This could be key to a stocks repeat in 2014 ...:
'via Blog this'
Tuesday, December 31, 2013
Monday, December 30, 2013
Will the S&P's rally hurt capitalism?—Commentary
Will the S&P's rally hurt capitalism?—Commentary: "But what's really galling to see is when CEOs do take action, what they chose to spend those productive resources on.
CEOs spent $445 billion buying back their own companies' stock in the 12 months to October, according to S&P Dow Jones.
That means for every $2 the Fed prints to buy Treasurys and mortgage-backed securities, CEOs spend another $1 to boost the stock market. No wonder it's been a such a banner year!
True, that cash belongs to shareholders and they have the right to have it "returned" to them through higher stock prices. But CEOs also launch buybacks to protect their own careers; to fend off potential approaches from loud, short-term, activist shareholders. Buybacks also make it look like CEOs are growing their earnings per share more rapidly, in addition to doing wonders for the value of their personal stock options.
But share buybacks are of zero productive value."
'via Blog this'
CEOs spent $445 billion buying back their own companies' stock in the 12 months to October, according to S&P Dow Jones.
That means for every $2 the Fed prints to buy Treasurys and mortgage-backed securities, CEOs spend another $1 to boost the stock market. No wonder it's been a such a banner year!
True, that cash belongs to shareholders and they have the right to have it "returned" to them through higher stock prices. But CEOs also launch buybacks to protect their own careers; to fend off potential approaches from loud, short-term, activist shareholders. Buybacks also make it look like CEOs are growing their earnings per share more rapidly, in addition to doing wonders for the value of their personal stock options.
But share buybacks are of zero productive value."
'via Blog this'
Sunday, December 29, 2013
Time to take some profits - MarketWatch
Time to take some profits - MarketWatch: "The latest problem is just starting to surface. Interest rates are creeping higher right across the board. Whether you look at the short or long end of the curve, bonds are heading lower and rates higher. So far the equity markets are doing what they have done with all other potential problems — they have simply turned a blind eye to the issue."
What was the effect on the U.S. markets? We didn't even blink. Determined markets sometimes ignore potential problems and this market is quite determined to hit the near term range breakout projections and maybe even those longer term ones that seemed outrageous six weeks ago.
What was the effect on the U.S. markets? We didn't even blink. Determined markets sometimes ignore potential problems and this market is quite determined to hit the near term range breakout projections and maybe even those longer term ones that seemed outrageous six weeks ago.
Sometimes momentum trumps everything and right now it sure feels that way. That momentum, when this strong, can make all investors and traders simply throw in the towel and buy, buy, buy. Right now it sure feels that way doesn't it? It engenders a "nothing matters" and the "market will rise forever" kind of an attitude.
When the trend is this strong you do defer to it but you don't accept the notion that what goes up will never come back down and will simply go up infinitely.
You keep looking for storm clouds and potential problems. Rising rates is simply the latest in a string of issues. If bonds do continue to break down, they have the potential to bring this advance to an abrupt stop. Combine that with the fact that the meat of the advance towards those eye-popping projections is nearing an end and you have to come to the conclusion that it might be time to pull in the horns; tighten up the stops and make some stretch sales into strength. After that we can reassess and decide where the next opportunity lies.
'via Blog this'
Monday, December 23, 2013
Keep an eye on China: Dennis Gartman
Keep an eye on China: Dennis Gartman: ""I'm still bullish of stocks. Stocks are going to go higher. But if there's something that I'm concerned about, it is China," he said. "The liquidity crunch is very serious. Usually, these things resolve themselves in a very benign manner. Usually, these problems just disappear after the turn of the year. But if you have to be concerned about something, be concerned about the fact that short-term rates in China have risen several hundred basis points. It's happened in the past. It's going to happen again.""
'via Blog this'
'via Blog this'
Saturday, December 21, 2013
Friday, December 20, 2013
Why it's time to get short: Jim Chanos
Why it's time to get short: Jim Chanos: "Billionaire investor Jim Chanos, who famously shorted Enron before the company collapsed, told CNBC on Thursday that now is one of the best times in recent memory to get short.
"I think the risks have increased in the U.S. market rather dramatically in the past year," Chanos told "Closing Bell." "Are we at some sort of top? I have no idea, but I do know that people that were eschewing risk in 2009 when they should have been taking it are now embracing it in late 2013."
From Fed stimulus to cheap valuations, Chanos said that for years, investors have made the same arguments in support of the market but that the risks to the U.S. market now are more severe than they were in 2009.
"We're finding a meaningfully ... larger [number] of opportunities on the short side at the end of 2013 than at any time since '06, '07," he said, referring to the period that the financial crisis unfolded."
Elsewhere in the market, the prominent short-seller said China is in a lot of trouble.
"We've had a bit of a banking crisis brew up all over again in China this week," Chanos said, indicating reports that a major coal company had defaulted on a large amount.
Concurrently, he noted, an important bank admitted that it had missed a number of loan payments earlier this year. As a result, rates have skyrocketed, even as the People's Republic has pumped money into the system to calm fears.
"We're questioning the credit-driven nature of this investment-led economic growth model," Chanos said.
He recommended steering clear of industrial equipment maker Caterpillar, for example, as well as hard industrial commodities such as iron ore and coal. China's reputation as "the source of unending demand could be questioned," he said, which could be problematic as more commodity supply comes onto the market.
Meantime, Chanos continues to like Visa and MasterCard because they have good business models and because "they're against other payment processors who we think are on the wrong side of the technology curve."
He is also short CGI Group—the parent of CGI Federal, which built HealthCare.gov. Its mishandling of the website is not the only reason for his short, which has more to do with the company's growth, Chanos said.
The founder of Kynikos Associates warned investors about companies that grow only via acquisitions, though he didn't offer examples.
—By CNBC's Drew Sandholm.
'via Blog this'
"I think the risks have increased in the U.S. market rather dramatically in the past year," Chanos told "Closing Bell." "Are we at some sort of top? I have no idea, but I do know that people that were eschewing risk in 2009 when they should have been taking it are now embracing it in late 2013."
From Fed stimulus to cheap valuations, Chanos said that for years, investors have made the same arguments in support of the market but that the risks to the U.S. market now are more severe than they were in 2009.
"We're finding a meaningfully ... larger [number] of opportunities on the short side at the end of 2013 than at any time since '06, '07," he said, referring to the period that the financial crisis unfolded."
Elsewhere in the market, the prominent short-seller said China is in a lot of trouble.
"We've had a bit of a banking crisis brew up all over again in China this week," Chanos said, indicating reports that a major coal company had defaulted on a large amount.
Concurrently, he noted, an important bank admitted that it had missed a number of loan payments earlier this year. As a result, rates have skyrocketed, even as the People's Republic has pumped money into the system to calm fears.
"We're questioning the credit-driven nature of this investment-led economic growth model," Chanos said.
He recommended steering clear of industrial equipment maker Caterpillar, for example, as well as hard industrial commodities such as iron ore and coal. China's reputation as "the source of unending demand could be questioned," he said, which could be problematic as more commodity supply comes onto the market.
Meantime, Chanos continues to like Visa and MasterCard because they have good business models and because "they're against other payment processors who we think are on the wrong side of the technology curve."
He is also short CGI Group—the parent of CGI Federal, which built HealthCare.gov. Its mishandling of the website is not the only reason for his short, which has more to do with the company's growth, Chanos said.
The founder of Kynikos Associates warned investors about companies that grow only via acquisitions, though he didn't offer examples.
—By CNBC's Drew Sandholm.
'via Blog this'
Thursday, December 19, 2013
PROSPERITY REIT Adds HKD1 Bln Property; PRC Real Estate Facing Headwinds
PROSPERITY REIT Adds HKD1 Bln Property; PRC Real Estate Facing Headwinds:
ARA Asset Management (Prosperity) Ltd, as manager of Prosperity REIT, said that HSBC Institutional Trust Services (Asia) Ltd -- on behalf of Prosperity REIT and acting on the instructions of the REIT Manager -- entered into the share purchase agreement for the Hong Kong commercial property.
Upon completion, Prosperity REIT will, through Clifton Properties Ltd, hold the property, which is strategically located in the mature decentralized business district of Kowloon East (CBD2).
The property is in close proximity to the Ngau Tau Kok MTR station and is easily accessible by private and public transportation such as taxis and buses.
Furthermore, the property is adjacent to one of Prosperity REIT’s existing properties -- Prosperity Center -- and is only 10 minutes away from another of Prosperity REIT's flagship properties, Prosperity Place.
“The acquisition is expected to be yield accretive and improve the earnings and DPU to existing unitholders.
“The relatively low initial net property income of the property is a result of over 50% of the tenancies being due for expiry in 2014, which are below current market rental, thus offering substantial reversionary upside,” said REIT Manager CEO Ms. Mavis Wong.
'via Blog this'
ARA Asset Management (Prosperity) Ltd, as manager of Prosperity REIT, said that HSBC Institutional Trust Services (Asia) Ltd -- on behalf of Prosperity REIT and acting on the instructions of the REIT Manager -- entered into the share purchase agreement for the Hong Kong commercial property.
Upon completion, Prosperity REIT will, through Clifton Properties Ltd, hold the property, which is strategically located in the mature decentralized business district of Kowloon East (CBD2).
The property is in close proximity to the Ngau Tau Kok MTR station and is easily accessible by private and public transportation such as taxis and buses.
Furthermore, the property is adjacent to one of Prosperity REIT’s existing properties -- Prosperity Center -- and is only 10 minutes away from another of Prosperity REIT's flagship properties, Prosperity Place.
“The acquisition is expected to be yield accretive and improve the earnings and DPU to existing unitholders.
“The relatively low initial net property income of the property is a result of over 50% of the tenancies being due for expiry in 2014, which are below current market rental, thus offering substantial reversionary upside,” said REIT Manager CEO Ms. Mavis Wong.
'via Blog this'
Bernanke's new formula for pleasing investors
Bernanke's new formula for pleasing investors:
Yet Bernanke also calmed nerves by walking back a plan to consider raising short-term rates once unemployment reaches 6.5 percent from the current 7 percent.
That 6.5 percent threshold the Fed had been using? Not much of a threshold anymore. The Fed now says it expects to keep its key short-term rate near zero "well past" the time that unemployment falls below 6.5 percent.
The message: The Fed expects low-cost loans to boost the economy for, well, for a very long time.
Investors rejoiced by sending the Dow Jones Industrial Average rocketing nearly 300 points to a record high.
(Read more: Now that Fed's out of the way, it's Santa's turn)
It means that five years after the Fed responded to the financial crisis by cutting its key short-term rate to near zero, it has no plans to change course. Low rates encourage spending, hiring and investing. At the same time, critics say it can inflate dangerous bubbles in stocks, housing and other assets.
Bernanke's remarks suggested that three factors had led him to the balance he struck Wednesday: The unemployment rate can be misleading. The Fed wants to avoid setting unrealistic expectations. And inflation remains so low that it poses a potential problem for the economy.
"It comes out of the danger that you're getting so specific with these unemployment rates, you end up in a situation where you put yourself in a corner," said Wells Fargo chief economist John Silvia. "Sometimes you can be too specific and too transparent, certainly in the uncertain world of economics."
With the Fed essentially dropping the 6.5 percent unemployment threshold, Bernanke signaled that he now sees greater public transparency—a longtime priority of his as chairman—as being somewhat flawed. It also means his likely successor, Janet Yellen, will feel at liberty to show similar flexibility.
Though the Fed will be scaling back its monthly bond purchases, Bernanke called the buying of Treasurys and mortgage bonds merely a "supplementary tool" compared with the "main tool" of the Fed's benchmark short-term rate.
At his December 2012 news conference, Bernanke had announced the 6.5 percent unemployment threshold as a way to "allow the markets to respond quickly and promptly to changes" in Fed policy and act "like an automatic stabilizer."
"We're transparent about what's going to determine our policy in the future," Bernanke said then.
But over the past year, the decline in the unemployment rate to 7 percent from 7.8 percent hasn't necessarily reflected a much stronger job market. So Bernanke adapted.
Unemployment has fallen in part because the equivalent of more than 7 million Americans left the workforce and were no longer counted as unemployed. Some of this reflects an aging population. Some of it comes from a discouraged group of Americans who can't find jobs. All of it suggests an underlying weakness in the economy.
"We want to look at hiring, quits, vacancies, participation, long-term unemployment," Bernanke said Wednesday. "So I expect there will be some time past the 6.5 percent before all of the other variables we'll be looking at will line up in a way that will give us confidence that the labor market is strong enough to withstand the beginning of increases in rates."
Most Fed officials now expect unemployment to drop to 6.5 percent by the end of next year, according to new projections released Wednesday. Many projected that rates would increase starting in 2015—seven years after the financial crisis erupted.
(Read more: Fed late with tapering: Paul Ryan)
Secondly, more transparency has not stabilized the markets. The stock sell-off that occurred in June after Bernanke suggested that bond purchases could soon end eventually turned into a rally. After the Fed chose not to pull back on its buying at its September meeting, stocks set record highs.
Instead of stabilizing the markets, Bernanke's specifics had created a yo-yo effect. Economist Stanley Fischer, who taught Bernanke at the Massachusetts Institute of Technology, warned that overly specific forward guidance had made financial markets more volatile.
A former governor at the Bank of Israel who is expected to be nominated by President Barack Obama to become the Fed's vice chairman, Fischer believes that rates should be determined by a series of economic conditions that are hard to forecast.
"We don't know what we'll be doing a year from now," he said at a September conference in Hong Kong. "It's a mistake to try and get too precise."
And, lastly, there is the trouble created by low inflation.
The Fed's dual mandate is to maximize employment and provide stable prices. But inflation as measured by the index the Fed monitors has been only about half the central bank's 2 percent target this year.
Some Fed officials forecast that inflation could stay below their target through 2016. The word "inflation" was mentioned 86 times during Bernanke's news conference.
When prices are flat or even decline, consumers might become reluctant to spend because the costs could be cheaper a week, a month, or even months from now. It's a sign that demand is too weak to spark much growth. The Fed can pump money into the economy with lower interest rates to keep inflation at a reasonable level.
"There is still this question about inflation, which is a bit of a concern, more than a bit of a concern," Bernanke said. "We take that very seriously. And if inflation does not show signs of returning to target, we will take appropriate action."
—By The Associated Press
'via Blog this'
Yet Bernanke also calmed nerves by walking back a plan to consider raising short-term rates once unemployment reaches 6.5 percent from the current 7 percent.
That 6.5 percent threshold the Fed had been using? Not much of a threshold anymore. The Fed now says it expects to keep its key short-term rate near zero "well past" the time that unemployment falls below 6.5 percent.
The message: The Fed expects low-cost loans to boost the economy for, well, for a very long time.
Investors rejoiced by sending the Dow Jones Industrial Average rocketing nearly 300 points to a record high.
(Read more: Now that Fed's out of the way, it's Santa's turn)
It means that five years after the Fed responded to the financial crisis by cutting its key short-term rate to near zero, it has no plans to change course. Low rates encourage spending, hiring and investing. At the same time, critics say it can inflate dangerous bubbles in stocks, housing and other assets.
Bernanke's remarks suggested that three factors had led him to the balance he struck Wednesday: The unemployment rate can be misleading. The Fed wants to avoid setting unrealistic expectations. And inflation remains so low that it poses a potential problem for the economy.
"It comes out of the danger that you're getting so specific with these unemployment rates, you end up in a situation where you put yourself in a corner," said Wells Fargo chief economist John Silvia. "Sometimes you can be too specific and too transparent, certainly in the uncertain world of economics."
With the Fed essentially dropping the 6.5 percent unemployment threshold, Bernanke signaled that he now sees greater public transparency—a longtime priority of his as chairman—as being somewhat flawed. It also means his likely successor, Janet Yellen, will feel at liberty to show similar flexibility.
Though the Fed will be scaling back its monthly bond purchases, Bernanke called the buying of Treasurys and mortgage bonds merely a "supplementary tool" compared with the "main tool" of the Fed's benchmark short-term rate.
At his December 2012 news conference, Bernanke had announced the 6.5 percent unemployment threshold as a way to "allow the markets to respond quickly and promptly to changes" in Fed policy and act "like an automatic stabilizer."
"We're transparent about what's going to determine our policy in the future," Bernanke said then.
But over the past year, the decline in the unemployment rate to 7 percent from 7.8 percent hasn't necessarily reflected a much stronger job market. So Bernanke adapted.
Unemployment has fallen in part because the equivalent of more than 7 million Americans left the workforce and were no longer counted as unemployed. Some of this reflects an aging population. Some of it comes from a discouraged group of Americans who can't find jobs. All of it suggests an underlying weakness in the economy.
"We want to look at hiring, quits, vacancies, participation, long-term unemployment," Bernanke said Wednesday. "So I expect there will be some time past the 6.5 percent before all of the other variables we'll be looking at will line up in a way that will give us confidence that the labor market is strong enough to withstand the beginning of increases in rates."
Most Fed officials now expect unemployment to drop to 6.5 percent by the end of next year, according to new projections released Wednesday. Many projected that rates would increase starting in 2015—seven years after the financial crisis erupted.
(Read more: Fed late with tapering: Paul Ryan)
Secondly, more transparency has not stabilized the markets. The stock sell-off that occurred in June after Bernanke suggested that bond purchases could soon end eventually turned into a rally. After the Fed chose not to pull back on its buying at its September meeting, stocks set record highs.
Instead of stabilizing the markets, Bernanke's specifics had created a yo-yo effect. Economist Stanley Fischer, who taught Bernanke at the Massachusetts Institute of Technology, warned that overly specific forward guidance had made financial markets more volatile.
A former governor at the Bank of Israel who is expected to be nominated by President Barack Obama to become the Fed's vice chairman, Fischer believes that rates should be determined by a series of economic conditions that are hard to forecast.
"We don't know what we'll be doing a year from now," he said at a September conference in Hong Kong. "It's a mistake to try and get too precise."
And, lastly, there is the trouble created by low inflation.
The Fed's dual mandate is to maximize employment and provide stable prices. But inflation as measured by the index the Fed monitors has been only about half the central bank's 2 percent target this year.
Some Fed officials forecast that inflation could stay below their target through 2016. The word "inflation" was mentioned 86 times during Bernanke's news conference.
When prices are flat or even decline, consumers might become reluctant to spend because the costs could be cheaper a week, a month, or even months from now. It's a sign that demand is too weak to spark much growth. The Fed can pump money into the economy with lower interest rates to keep inflation at a reasonable level.
"There is still this question about inflation, which is a bit of a concern, more than a bit of a concern," Bernanke said. "We take that very seriously. And if inflation does not show signs of returning to target, we will take appropriate action."
—By The Associated Press
'via Blog this'
Ex-Sears CEO Mark Cohen sees potential shopping mall crash
Ex-Sears CEO Mark Cohen sees potential shopping mall crash: "Overcapacity and the growth of online shopping could eventually result in a "crash of sorts" among lower- and midtier shopping malls, Mark Cohen, former CEO of Sears Canada, told CNBC on Tuesday.
"I don't think it's going to be abrupt," he said on "Squawk on the Street." "But ... the most popular malls will prevail, and the B and C malls won't.""
'via Blog this'
"I don't think it's going to be abrupt," he said on "Squawk on the Street." "But ... the most popular malls will prevail, and the B and C malls won't.""
'via Blog this'
Marc 'Dr. Doom' Faber’s shocking call: Go into cash
Marc 'Dr. Doom' Faber’s shocking call: Go into cash:
Marc Faber is well-known for his bearish take on stocks as well as his theory that the actions of the Federal Reserve will end up crushing the value of the U.S. dollar. And that is precisely why his latest recommendation is so surprising.
When asked whether investors should keep their money in cash on Tuesday's episode of "Futures Now," Faber responded: "Cash, yes. I think the most hated asset at the present time is cash."
(Read more: Taper or no taper, the Fed will never end QE: Marc Faber)
This despite the fact that his monetary view hasn't changed.
"I agree that with the Fed's policy, cash loses purchasing power," Faber said.
The problem is that Faber thinks the market could crash, but only after rising further.
"I think we will go up until it's over," Faber said. In 2013 "I wrongly predicted a 20 percent correction—it hasn't happened. But I think when it's over, it will be more than 20 percent."
Given that nuanced view, "I'm not yet short, but I would look at essentially any rally here in the U.S. market as an opportunity to lighten up on positions," Faber said. "And I don't think people should buy stocks".
(Read more: Scared or not, you have to buy stocks: BlackRock's Koesterich)
In addition to staying in cash, Faber also recommends buying gold miners.
"Of all the asset classes that I look at," Faber said, "the one that stands out as being extremely depressed is the precious metal sector, and in particular, precious metal equities."
—By CNBC's Alex Rosenberg
'via Blog this'
Marc Faber is well-known for his bearish take on stocks as well as his theory that the actions of the Federal Reserve will end up crushing the value of the U.S. dollar. And that is precisely why his latest recommendation is so surprising.
When asked whether investors should keep their money in cash on Tuesday's episode of "Futures Now," Faber responded: "Cash, yes. I think the most hated asset at the present time is cash."
(Read more: Taper or no taper, the Fed will never end QE: Marc Faber)
This despite the fact that his monetary view hasn't changed.
"I agree that with the Fed's policy, cash loses purchasing power," Faber said.
The problem is that Faber thinks the market could crash, but only after rising further.
"I think we will go up until it's over," Faber said. In 2013 "I wrongly predicted a 20 percent correction—it hasn't happened. But I think when it's over, it will be more than 20 percent."
Given that nuanced view, "I'm not yet short, but I would look at essentially any rally here in the U.S. market as an opportunity to lighten up on positions," Faber said. "And I don't think people should buy stocks".
(Read more: Scared or not, you have to buy stocks: BlackRock's Koesterich)
In addition to staying in cash, Faber also recommends buying gold miners.
"Of all the asset classes that I look at," Faber said, "the one that stands out as being extremely depressed is the precious metal sector, and in particular, precious metal equities."
—By CNBC's Alex Rosenberg
'via Blog this'
Blackstone CEO: Disconnect between modest economic growth and roaring stocks
Blackstone CEO: Disconnect between modest economic growth and roaring stocks:
"There's a disconnect between modest economic growth and roaring stock market, Blackstone Group Chairman and CEO Stephen Schwarzman told CNBC on Thursday.
"The economy is improving pretty modestly. I think there's a lot of bullishness that feeds on itself," he said in a "Squawk Box" interview. "The real world is moving ahead. But it's not barreling ahead."
Schwarzman added, "When you have an economy that grows at 2.5 percent, 2.75 percent, and a stock market that goes up 27 percent, seems somewhat disconnected."
"It seems a low probability that markets continue going up at 27 percent," he said.
For now, investors are reveling in the clarity from the Federal Reserve, which finally ended the "will they, won't they" guessing game. After its final meeting of the year, the central bank announced that it will taper its $85-billion-a-month bond-buying program by $10 billion.
Stocks rallied sharply on the news Wednesday. The Fed is expected to gradually wind down the program over the next year, but it's still holding $4 trillion of securities on its balance sheet.
—By CNBC's Matthew J. Belvedere"
'via Blog this'
"There's a disconnect between modest economic growth and roaring stock market, Blackstone Group Chairman and CEO Stephen Schwarzman told CNBC on Thursday.
"The economy is improving pretty modestly. I think there's a lot of bullishness that feeds on itself," he said in a "Squawk Box" interview. "The real world is moving ahead. But it's not barreling ahead."
Schwarzman added, "When you have an economy that grows at 2.5 percent, 2.75 percent, and a stock market that goes up 27 percent, seems somewhat disconnected."
"It seems a low probability that markets continue going up at 27 percent," he said.
For now, investors are reveling in the clarity from the Federal Reserve, which finally ended the "will they, won't they" guessing game. After its final meeting of the year, the central bank announced that it will taper its $85-billion-a-month bond-buying program by $10 billion.
Stocks rallied sharply on the news Wednesday. The Fed is expected to gradually wind down the program over the next year, but it's still holding $4 trillion of securities on its balance sheet.
—By CNBC's Matthew J. Belvedere"
'via Blog this'
Gartman: 'Never thought Fed would take action'
Gartman: 'Never thought Fed would take action':
"I never thought they'd take action yesterday," the founder of the closely-watched "Gartman letter" told CNBC Europe's "Squawk Box" on Thursday. "I thought there would be a lot of rhetoric about the level of debate, about the fact that the economic numbers were in fact getting better. But I never actually thought they'd move to reduce the speed with which we're driving down the highway."
The U.S. central bank's monetary policy committee decided on Wednesday to start winding down its bond buying program but will do so gradually, trimming its monthly asset purchases by $10 billion to $75 billion from January onwards.
It sought to temper the market impact of the policy move by suggesting its key interest rate would stay near zero "well past the time" unemployment falls below 6.5 percent.
Despite his surprise, Gartman believed that U.S. economic conditions warranted a reduction in asset purchases. "I would say that the economic conditions have been for some while appropriate for a reduction in the sum of accommodation – that's the term the Fed uses, not tapering – but I was surprised by the fact that the decision was made. "
"I thought it would be deferred and put into the hands of the next Fed chairman [Janet Yellen] at the March meeting," he added, referring to the fact that this policy decision was the last to be made under the aegis of Chairman Ben Bernanke who steps down from the role at the end of January.
The Fed's decision propelled the Dow and S&P 500 to new record highs, while the Nasdaq ended at a 13-year high and the dollar leaped to a more than five-year high against the yen. Globally, Asian stocks were mostly higher on Thursday and European stocks look set to follow suit.
Investors have been factoring in a taper to the U.S. monetary stimulus, which has buoyed global equity markets, ever since Bernanke first mentioned the possibility that the central bank would be winding down its bond-buying program in May. That sparked volatility -- or so-called "taper tantrums" -- in equity, currency and bond markets.
(Read more: Taper seen as positive for economy, bad omen for bonds)
"I'm not surprised that the stock market took off, that the dollar got that strong, that gold fell. Once the announcement was made, those actions were pre-destined," Gartman said.
Having been bullish on stocks for some time, Gartman said he was cautious ahead of the Fed's announcement though he wished he "remained as manifestly, overtly and violently bullish" on stocks as he had been previously.
"Within seconds of the announcement… I had no choice - I had to come in and buy more stocks and reduce any hedges I had and make certain that the long positions I had in the dollar – I've been very bearish on the yen -- were increased."
There was "no question," Gartman added, that "an abundant part of yesterday's panic buying [was due to] people saying 'Oh my word I'm short, I'm wrong and I have to get out'…Some of the smartest guys I know have been short the market all the way up and I've seen more of that than people being long the market."
Gartman said there was no question that the "Santa rally" – a seasonal market rally -- was upon us and "was likely to continue."
- By CNBC' Holly Ellyatt, follow her on Twitter
'via Blog this'
"I never thought they'd take action yesterday," the founder of the closely-watched "Gartman letter" told CNBC Europe's "Squawk Box" on Thursday. "I thought there would be a lot of rhetoric about the level of debate, about the fact that the economic numbers were in fact getting better. But I never actually thought they'd move to reduce the speed with which we're driving down the highway."
The U.S. central bank's monetary policy committee decided on Wednesday to start winding down its bond buying program but will do so gradually, trimming its monthly asset purchases by $10 billion to $75 billion from January onwards.
It sought to temper the market impact of the policy move by suggesting its key interest rate would stay near zero "well past the time" unemployment falls below 6.5 percent.
Despite his surprise, Gartman believed that U.S. economic conditions warranted a reduction in asset purchases. "I would say that the economic conditions have been for some while appropriate for a reduction in the sum of accommodation – that's the term the Fed uses, not tapering – but I was surprised by the fact that the decision was made. "
"I thought it would be deferred and put into the hands of the next Fed chairman [Janet Yellen] at the March meeting," he added, referring to the fact that this policy decision was the last to be made under the aegis of Chairman Ben Bernanke who steps down from the role at the end of January.
The Fed's decision propelled the Dow and S&P 500 to new record highs, while the Nasdaq ended at a 13-year high and the dollar leaped to a more than five-year high against the yen. Globally, Asian stocks were mostly higher on Thursday and European stocks look set to follow suit.
Investors have been factoring in a taper to the U.S. monetary stimulus, which has buoyed global equity markets, ever since Bernanke first mentioned the possibility that the central bank would be winding down its bond-buying program in May. That sparked volatility -- or so-called "taper tantrums" -- in equity, currency and bond markets.
(Read more: Taper seen as positive for economy, bad omen for bonds)
"I'm not surprised that the stock market took off, that the dollar got that strong, that gold fell. Once the announcement was made, those actions were pre-destined," Gartman said.
Having been bullish on stocks for some time, Gartman said he was cautious ahead of the Fed's announcement though he wished he "remained as manifestly, overtly and violently bullish" on stocks as he had been previously.
"Within seconds of the announcement… I had no choice - I had to come in and buy more stocks and reduce any hedges I had and make certain that the long positions I had in the dollar – I've been very bearish on the yen -- were increased."
There was "no question," Gartman added, that "an abundant part of yesterday's panic buying [was due to] people saying 'Oh my word I'm short, I'm wrong and I have to get out'…Some of the smartest guys I know have been short the market all the way up and I've seen more of that than people being long the market."
Gartman said there was no question that the "Santa rally" – a seasonal market rally -- was upon us and "was likely to continue."
- By CNBC' Holly Ellyatt, follow her on Twitter
'via Blog this'
Wednesday, December 18, 2013
Tuesday, December 17, 2013
Taper or no taper, the Fed will never end QE: Marc Faber
Taper or no taper, the Fed will never end QE: Marc Faber: ""The Federal Reserve—all of them—could be sitting on a barrel of dynamite, and then pouring gasoline on top of it, and then light a cigar with matches, throw the match into the gasoline, and then not notice that there is any danger," Faber said. "That is the state of mind of the professors at the Fed, who never worked a single [day] in business.""
'via Blog this'
'via Blog this'
Bernanke should lay groundwork for Fed Reserve tapering
Bernanke should lay groundwork for Fed Reserve tapering: ""We still think they're not going to do anything tomorrow in terms of actual action," said Bill Stone, chief investment strategist at PNC Wealth Management. "We think they're going to punt until January. Obviously it depends whose survey you look at, but there are a significant number of managers that believe—and it wouldn't blow me out of the water—if they did do something tomorrow. The odds, I think, are greater than 50 percent that they wait until January."
CNBC's Fed Survey this week showed that expectations are now that the Fed will begin to move away from its $85 billion in monthly bond and mortgage purchases in February—two months earlier than expected in an October survey of fund managers and others. Fifty-five percent see the Fed tapering in January or December, while more than 40 percent expect it in March or later."
'via Blog this'
CNBC's Fed Survey this week showed that expectations are now that the Fed will begin to move away from its $85 billion in monthly bond and mortgage purchases in February—two months earlier than expected in an October survey of fund managers and others. Fifty-five percent see the Fed tapering in January or December, while more than 40 percent expect it in March or later."
'via Blog this'
Monday, December 16, 2013
Tuesday Look Ahead: Will they or won't they?
Tuesday Look Ahead: Will they or won't they?: ""There is little consensus whether good news is good or bad right now, with the indicators that I watch showing everything from fully bearish to fully bullish," said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research.
An upbeat November jobs report sparked a rally in equities on Dec. 6, yet a week of mostly solid economic data drew a negative reaction from the stock market in the week that followed.
"It doesn't make a lot of sense. If good news is good news, it needs to stay that way," said Frederick. "Given the mixed indicators, I am not sure we know what the market wants."
"Debate will be running high through mid-day Wednesday about whether the Fed tapers or not at this FOMC meeting. If the averages trade higher today, tomorrow and Wednesday morning, then it could become a 'sell on the news' no matter the decision," Elliot Spar, market strategist, at Stifel, Nicolaus & Co., wrote in emailed comments Monday afternoon."
'via Blog this'
An upbeat November jobs report sparked a rally in equities on Dec. 6, yet a week of mostly solid economic data drew a negative reaction from the stock market in the week that followed.
"It doesn't make a lot of sense. If good news is good news, it needs to stay that way," said Frederick. "Given the mixed indicators, I am not sure we know what the market wants."
"Debate will be running high through mid-day Wednesday about whether the Fed tapers or not at this FOMC meeting. If the averages trade higher today, tomorrow and Wednesday morning, then it could become a 'sell on the news' no matter the decision," Elliot Spar, market strategist, at Stifel, Nicolaus & Co., wrote in emailed comments Monday afternoon."
'via Blog this'
5 ways most investors are just plain wrong - MarketWatch
5 ways most investors are just plain wrong - MarketWatch:
A fool thinks himself to be wise, but a wise man knows himself to be a fool.” From “As You Like It,” by William Shakespeare
My best advice: Once you have a good long-term strategy, turn off the television, throw away the marketing mailers and focus on living your life.
My best advice: Learn the difference between what is possible (almost anything) and what is probable or likely. You can't know what's really likely until you have 30 to 80 years of performance data.
My best advice: Rely on the appropriate amount of fixed-income investments, not stock fund managers, to keep you within your risk tolerance.
My best advice: No matter how certain you are that you're right, get a second opinion.
'via Blog this'
A fool thinks himself to be wise, but a wise man knows himself to be a fool.” From “As You Like It,” by William Shakespeare
My best advice: Once you have a good long-term strategy, turn off the television, throw away the marketing mailers and focus on living your life.
My best advice: Learn the difference between what is possible (almost anything) and what is probable or likely. You can't know what's really likely until you have 30 to 80 years of performance data.
My best advice: Rely on the appropriate amount of fixed-income investments, not stock fund managers, to keep you within your risk tolerance.
My best advice: No matter how certain you are that you're right, get a second opinion.
'via Blog this'
Bernanke Says Fed in ‘Finest Hours’ Stood Up to Pressure - Bloomberg
Bernanke Says Fed in ‘Finest Hours’ Stood Up to Pressure - Bloomberg:
“One value that strikes me as having been at least as important as any other has been the Federal Reserve’s willingness, during its finest hours, to stand up to political pressure and make tough but necessary decisions,” Bernanke said today in Washington at a celebration of the 100th anniversary of the Fed. He didn’t discuss the outlook for monetary policy or the near-term prospects for the U.S. economy.
"The financial crisis of 2008 was “analogous to the panics that central banks have faced for centuries” and the Fed “found ways to carry out its traditional central bank functions in this environment,” Bernanke said today.
The Fed faces the continued challenge of explaining and defending its actions to the public, he said. Its ability to respond to crisis “depends on the public’s understanding and acceptance of our actions.”
“Of course, we will continue to talk to economists and market participants, but that is not enough,” he said. “Ultimately, the legitimacy of our policies rests on the understanding and support of the broader American public, whose interests we are working to serve.”"
'via Blog this'
“One value that strikes me as having been at least as important as any other has been the Federal Reserve’s willingness, during its finest hours, to stand up to political pressure and make tough but necessary decisions,” Bernanke said today in Washington at a celebration of the 100th anniversary of the Fed. He didn’t discuss the outlook for monetary policy or the near-term prospects for the U.S. economy.
"The financial crisis of 2008 was “analogous to the panics that central banks have faced for centuries” and the Fed “found ways to carry out its traditional central bank functions in this environment,” Bernanke said today.
The Fed faces the continued challenge of explaining and defending its actions to the public, he said. Its ability to respond to crisis “depends on the public’s understanding and acceptance of our actions.”
“Of course, we will continue to talk to economists and market participants, but that is not enough,” he said. “Ultimately, the legitimacy of our policies rests on the understanding and support of the broader American public, whose interests we are working to serve.”"
'via Blog this'
Saturday, December 14, 2013
Friday, December 13, 2013
Want to invest like Buffett? Here’s how - Mark Hulbert - MarketWatch
Want to invest like Buffett? Here’s how - Mark Hulbert - MarketWatch:
"The first is a “focus on cheap, safe, quality stocks,” defined as those that have exhibited below-average volatility and sport low ratios of price-to-book value — a measure of net worth. In addition, the researchers looked for stocks whose profits are growing at an above-average pace and that pay out a significant portion of their earnings as dividends.
The second part of the formula will raise eyebrows: It calls for investing in these stocks “on margin” — that is, borrowing money to buy more shares than could otherwise be purchased. To match Buffett’s long-term return, the researchers found, a portfolio would need to be 60% on margin — borrowing enough so that it owned $160 of “cheap, safe, quality stocks” for every $100 of portfolio value."
"The first is a “focus on cheap, safe, quality stocks,” defined as those that have exhibited below-average volatility and sport low ratios of price-to-book value — a measure of net worth. In addition, the researchers looked for stocks whose profits are growing at an above-average pace and that pay out a significant portion of their earnings as dividends.
The second part of the formula will raise eyebrows: It calls for investing in these stocks “on margin” — that is, borrowing money to buy more shares than could otherwise be purchased. To match Buffett’s long-term return, the researchers found, a portfolio would need to be 60% on margin — borrowing enough so that it owned $160 of “cheap, safe, quality stocks” for every $100 of portfolio value."
It can be easy to overlook the extent of this leverage, since Buffett is able to borrow from other parts of his business. But that doesn’t mean the company isn’t still leveraged, Frazzini argues. According to its most recent annual report, for example, the total value of Berkshire’s holdings are double the company’s net worth, implying that its current leverage is about 2-to-1 — somewhat higher than its long-term average.
Employing margin can magnify profits, of course. It also increases potential losses when things go wrong. But note that the formula combines a heavy use of margin with stocks that tend to be much less risky than the market, so the net result can still be a portfolio that is no riskier than the market as a whole.
‘Margin call’ risks
To be sure, a heavily margined portfolio will always run the risk that, if its holdings fall enough, of getting a “margin call” — the need to come up with additional cash. Berkshire Hathaway has been able to sidestep that risk over the last 50 years. Despite a heavily reliance on leverage, its worst return in any calendar year was a loss of 9.6%. And its book value has been less volatile than the S&P 500 SPX -0.01% . Volatility is a common measure of a portfolio’s risk.
'via Blog this'Thursday, December 12, 2013
LionGold is Asia's second best short in 2013: Markit
LionGold is Asia's second best short in 2013: Markit: "Mr Rippon is concerned that too much growth has been generated by intervention and that when this support is withdrawn, the drop could be significant."However, if tapering represents only a small drop in QE, then markets could yet still continue to rally as a result of investors feeling comfortable that despite a slight reduction QE will continue apace. This could see the bubble get bigger.""
'via Blog this'
'via Blog this'
The bitcoin crash of 2013: Don't you feel silly now? - latimes.com
The bitcoin crash of 2013: Don't you feel silly now? - latimes.com: "Bitcoin advocates love to talk as though their new medium will be a counterforce to governments' tendencies to devalue their own currencies for economic gain. As Boston University economist Laurence Kotlikoff recently wrote: "Anyone familiar with current U.S. monetary policy might well wonder whether our country wouldn't be better served with bitcoins replacing the dollar."
You can stop wondering. The answer is no."
'via Blog this'
You can stop wondering. The answer is no."
'via Blog this'
Sunday, December 8, 2013
Now where do stocks go? Here's a hint: Ho ho ho
Now where do stocks go? Here's a hint: Ho ho ho: "One Grinch that could spoil the stock market rally this coming week is the bond market, should yields rise too quickly. There are a few pieces of economic data, with the most important Thursday's retail sales, and the market will also be digesting $64 billion in Treasury auctions.
"The path of least resistance is still higher for stocks,"said Barry Knapp, head of equity portfolio strategy at Barclays. "There's favorable seasonality, the economy is getting better, and unless the Fed shocks us and starts [tapering] in December, I don't think the market will go down.""
"The path of least resistance is still higher for stocks,"said Barry Knapp, head of equity portfolio strategy at Barclays. "There's favorable seasonality, the economy is getting better, and unless the Fed shocks us and starts [tapering] in December, I don't think the market will go down.""
"I think the rate-hike cycle will be more aggressive than it's currently priced," he said. "The five-year part of the curve could really sell off sharply."
Emerging markets also bear watching, he said. "I'm hard-pressed to find any investors that are bullish on emerging markets. … I can't imagine they'll have many friends when the Fed starts the process."
'via Blog this'
Saturday, December 7, 2013
The chart that’s scaring Wall Street - Mark Hulbert - MarketWatch
The chart that’s scaring Wall Street - Mark Hulbert - MarketWatch:
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By Mark Hulbert, MarketWatch
In recent days, a chart featuring two lines like the ones shown below has been circulating among trading desks, according to hedge-fund manager Douglas Kass. It certainly looks scary, pointing as it does to a 1929-magnitude crash in January.
But there isn’t any need to run for the hills just yet. The chart’s statistical validity is questionable, at best. Even many of those who insist it is worth paying attention to aren’t predicting a crash.
The chart shows the performance of the stock market over the past 18 months alongside the path the Dow Jones Industrial Average DJIA +1.26% traveled in 1928 and 1929. In emailing it to his clients, Kass, president of Seabreeze Partners Management Inc., called the similarity “eerie.” Read: Ghost of 1929 crash reappears.
According to Tom McClellan, editor of the McClellan Report, an investment newsletter, the Sept. 3, 1929, stock market top equates to this coming Jan. 14 — just five weeks from now.
David Leinweber, founder of the Center for Innovative Financial Technology at the Lawrence Berkeley National Laboratory, isn’t impressed. In an email, he said that “if you looked at enough periods of the same length, you’d find all sorts of very similar pictures, most without a crash at the end.”
Leinweber views charts such as this one as an example of a potentially dangerous practice known as “data mining”— endlessly analyzing a database until you “discover” a pattern. The result of this practice is “the analytical equivalent of finding bunnies in the clouds. If you did enough poring, you would be bound to find that bunny sooner or later, but it would be no more real than the one that blows over the horizon,” he said.
Kass, who has been outspokenly bearish on the U.S. stock market during a rally that has pushed the S&P 500 index SPX +1.12% up 26% this year, said he sent the chart out to his clients merely as “interesting food for thought.” He said that, while he believes stocks are likely to produce below-average returns in coming years, he doesn’t think there will be a crash.
McClellan said that finding chart correlations is risky, since they “all break down eventually — it’s just a matter of time.” Unfortunately, “they usually break down the moment you are most counting on it.”
Nevertheless, he said he will be closely watching whether the stock market in coming weeks continues to follow the pre-1929-crash script. If it does, and he concedes that this is a “big if,” then his confidence will grow that the stock market’s direction will turn down in January.
To be sure, a bear market could happen at any time, and drawing the analogy between now and the late 1920s can serve a helpful purpose: If you don’t think you can stick with your stock holdings through a market decline, you should reduce them now to whatever level you would be comfortable holding through that decline.
There is another reason to consider selling some shares: The bull market has led equity positions to become a bigger part of overall portfolio values. That in turn means portfolios might be riskier than is appropriate. The end of the year is an ideal time to tweak portfolio allocations.
In this rebalancing, you would normally invest the proceeds of sales into asset classes that have performed poorly. That might mean buying bonds, however, since bonds have lost ground this year as the stock market has soared. That may seem hard to swallow if you expect the Federal Reserve to start pulling back on its bond purchases, which some think could push bond yields higher and prices lower.
Jason Hsu, chief investment officer at Research Affiliates, a money management firm based in Newport Beach, Calif., recommends looking at “absolute-return strategies” as you rebalance your portfolio. These strategies aim to produce consistent returns in all kinds of markets.
In theory, absolute-return strategies tend to march to the beats of their own drummers rather than rise and fall in lock step with either stocks or bonds. That could make them attractive if you, like Hsu, are unenthusiastic about the prospects for either stocks or bonds in coming years.
David Nadig, chief investment officer at IndexUniverse, a research firm, says there are several exchange-traded funds that offer absolute-return strategies. He said in an email that his firm’s recommendations are based on a number of factors, including expenses, liquidity, and how closely the fund tracks the market to which it is benchmarked.
His firm’s top pick among “absolute-return ETFs” is the IQ Hedge Multi-Strategy Tracker [ticker: QAI], with a 0.94% expense ratio, or $94 per $10,000 invested. The fund aims to match the average performance of a wide variety of hedge funds.
Another is the PowerShares DB G10 Currency Harvest fund [ticker: DBV], with a 0.75% expense ratio, which invests in the currencies of leading industrialized nations. A third ETF that Nadig’s firm recommends is the WisdomTree Managed Futures Strategy fundWDTI +0.51% , with a 0.96% expense ratio; it bets on the directions of currencies, interest rates, and physical commodities.
Hsu also suggested diversifying equity holdings outside the U.S. He believes that three regions offer equity markets that are cheaper than the U.S.: Japan, Europe and emerging markets.
The ETFs linked to these respective regions that Mr. Nadig’s firm favors are the iShares MSCI Japan fund EWJ +1.27% , with a 0.53% expense ratio; the iShares MSCI EMU Index fund EZJ +2.17% , also with a 0.53% expense ratio; and the iShares Core MSCI Emerging Markets fund IEMG +1.98% , with a 0.18% expense ratio.
More related commentary:
Ghost of 1929 crash reappears - Outside the Box - MarketWatch
Ghost of 1929 crash reappears - Outside the Box - MarketWatch:
They say those who forget the lessons of history are doomed to repeat them.
As a student of market history, I’ve seen that maxim made true time and again. The cycle swings fear back to greed. The overcautious become the overzealous. And at the top, the story is always the same: Too much credit, too much speculation, the suspension of disbelief, and the spread of the idea that this time is different.
It doesn’t matter whether it was the expansion of railroads heading into the crash of 1893 or the excitement over the consolidation of the steel industry in 1901 or the mixing of speculation and banking heading into 1907. Or whether it involves an epic expansion of mortgage credit, IPO activity, or central-bank stimulus. What can’t continue forever ultimately won’t.
The weaknesses of the human heart and mind means the swings will always exist. Our rudimentary understanding of the forces of economics, which in turn, reflect ultimately reflect the fallacies of people making investing, purchasing, and saving decisions, means policymakers will never defeat the vagaries of the business cycle.
So no, this time isn’t different. The specifics may have changed, but the themes remain the same. Read Mark Hulbert’s take: The chart that’s scaring Wall Street.
In fact, the stock market is right now tracing out a pattern eerily similar to the lead up to the infamous 1929 market crash. The pattern, illustrated by Tom McClellan of the McClellan Market Report, and brought to his attention by well-known chart diviner Tom Demark, is shown below.
Excuse me for throwing some cold water on the fever dream Wall Street has descended into over the last few months, an apparent climax that has bullish sentiment at record highs, margin debt at record highs, bears capitulating left and right, and a market that is increasingly dependent on brokerage credit, Federal Reserve stimulus, and a fantasy that corporate profitability will never again come under pressure.
On a pure price-analogue basis, it’s time to start worrying.
Fundamentally, it’s time to start worrying too. With GDP growth petering out (Macroeconomic Advisors is projecting fourth-quarter growth of just 1.2%), Americans abandoning the labor force at a frightening pace, businesses still withholding capital spending, and personal-consumption expenditures growing at levels associated with recent recessions, we’ve past the point of diminishing marginal returns to the Fed’s cheap-money morphine.
All we’re doing now is pushing on the proverbial string. Trillions in unused bank reserves are piling up. The housing market has stalled after the “taper tantrum” earlier this year caused mortgage rates to shoot from 3.4% to 4.6% between May and August. The Treasury market is getting distorted as the Fed effectively monetizes a growing share of the national debt. Emerging-market economies are increasingly vulnerable to a currency crisis once the taper finally starts.
The Fed knows it. But they’re trapped between these risks and giving the market — the one bright spot in the post-2009 recovery — serious liquidity withdrawals.
But the specifics of the run up to the 1929 crash provide true bone-chilling context for what’s happening now.
The Bernanke-led Fed’s enthusiasm for avoiding the mistakes that worsened the Great Depression—- a mistimed tightening of monetary conditions — has led him to repeat the mistakes that caused it in the first place: Namely, continuing to lower interest rates via Treasury bond purchases well into an economic expansion and bull market justified by low-to-no inflation.
(Side note here: As economist Murray Rothbard of the Austrian School wrote in America’s Great Depression, prices dropped then, as now, because of gains in productivity and efficiency.)
Here’s the kicker: The Fed (mainly the New York Fed under Benjamin Strong) was knee deep in quantitative easing in the late 1920s, expanding the money supply and loweringinterest rates via direct bond purchases. Wall Street then, as now, was euphoric.
It ended badly.
Fed policymakers felt like heroes as they violated that central tenant of central banking as outlined in 1873 by Economist editor Walter Bagehot in his famous Lombard Street: That they should lend freely to solvent banks, at a punitive interest rate in exchange for good quality collateral. Central-bank stimulus should only be a stopgap measure used to stem panics, a lender of last resort; not act as a vehicle of economic deliverance via the printing press.
It’s being violated again now as the mistakes of history are repeated once more. Bernanke will be around to see the results of his mistakes and his misguided justification that quantitative easing is working because stock prices are higher, ignoring evidence that the “wealth effect” isn’t working.
Strong died in 1928, missing the hangover his obsession with low interest rates and credit expansion caused after bragging, in 1927, that his policies would give “a little coup de whisky to the stock market.”
More MarketWatch commentary:
Anthony Mirhaydari is a columnist and blogger for MSN Money who writes on stocks and the economy. He is also the founder and publisher of the Edge , an investment advisory newsletter .
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Thursday, December 5, 2013
Wednesday, December 4, 2013
Greenspan Says Bitcoin a Bubble Without Intrinsic Currency Value - Bloomberg
Greenspan Says Bitcoin a Bubble Without Intrinsic Currency Value - Bloomberg: "“I do not understand where the backing of Bitcoin is coming from,” the former Fed chief said. “There is no fundamental issue of capabilities of repaying it in anything which is universally acceptable, which is either intrinsic value of the currency or the credit or trust of the individual who is issuing the money, whether it’s a government or an individual.”"
'via Blog this'
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Private-sector job gains hottest in a year: ADP - Economic Report - MarketWatch
Private-sector job gains hottest in a year: ADP - Economic Report - MarketWatch: "“The job market remained surprisingly resilient to the government shutdown and brinkmanship over the Treasury debt limit. Employers across all industries and company sizes looked through the political battle in Washington. If anything, job growth appears to be picking up,” said Mark Zandi, chief economist of Moody’s Analytics, which prepares the report with ADP’s data."
'via Blog this'
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PropertyGuru Expert Blogs - How the URA’s Masterplan 2013 Will Affect the Property Market
PropertyGuru Expert Blogs - How the URA’s Masterplan 2013 Will Affect the Property Market: "As part of efforts to improve the public transportation system, by 2030 the rail network will double to 360km, and 80 percent of all homes will be within a 10-minute walk to an MRT station.
Traditionally, homes near to an MRT station will usually be able to command a premium to less well-connected homes. But if 80 percent of homes are within a 10-minute walk to the MRT, will this premium still exist?
I believe being near to an MRT station will eventually become less important to which MRT station and line you are near to. Homes near MRT interchanges (where two or more lines cross) will likely command a larger premium. Homes near MRT stations on lines with key business hubs (e.g. the East-West line which has connectivity to the hubs of Jurong, the CBD, Kampong Bugis, Paya Lebar and Tampines) will have better prices and rentals versus other lines which may require multiple transits to get to the key hubs."
'via Blog this'
Traditionally, homes near to an MRT station will usually be able to command a premium to less well-connected homes. But if 80 percent of homes are within a 10-minute walk to the MRT, will this premium still exist?
I believe being near to an MRT station will eventually become less important to which MRT station and line you are near to. Homes near MRT interchanges (where two or more lines cross) will likely command a larger premium. Homes near MRT stations on lines with key business hubs (e.g. the East-West line which has connectivity to the hubs of Jurong, the CBD, Kampong Bugis, Paya Lebar and Tampines) will have better prices and rentals versus other lines which may require multiple transits to get to the key hubs."
'via Blog this'
Tuesday, December 3, 2013
Monday, December 2, 2013
Nobel Prize winner warns of US stock market bubble
Nobel Prize winner warns of US stock market bubble: "A sharp rise in U.S. equity prices could be leading to a dangerous bubble, according to one of the three Americans who won the 2013 Nobel prize for economics.
"I'm not sounding the alarm yet. But in many countries the stock price levels are high, and in many real estate markets prices have risen sharply...that could end badly."
"I find the boom in the U.S. stock market most concerning," Robert Shiller said in an interview with Germany's Der Spiegel magazine published on Sunday"
'via Blog this'
"I'm not sounding the alarm yet. But in many countries the stock price levels are high, and in many real estate markets prices have risen sharply...that could end badly."
"I find the boom in the U.S. stock market most concerning," Robert Shiller said in an interview with Germany's Der Spiegel magazine published on Sunday"
'via Blog this'
Sunday, December 1, 2013
YEOMAN: "We get richer by the day, no matter where the market goes"
YEOMAN: "We get richer by the day, no matter where the market goes":
And the fund is big on diversification -- not unlike Aggregate Asset Management which we highlighted recently in AGGREGATE ASSET MGT: 'Why we invest in more than 100 stocks'
The Yeoman fund invests in around 70 stocks and has S$117 million of assets under management as at end-Oct 2013.
Here's more:
Performance: In the current year to end-October, the Yeoman fund has gained 19.34 per cent, compared with the MSCI Far East ex Japan index return of 3.45 per cent.
Since its inception in October 1997, the fund has achieved cumulative returns of more than 638 per cent, compared with the index return of 110 per cent.
This translates to a compounded annual return of 13.3 per cent.
Every $100,000 invested at inception have transformed into more than $738,000!
BT quoted Yeo Seng Chong, Yeoman's founder and chief executive, saying undervaluation is the "prime and only motivation for investing''.
It adds: "We do not sell just because other people are selling (or buy just because others are doing so)."
Diversification is key: The maximum exposure to a single stock is about 1.4 per cent. And it has tremendous defensiveness.
As Mr Yeo told BT: "If something doesn't work out in one stock and we suffer permanent and total impairment, we would have lost 1.4 per cent. But if the remaining stocks work out, and typically we pay 50 cents on the dollar - that is, we assess that the stock is worth $1 and we pay 50 cents - ... the loss would be more than covered.
'via Blog this'
WARREN BUFFETT eschews diversification, seeking to buy lots of a stock only when prices are very attractive.
What works for him could work for many lesser investors too. Similarly, a very diversified portfolio could make good sense, especially if one seeks lower volatility in one's portfolio.
Different strokes for different folks, as one might say.
The Yeoman 3-Rights Value Asia Fund has done well for its investors and an excellent article by Genevieve Cua in Business Times(Nov 27, right) highlighted that.
What works for him could work for many lesser investors too. Similarly, a very diversified portfolio could make good sense, especially if one seeks lower volatility in one's portfolio.
Different strokes for different folks, as one might say.
The Yeoman 3-Rights Value Asia Fund has done well for its investors and an excellent article by Genevieve Cua in Business Times(Nov 27, right) highlighted that.
And the fund is big on diversification -- not unlike Aggregate Asset Management which we highlighted recently in AGGREGATE ASSET MGT: 'Why we invest in more than 100 stocks'
The Yeoman fund invests in around 70 stocks and has S$117 million of assets under management as at end-Oct 2013.
Here's more:
Performance: In the current year to end-October, the Yeoman fund has gained 19.34 per cent, compared with the MSCI Far East ex Japan index return of 3.45 per cent.
Since its inception in October 1997, the fund has achieved cumulative returns of more than 638 per cent, compared with the index return of 110 per cent.
This translates to a compounded annual return of 13.3 per cent.
Every $100,000 invested at inception have transformed into more than $738,000!
Methodology: On Yeoman's website, the explanation is: "We call our investment process the "3-Rights" (Right Business, Right Price and Right Management). Subject to the 3-Rights criteria being met, we are usually fully invested holding little or no cash. For us, performance attribution is from securities selection and portfolio construction, not market timing."
BT quoted Yeo Seng Chong, Yeoman's founder and chief executive, saying undervaluation is the "prime and only motivation for investing''.
"If we can't get undervaluation, we don't participate. The undervaluation is measured in terms of PE (price earnings multiple), dividend yield, free cash flow and discount to balance sheet book value. We also look at return on equity to make sure our stocks have capital efficiency."
From Yeoman's website: "If we have the comfort of time on our side and the stocks that we own are backed by real businesses generating adequate earnings relative to our price at entry and the cost of the company's capital employed, then we are getting richer by the day, no matter where the market goes.
"If we get the '3-Rights' right, time is our friend. In the short term, price and value may not converge but over the longer term they surely must.''
It adds: "We do not sell just because other people are selling (or buy just because others are doing so)."
Diversification is key: The maximum exposure to a single stock is about 1.4 per cent. And it has tremendous defensiveness.
As Mr Yeo told BT: "If something doesn't work out in one stock and we suffer permanent and total impairment, we would have lost 1.4 per cent. But if the remaining stocks work out, and typically we pay 50 cents on the dollar - that is, we assess that the stock is worth $1 and we pay 50 cents - ... the loss would be more than covered.
"A lot of people spend time picking that one winner that makes a killing. We think that's best left to the person with a strong imagination. As stewards of other people's money, we can't take liberties. As we work on probabilities, this method of investing is very good. The reward is maximised through the '50 cents on the dollar' approach. Value will be realised at some point. Should something come up to hurt us, the loss is well contained.''
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