Wall of worry

Recommended reading, economic debates, predictions and opinions.
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scomac
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Re: Wall of worry

Post by scomac »

It sounds to me like there are a lot of folks here making a one way bet. These are very uncertain times, but it would appear that the expected outcome is far more certain than the times warrant. There appears to be a very strong desire to protect capital, but what happens if these actions backfire and the result is opposite of what is hoped for? Someone is going to profit from all of this uncertainty. If history is any guide, it isn't likely to be the majority.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Shakespeare
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Re: Wall of worry

Post by Shakespeare »

Stein's Law: If something cannot continue, it will end.

(I happen to think a diversified portfolio including RRBs, short bonds, and stocks is a reasonable approach.)
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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newguy
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Re: Wall of worry

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Here's why we have manipulation. Ben knows the banks are in trouble unless he can shovel enough money at them. They made about 500 mill in trading revenues. If $375 bill in MBS gets put back, they are well and truly fucked screwed.
Bank Of America Reports No Day With Trading Losses In Q3, Announces MBS Complaints Over $375 Billion Worth Of Securities
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ghariton
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Re: Wall of worry

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From Statistics Canada:
In October, employment remained virtually unchanged for the second consecutive month, as full-time gains offset part-time losses. The unemployment rate edged down to 7.9% and has been around 8% for the past seven months.

<snip>

Employment in Canada reached a high in the fall of 2008, then declined steeply over a period of nine months. Since the summer of 2009, employment has increased, particularly in the first half of 2010.

Although employment has returned to its pre-recession level of October 2008, the unemployment rate remains around 8%, well above its pre-recession level of 6.2%. Over this two-year period, the working-age population (15 years and over) grew by 2.9%, and the labour force — those working or looking for work — rose by 1.9%.
So, while not exactly great, not that bad either.

According to Reinhart and Rogoff, economies are particularly slow to recover from a recession when that recession is the result of a financial crisis. It takes time to deleverage and build confidence again. And of course employment growth lags.

Apparently, it's been this way for the last thousand years.

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Re: Wall of worry

Post by rhenderson »

I wonder if Bernanke plans on printing enough paper to fill these containers for the return trip :?:

"In the first eight months of 2010, the port saw the equivalent of 700,000 more full 20-foot containers enter than leave."

http://features.blogs.fortune.cnn.com/2 ... iner-city/
mudLark
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Re: Wall of worry

Post by mudLark »

scomac wrote:Someone is going to profit from all of this uncertainty.
Seems they already are...

Image
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newguy
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Re: Wall of worry

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I don't think you should look at that one. MSFT is a big part of it. What happens when Bill or Ballmer wants to buy ... say a small country or something?

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Re: Wall of worry

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Ireland is quite pretty and should be well within their budget.
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Re: Wall of worry

Post by mudLark »

newguy wrote:MSFT is a big part of it.
Good point (nice catch :)); discounting MSFT it's still probably ~$3 billion which seems relatively high.
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Bylo Selhi
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Re: Wall of worry

Post by Bylo Selhi »

Shakespeare wrote:Meanwhile, it may or may not be Weimar II - nobody knows (although that would be an extreme outcome)...
Don't write off your Weimar I debt quite yet :shock: :twisted:

There may still be hope (especially if you're a 'Murrkin lawyer.) U.S. Investors Sue For Payback From Pre-World War II German Bonds
More than 80 years ago, Germany sold tens of thousands of bonds to American investors in an effort to recover financially from World War I...

Now, a half-dozen U.S. bondholders are turning to federal courts in an effort to force Germany to make good on its promise to repay the debts, which today could be worth hundreds of millions, if not billions, of dollars. Action has been heating up in lawsuits filed in Miami, New York and Chicago, including a victory for investors last month when an appeals court rejected Germany's attempt to dismiss their case.

If the bondholders ultimately win, their lawyers could ask judges to seize German assets in the U.S. to repay them, a tactic that has worked in other legal disputes over money owed by foreign governments.

But if Germany prevails, the bondholders argue, it could undermine the global system through which governments raise money by issuing bonds...
Of course getting one's money back after 80+ years would be moot for most of us, but just saying... Never say never and all that.
Sedulously eschew obfuscatory hyperverbosity and prolixity.
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ghariton
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Re: Wall of worry

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Bylo Selhi wrote:Of course getting one's money back after 80+ years would be moot for most of us.
There are vulture funds that specialize in buying up issues on which sovereigns have defaulted, then using every legal trick in the book (and inventing new ones) to squeeze out as much as possible.

Nothing to do with the original investors or their heirs.

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Re: Wall of worry

Post by Hammerer »

Here's the BBC story about these "vulture funds". Sounds like a buy-extremely-low-settle-higher type of operation.
http://news.bbc.co.uk/2/hi/programmes/w ... 546628.stm
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ghariton
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Re: Wall of worry

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Mark Hulbert speculates about what's going on in the US:
The Great Recession has now been completely overcome: The United States economy is today back to where it stood at its peak prior to the Great Recession of 2008-2009.

<snip>

The lack of attention to the magnitude of the recovery has been caused, in his opinion, by “the extraordinary pessimism enveloping the consumer investing population, fanned by a fear-mongering financial media.” That skepticism, in turn, has played a big role in holding the stock market back from even bigger gains in recent months.

For example, as Fosback points out, even though the economy is now back to pre-recession levels, the major stock-market averages are not even close.

<snip>

There is a silver lining, however, according to Fosback: As a result of investors’ extraordinary pessimism, the bull market will likely last longer than it otherwise would have if investors had more quickly jumped on the bullish bandwagon.

How bullish is Fosback? His econometric models are forecasting a 22% return for stocks over the coming 12 months — and, over the coming five years, an annualized return of 11%.
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newguy
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Re: Wall of worry

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The Great Recession has now been completely overcome: The United States economy is today back to where it stood at its peak prior to the Great Recession of 2008-2009.
unemp.png
The lack of attention to the magnitude of the recovery has been caused, in his opinion, by “the extraordinary pessimism enveloping the consumer investing population, fanned by a fear-mongering financial media.
People have been paying attention to what's been causing the recovery,
debt.png
about 4 trillion dollars.
There is a silver lining, however, according to Fosback: As a result of investors’ extraordinary pessimism, the bull market will likely last longer than it otherwise would have if investors had more quickly jumped on the bullish bandwagon.
This guy's from what planet?
AAII: BULLISH SENTIMENT HITS 6 YEAR HIGH.
aaii4.png
How bullish is Fosback? His econometric models are forecasting a 22% return for stocks over the coming 12 months — and, over the coming five years, an annualized return of 11%.
Let's see the models, I look at others with a good track record.
Lots more pictures here but I can't upload everything.
http://www.hussmanfunds.com/wmc/wmc101213.htm

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Shakespeare
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Re: Wall of worry

Post by Shakespeare »

Don't know about anybody else, but I think the market is frothy right now.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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deaddog
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Re: Wall of worry

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Shakespeare wrote:Don't know about anybody else, but I think the market is frothy right now.
What does that mean? :?
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
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scomac
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Re: Wall of worry

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deaddog wrote:
Shakespeare wrote:Don't know about anybody else, but I think the market is frothy right now.
What does that mean? :?
My interpretation would be expensive; but then again, most things are.

It is getting increasingly difficult to find anything to buy that doesn't come with significant headwinds to overcome. As a result, I have turned my attention away from the traditional sorts of stocks I usually choose from and have begun to look more and more at those things with less of a consumer and/or yield component. Never-the-less, after looking over the most recent housing statistics, financial assets seem fairly reasonable in comparison. :twisted:
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
ig17
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Re: Wall of worry

Post by ig17 »

Shakespeare wrote:Don't know about anybody else, but I think the market is frothy right now.
Are you sure? :wink:

3 reasons to tap home equity to buy stocks. Here's why leveraging your house to scoop up deals in the stock market might pay off big.

:lol:
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Re: Wall of worry

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Good grief! 'It might pay off big!' ( no fine print saying ' or you could lose the farm ....')
suzy
JaydoubleU
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Re: Wall of worry

Post by JaydoubleU »

Don't know about anybody else, but I think the market is frothy right now.
Until recently, there always seemed to be at least one sector that stood out as relatively cheap and perhaps somewhat undervalued. Last summer and autumn, it was the interest rate sensitives, REITs, utilities, telecoms, which had sold off excessively on the first tapering fear. I thought then that energy stocks were undervalued, particularly on a P/CF measure. Now that this sector has begun lifting off, I no longer see any particular sector that looks even relatively cheap. If there is one, please do tell. Materials?
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Re: Wall of worry

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Late last fall (but not quite at the optimum time of Sept/Oct), I took advantage of the temporary bond rate blip to buy some REITs and Prefs. I feel good about that though I did not buy enough. They remain on my 'watch list' for the next 'hiccup'. I probably missed the opportunity to buy a few utilities, e.g. FTS, EMA, for the same reason but I thought they were still too rich at that time. They remain on my 'watch list' for potentially the next 'rate blip'.

I am currently looking at a few oil stocks but they continue to 'tease' at prices not yet cheap enough for me - wanting another 10% or so to be in the lower end of the trading ranges. I may regret not picking up a few of those too. I don't know what to think of materials yet and have traditionally never been a fan. Hard to NOT to look at companies crushed by gold and copper prices though.
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Re: Wall of worry

Post by Flaccidsteele »

scomac wrote:It sounds to me like there are a lot of folks here making a one way bet. These are very uncertain times, but it would appear that the expected outcome is far more certain than the times warrant.
Unless an individual is omniscient and can predict the future, isn't it always 'uncertain times'?

Just sayin'
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scomac
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Re: Wall of worry

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Flaccidsteele wrote:
scomac wrote:It sounds to me like there are a lot of folks here making a one way bet. These are very uncertain times, but it would appear that the expected outcome is far more certain than the times warrant.
Unless an individual is omniscient and can predict the future, isn't it always 'uncertain times'?

Just sayin'
Not in the eyes of the herd at market watersheds. As Buffett has oft been quoted; "You pay a hefty price for a rosy consensus!"
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
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ghariton
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Re: Wall of worry

Post by ghariton »

Yellen: No Bubbles Here:
On a day when the S&P 500 set yet another all-time high, Fed Chairwoman Janet Yellen said she isn’t particularly concerned about stock prices at current levels.

In her press conference Wednesday afternoon, Ms. Yellen said she and her committee look at several different metrics to gauge stock valuations relative to earnings and dividends, and how they stack up against historical comparisons.

When asked whether the market is trading outside of those norms, she responded: “I still don’t see that for equity prices broadly,” while adding she currently doesn’t see bubble-like conditions in the market.
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Re: Wall of worry

Post by kcowan »

ghariton wrote:Yellen: No Bubbles Here:
and her predecessor said that US house prices were not in bubble territory just before the crash.
For the fun of it...Keith
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