Investment
© Inya Ivkovic
Market Forecasts
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Normxxx
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permabear
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Normxxx
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Normxxx
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 Inya Ivkovic
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Normxxx
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Inya Ivkovic
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Inya Ivkovic
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Normxxx
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Normxxx
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permabear
- Marc Faber on stocks and gold
In response to Marc Faber on stocks and gold posted by Normxxx: Good advice Norm. Don't know if I have the stomach to play the short-term. Not a savvy enough trader to time those moves. I remain confident that the longer term trends in the dollar and gold remain solid. Best just to stick to the winning strategy. You would hate to be out of gold if it really made that next big leg up in what appears to be a very strong secular bull market. Also agree with you on oil. Got out of most of my energy investments at the end of October (a little early) preparing for the downturn in the economy, which appears to be taking hold right now. If oil prices fall back into the $70s, I'll look for a reentry.
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Normxxx
- Another Bubble Popping?
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Normxxx
- The WSJ - "GM Sees End to Bleak Era"
In response to The WSJ - "GM Sees End to Bleak Era" posted by iivkovic:
They've got to be kidding! I thought every country now makes its own cars plus some for export (but to whom?)
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Inya Ivkovic
- The WSJ - "GM Sees End to Bleak Era"
In response to The WSJ - "GM Sees End to Bleak Era" posted by Normxxx:
I thought it was an entertaining clipping, too. The last paragraph that ever so lightly touches on all the "ifs" was the funniest.
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Normxxx
- The WSJ - "When Is It Time to Buy Stocks Again?"
By [the Fed model] measure, stocks today have a forward yield of 7.63%, well above the 3.64% on the 10-year note. "That's an extreme reading," adds MKM's Mr. Darda. He acknowledges that U.S. Treasury yields may be at unreasonably low levels, thus making stocks appear cheaper than they really are in comparison. But even compared with corporate bonds, which are yielding 6.5% based on Moody's investment-grade bond index, stocks are undervalued, he says.
Howard Simons, strategist at Bianco Research LLC, argues that the earnings variable, which is based on the forecasts of Wall Street analysts, undermines the reliability of the Fed model at this point. Given the uncertain economic outlook, he says, "stock analysts really have no idea what they are talking about in terms of forward-looking expectations."
A case in point: Last summer, analysts' forecasts called for a 7.7% rise in earnings for companies in the S&P 500 last year. In large part as a result of the multi-billion-dollar write-downs of losses on problem mortgage investments, it now appears that earnings generated by S&P 500 firms will have fallen 3.3% in 2007, once all reports are in, according to S&P's senior index analyst, Howard Silverblatt.
The Fed Model=Bad Finance
Click here for a link to complete article: By John Hussman | 20 January 2008 The Mother of bad finance is the Fed Model- the notion that the prospective earnings yield on the S&P 500 should be equal to the 10-year Treasury bond yield. Here is a model with appealing simplicity, the downside being that the model has no predictive value whatsoever for the stock market!
The model rests on the unbaked assumption that the yield on a 10-year Treasury bond- having a duration of about 8-years- is the appropriate benchmark with which to value a stock index that currently has a duration of over 60-years. (For more on the concept of duration, see the February 23, 2004 comment).
That said, however, there is an interesting use for predictions from the Fed Model (other than to line a bird cage). Remember that the Fed Model indicates that stocks are undervalued when the prospective earnings yield on the S&P 500 is higher than the yield on 10-year Treasury bonds. It turns out that when the Fed Model registers a strong "undervalued" signal and the earnings yield on the S&P is itself very low, the signal is still meaningless for stocks, but is a fairly reliable sell signal on bonds. In effect, when the S&P 500 earnings yield is low, and the 10-year Treasury yield is lower still, it's a good signal that bond yields are probably too low to be sustained. Trouble for the bond market often follows.
M O R E. . .
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