710-07:00The cross-sector P/E ratios of S&P500As we have talked recently about <a href="http://boursediary.blogspot.com/2006/06/grahams-margin-of-safety-for-us-stocks.html">Graham's Margin of Safety</a> and hence the valuation of stocks (by at least the one parameter P/E ratios), here is a nice colorful graphic of the current development across sectors:<br /><br /><a href="http://usmarket.seekingalpha.com/article/14366">S&P 500 P/E Ratios by Sector</a><br /><br />For I have always stated that P/Es do not provide a sufficient basis for valuating the stock market, but merely a - say - starting point, one should be careful of talking only about that figures. Though the overall conditions are at least a good "starting point". <br /><br /><br /><br /><a href="http://technorati.com/tag/stocks" rel="tag">stocks</a> <a href="http://technorati.com/tag/bourse" rel="tag">bourse</a> <a href="http://technorati.com/tag/valuation" rel="tag">valuation</a> <a href="http://technorati.com/tag/price" rel="tag">price</a> <a href="http://technorati.com/tag/earnings" rel="tag">earnings</a><br /><br /><span style="font-size:78%;color:#333333;"><strong>Disclaimer</strong> - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site </span>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-1152273351962737972006-07-07T04:55:00.000-07:002006-07-07T04:55:52.026-07:00Look Back on Market Forcasts for 2006Is it good when analysts expectations do meet the market performance? This is rather soldomly the case, but in this year so far the half-time consensus is prety close to reality.<br /><br />I think this could add some confidence in the market. The last time analyst were pretty good was 2004. The strategies will not change a lot - they were from the beginning conservative and now as the correction has let some hot air, they will further position carefully for slight gains. It's sound. <br /><br />The forcasts for the rest of the year:<br /><a href="http://www.businessweek.com/magazine/content/05_52/b3965416.htm">Business Week Market Survey</a>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-1151071109169801202006-06-23T06:58:00.000-07:002006-06-23T06:58:29.220-07:00New Economist: Inflation: a rational phobia?New Economist is posting some interesting research on the inflation estimations and on the current fears:<br /><br /><a href="http://neweconomist.blogs.com/new_economist/2006/06/inflation_1.html">New Economist: Inflation: a rational phobia?</a><br /><br />Everyone is looking at the matter in his own way. Some argue, that inflation figures are underestimated due to hedonic measurement, others say statistical effects such as "owners equivalent rent" makes inflation rate looks higher than in real life...<br /><br />It's not an easy issue. What I tend to is: inflationary pressures should come down to confortable levels after those long run in rising interest rates. From the corportae site there are still no worrysome signs. If inflation is in tendency lower than statistically shown, the real interst rate is higher and should lead to a harder landing.savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-1150489774464364912006-06-16T13:04:00.000-07:002006-06-16T13:29:38.236-07:00Grahams Margin of Safety for the US Stocks<span style="font-weight: bold;"></span>A nice view on the valuation of the US stock market through the eyes of the investment classics - the US Market Blog (link below) reminds us of Graham's Margin of Safety model.<br /><br />It it surely not the first time to compare earning of stocks, hence stocks earnings rate, with the interest rate on long term bonds. Though, I think the investors tend to oversee or forget this important ratio especially in times of uncertainty and volatile movements.<br /><br />The article provides a nice graph of the Margin of Safety Model (explained there - a relative figure of stocks and bond earnings) calculated for the time since 1988, and ... well both bulls and bears will find their arguments on it:<br /><br />The US stocks have traded since 1988 almost all the time with "negative" margin of safety. If you have followed Graham's model, you may have missed some of the greatest bull markets. But there is also that point: the best time to buy was in retrospect when stocks had positive margin of safety (even if slightly, or if you don't want to be that exact - when margin of safety was around zero) - e.g. 1994-1995 and 2003, and on the other side: it was mostly very bad time to buy stocks, when margin of safety was strongly in negative terrain. (Chart is provided as well).<br /><br />Now we are strongly positive, considerably positive...<br /><br />The author ends up suggesting, like I do, that this circumstances do provide us substantial "safety" in the current situation. When the earnings of the US companies do not collapse, even with decreasing earnings and slowly raising interest rates and (suppose: slowly) falling stock prices, the market remains very well grounded with enough inner safety.<br /><br />And, for I do not believe we have had or have an extreme phase at the stock markets (so that additional factors have to be considered), I suppose, the logic of finance, of relative attractivity of investments, of capital as a whole have to take overhand.<br /><br /><br /><a href="http://usmarket.seekingalpha.com/article/11466">US Market » The Current Graham Margin of Safety for the US Market</a><span class="fullpost"><br /><br /><br /><a href="http://technorati.com/tag/stocks" rel="tag">stocks</a> <a href="http://technorati.com/tag/bourse" rel="tag">bourse</a> <a href="http://technorati.com/tag/margin" rel="tag">marging</a> <a href="http://technorati.com/tag/safety" rel="tag">safety</a> <a href="http://technorati.com/tag/Graham" rel="tag">Graham</a><br /><br /><span style="color: rgb(51, 51, 51);font-size:78%;" ><strong>Disclaimer</strong> - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site </span></span>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-1150325028745311922006-06-14T15:43:00.000-07:002006-06-14T15:43:48.916-07:00The Big Picture on InflationThe Big Picture Blog has some interesting thoughts on the inflation: current figures and concerns, implications on the fed policy and on the overall pattern of development.<br /><br /><br /><a href="http://bigpicture.typepad.com/">The Big Picture: Articles on Inflation<br /></a>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-1150308319678900082006-06-14T10:46:00.000-07:002006-06-14T11:05:19.740-07:00Inflation figures indicate some more troubleThe inflation figures came in today a bit higher than anticipated. I have mentioned already my general view, that liquidity situation is now worsening, and - more important - can actually not be "discounted", i.e. you should not think of it as of corporate news which are now priced in. <br /><br />Though the fundamental valuation and prospective for the world stock exchanges and economy remains sound. We do not have the 2000 environment.<br /><br />Of course, one could be concerned about earnings development - with business cycle moves, sales move and earning fluctuate. It's very natural. But I've always stated, that not the underlying economic conditions is what should make you scary at the bourse - it's the people, the mass, with their emotional and from time to time irrational behavior. <br /><br />I can't recognize any exuberance in the recent past, any striking cause of disappointment. And - if you don't trust (like me) the earnings estimations, think for a moment this way: the companies have made large restructuring, have focused on core business, there were - my opinion - no business or financial "adventures" in recent years. So we will stay firm. Even if there is a cooling off economically, the earnings should not behave as after the stocks mania of late 90s. And any further decline in stock prices brings the valuation to even more favorable levels. Do not forget the fundamentals...<br /><br />Anyway, the liquidity problem should make some troubles in the coming weeks. So I would expect trouble and prepare for buying. Slowly... don't rush... (if you have good portfolio positions; if not I suppose you should run to make some...but first look at the disclaimer...)<br /><br /><br /><a href="http://technorati.com/tag/stocks" rel="tag">stocks</a> <a href="http://technorati.com/tag/bourse" rel="tag">bourse</a> <a href="http://technorati.com/tag/supply" rel="tag">supply</a> <a href="http://technorati.com/tag/demand" rel="tag">demand</a><br /><br /><span style="color: rgb(51, 51, 51);font-size:78%;" ><strong>Disclaimer</strong> - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site </span></span>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0tag:blogger.com,1999:blog-18905861.post-1149369444799544922006-06-03T13:43:00.000-07:002006-06-03T14:17:24.823-07:00The Payroll Figures from Now and the Past - how do you think about it?There is a nice chart I've seen on <a href="http://bigpicture.typepad.com/">The Big Picture</a> Blog - it shows the development of the payroll recovery after some equivalent recessions in the past:<br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://bigpicture.typepad.com/comments/images/payrolls506.png"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 420px;" src="http://bigpicture.typepad.com/comments/images/payrolls506.png" alt="" border="0" /></a><br />Source attributed: <a href="http://www.contraryinvestor.com/">Contrary Investor</a><br /><br />The author is - to say it politely - concerned about the outlook for the bourse and the economy by this comparatively weak recovery of employment. And he has not overlooked the fact, that we start this jobs recovery from quite low unemployment levels and that the recent recession in the USA was a rather small one. Though there is concern, and "the bill" for the very supportive monetary policy (as main reason to do relatively smooth in the real economy despite the second biggest stock market collapse in history) is still to be paid...<br /><br />So, it's surely not easy to get the right view on those complex developments. I can't do it as well. Anyway, what I thought about is, that the pressure on prices (i.e. inflation) coming from the employment increase should remain weaker than currently feared. Ok, before the last report...<br /><br />A smoother recovery (and the smoother recession before) provide - in my view - one more indication about the effects of globalization, more stable and ripe financial markets and capability of the world economy (and of course of the US-economy). It just does not shake that much as it used to. And the business cycles turn smoother and longer.<br /><br />And I do expect this stock cycle will turn out to be longer than anticipated.<br /><br />The free market economy is more capable than ever to absorb shocks, deterioration than ever before. As mentioned - we absorbed very well the severe bear market after 2000. The few of a budget deficit and slowing real estate markets will (hey - probably, I'm not an oracle) not get us so easy out of track.<br /><br />So, if the economy is to stay relatively robust, how about the shares? They can nonetheless go down? Yes, if there were "hot air" and "hot speculation" and the prices are not in trace with the fundamentals. But I can't see none of that at the recent levels.<br /><br /><br /><br /><br /><a href="http://technorati.com/tag/stocks" rel="tag">stocks</a> <a href="http://technorati.com/tag/bourse" rel="tag">bourse</a> <a href="http://technorati.com/tag/employment" rel="tag">employment</a> <a href="http://technorati.com/tag/business" cycle="" rel="tag">business cycle</a><br /><br /><span style="color: rgb(51, 51, 51);font-size:78%;" ><strong>Disclaimer</strong> - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site </span>savianohttp://www.blogger.com/profile/02990621733223933116noreply@blogger.com0