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Tag Archives: warnings

MacroView: The Ghosts Of 2018?

On Jan 3rd, I wrote an article entitled: “Will The Market Repeat The Start Of 2018?” At that time, the Federal Reserve was dumping a tremendous amount of money into the financial markets through their “Repo” operations. To wit: “Don’t fight the Fed. That is the current mantra of the market as we begin 2020, and it certainly seems to be the right call. Over the last few months, the Federal Reserve has continued its “QE-Not QE” operations, which has dramatically expanded its balance sheet. Many...

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Quick Take: Recession Risks Tick Up

Over the last couple of months, there was a slight uptick in the economic data, which lifted hopes that a “global reflation” event was underway.  As we have been warning for the last couple of months in our weekly newsletter, the ongoing collapse in commodity prices suggested a problem was emerging that trailing “sentiment” data was clearly overlooking. To wit: “There are a few indicators which, by their very nature, should be signaling a surge in economic activity if there was indeed...

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Technically Speaking: Markets Start To Price In “Viral Impacts”

At the end of January, I wrote a piece titled “This Is Nuts: Why We Reduced Risk” discussing why we took profits in our portfolios. Here is the important point: “When you sit down with your portfolio management team, and the first comment made is ‘this is nuts,’ it’s probably time to think about your overall portfolio risk.”  At that time, we began the orderly process of reducing exposure in our portfolios: In the Equity Portfolios, we reduced our weightings in some of our more extended...

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Decoding Media Speak & What You Can Do About It

Just recently, the Institutional Investor website published a brilliant piece entitled “Asset Manager B.S. Decoded.” “The investment chief for one institution-sized single-family fortune decided to put pen to paper, translating these overused phrases, sales jargon, and excuses into plain — and satirical — English.” A Translation Guide to Asset Manager-Speak Now is a good entry point = Sorry, we are in a drawdown We have a high Sharpe ratio = We don’t make much money We have never lost money =...

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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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Technically Speaking: COT Positioning – Risk Of Correction Still High (Q1-2020)

As discussed in this past weekend’s newsletter, the market remains overly extended as the recent correction sharply reversed on expectations for more Fed liquidity. However, with the market extremely deviated from the long-term moving average, a correction is once again a high probability event.  “Previously, we discussed that we had taken profits out of portfolios as we were expecting between a 3-5% correction to allow for a better entry point to add equity exposure. While...

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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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