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Tag Archives: stock buybacks

After A Decade, Investors Are Finally Back to Even

I recently discussed putting market corrections into perspective, in which we looked at the financial impact of a 10-60% correction. But what happens afterward? During strongly advancing, and very long bull markets, investors become overly complacent about the potential risks of investing. This “complacency” shows up in the resurgence of “couch potato,” “buy and hold,” and “passive indexing” portfolios. While such ideas work as long as markets are relentlessly rising, when the inevitable...

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Market Downturn? Putting Corrections Into Perspective

Shawn Langlois recently penned an interesting article: “Despite a few notable hiccups along the way, the bull market continues to prove insanely resilient.” What was most interesting, however, was the following quote: “Current hyper-valued extremes are likely to be followed by market losses on the order of two-thirds of the value of the S&P 500.”  The immediate response by most individuals is a 60%+ decline is an outlandish and impossible event given ongoing Central Bank interventions....

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MacroView: The Next “Minsky Moment” Is Inevitable

In 2007, I was at a conference where Paul McCulley, who was with PIMCO at the time, was discussing the idea of a “Minsky Moment.”  At that time, this idea fell on “deaf ears” as the markets, and economy, were in full swing. However, it wasn’t too long before the 2008 “Financial Crisis” brought the “Minsky Moment” thesis to the forefront. What was revealed, of course, was the dangers of profligacy which resulted in the triggering of a wave of margin calls, a massive selloff in assets to cover...

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Technically Speaking: Market Bounce, January, & The Super Bowl.

In this past weekend’s newsletter, we stated the market was likely to bounce due to the short-term oversold condition which existed following Friday’s rout. To wit: “With a ‘sell signal’ clearly triggered (lower panel), it suggests, on a short-term basis, we are likely to see a ‘tradeable bounce.’ However, until the signal reverses, any short-term bounce should probably be ‘sold into.’ Make no mistake, there is currently downside risk below the 50-dma to both the 38.2% and 50% Fibonacci...

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The Rotation To Value Is Inevitable

In late 1999, it was stated that “investing like Warren Buffett was the same as driving ‘Dad’s ole’ Pontiac.” The suggestion, of course, was that “value” investing was no longer a viable investment strategy in the new “dot.com” economy where “growth” was all that mattered. After all, in the “new world,” it was indeed “different this time.”  Less than a year later, investors wished they had adhered to Warren Buffett’s strategy of buying value as the “Dot.com dream” emerged as a nightmare for...

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MacroView: The Fed’s View Of Valuations May Be Misguided

On Wednesday, the Federal Reserve concluded their January “FOMC” meeting and released their statement. Overall, there was not much to get excited about, as it was virtually the same statement they released at the last meeting. However, Jerome Powell made a comment which caught our attention: ““We do see asset valuations as being somewhat elevated”  It is an interesting comment because he compares it to equity yields. “One way to think about equity prices is what’s the premium you’re getting...

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“SARS” Versus “Wuhan”: The Difference Between “Now & Then”

A week dominated by headlines of a spreading respiratory virus has had investors recalling pandemics past, from SARS in 2003 to the Ebola scare six years ago. While the “Wuhan” virus, or known scientifically as “nCoV,” is still in its infancy, it is closely tracking both the infection and, unfortunately, death rates of the SARS virus. However, the question everyone wants an answer to is: “what does the virus mean for the markets?” Will it derail the longest bull market in U.S. history? Or,...

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Technically Speaking: “Coronavirus” Triggers Overdue Market Correction

Over the last few weeks, we have discussed the outsize market advance driven by the Fed’s massive liquidity injections into the market. As we discussed with our RIAPRO subscribers (30-day RISK FREE Trial) we stated: “If it appears to you that the recent rally is an anomaly, your thoughts do not deceive you. The graph below shows that recent returns divided by annualized volatility (risk) have been running higher than at any time since the financial crisis. This standard calculation of return...

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MacroView: Elites View The World Through “Market Colored” Glasses

It is easy to suggest the economy is booming when your net worth is in the hundreds of millions, if not billions, of dollars, or when your business, and your net worth, directly benefit from surging asset prices. This was the consensus from the annual gaggle of the ultra-rich, politicians, and media stars in Davos, Switzerland this past week. As J.P. Morgan Chase CEO Jamie Dimon told CNBC on Wednesday the stock market is in a “Goldilocks place.”  Of course, it is when you bank receives an...

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Technically Speaking: Extreme Deviations & Eventual Outcomes

The good news is that with the market closed yesterday, the extreme extensions of the market did not get any more extreme. Also, it doesn’t change our analysis much from this past weekend’s missive either: “This week, the market pushed those deviations even further as the S&P 500 has now pushed into 3-standard deviation territory above the 200-WEEK moving average.” “There have only been a few points over the last 25-years where such deviations from the long-term mean were prevalent. In...

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