September 2013 Archives
No Strategy Works All The Time
One of the constants in investing is that investment theories are disbelieved, prosper, bloom, overshoot, die, and repeat. So is the only constant change? That's not my view.
There are valid theories on investing, and they work on average. If you pursue them consistently, you will do well. If you pursue them after failure, you can do better still.
How many times have you seen articles on investing entitled "The Death of ____." (fill in the blank) Strategies trend. There is an underlying kernel of validity; it makes economic sense, and has worked in the past. But any strategy can be overplayed, even my favorite strategy, value investing. My style of value investing tries to adjust for that, but it is not perfect there. (And to tell the truth, September has been a bad month for me, though 2013 has been a very good year.) read more »
ShareDividends Say US Out Of Recession
According to the number of publicly-traded U.S. companies announcing cuts to their dividends, as of August 2013, the private sector of the U.S. economy has now fully exited the period of microrecession that it first entered in July 2012.
This new data confirms our call last month that the U.S. economy was exiting the recessionary conditions that had bogged it down since the third quarter of 2012.
Not uncoincidentally, this period of time also coincides with the Fed's latest quantitative easing programs. If not for the Fed's QE efforts, the U.S. economy would have experienced a full-fledged recession, rather than the more limited microrecession that it did. read more »
The Magic Of Shrinking The Slowest
The Japanese revised GDP accounts for the 2013 4-6 period has gone pretty much the way of the export-import data. It reveals not only the lack of depth in understanding the numbers on the part of the media (and most economists), it is actually a useful example of some of the primary flaws in the expenditure approach itself.
The Wall Street Journal outlined the mainstream view,
"Following a revised solid 4.1% rise in the January-March quarter, the second-quarter GDP data make it clear that Japan's economy is now leading global growth, outshining the U.S. and the euro zone, picking up the slack left by slowing emerging economies. read more »
22 of 32 Economists Are Wrong
Bloomberg conducted a survey recently about whether Shinzo Abe should postpone the planned sales tax increase and what impact it would have if he did. The results?
Japanese shares could plunge 10 percent or more if Prime Minister Shinzo Abe fails to carry through on a plan to raise a sales tax in April.
Postponing an increase would have a large and negative impact on Japan's financial markets, said 22 of 32 economists in a Bloomberg News survey. JPMorgan Chase & Co. Senior Economist Masamichi Adachi said a delay could push stocks down 10 percent, wiping out $418 billion in market capitalization, while UBS AG Economist Daiju Aoki predicted a sell-off as steep as 12 percent in the Nikkei 225 Stock Average. read more »
S&P 500: Schrodinger's Cat 3/4 Dead
Last week, the stock market gave 52% odds that the Fed would commit to tapering off its purchases of U.S. government-issued securities by the end of the third quarter of 2013. In just a week's time, the probability of that happening have increased to be somewhere between 62% and 78%.
We know that's the case because that's how much the gap between the expectations for dividends associated with the first quarter of 2014, the point in the future where investors had fully fixed their forward-looking focus as recently as mid-June 2013, and the expectations associated with the third quarter of 2013, which is where investors expecting an earlier end to the Fed's QE program would focus, has closed.
The reason we're now indicating a range of potential odds for this likelihood is due to the different information being communicated by our primary sources of data for the dividends that will be paid out in future quarters. read more »
