I have always loved Boston. My first recollection of the city was when my parents and I used to fly into it spend a night, or two, and then head for our house in Nantucket. Boy, I wish I still had that house. In later life we use to visit the city to see portfolio managers with Fidelity of particular interest.
Psychology is the reason most investors fail to keep up with the markets, and why contrarian strategies have turned in consistently superior performance over time. This same inability to understand psychology is often why academics don’t incorporate its use and instead stay with what may be flawed modern portfolio theory.
Acknowledging that losses are part of business is one thing; taking and accepting those losses in the markets is something else entirely.
Recently, the markets have been gyrating in a narrow range. Again, according to the book One Way Pockets.
Our work suggests there is still a chance for the S&P 500 (SPX/2992.07) to trade out to new all-time highs (ATHs). However, the first part of October is showing up as problematic on a trading basis and potentially before then. Well, “potentially before then” began yesterday with the revelation that Speaker Nancy Pelosi was proceeding with a formal impeachment inquiry against President Trump.
Emotions run rampant before the uncertainty of floating, fluctuating, often violent and volatile markets. Constantly discounting prices are fickle and full of surprises. Disorder is usually the norm.
I have been reading Shad Rowe’s prose since the 1970s when he wrote a column for Forbes’s magazine. More recently Shad and I met in his Dallas office to discuss the markets, stocks and his investment style. That was about six or seven years ago.
Zebras have the same problem as institutional portfolio managers. First, both seek profits. For portfolio managers, above average performance; for zebras, fresh grass. Secondly, both dislike risk. Portfolio managers can get fired; zebras can get eaten by lions. Third, both move in herds.
The fact that the equity markets are rallying in the face of this week’s negative “energy blast” is highly bullish.
Desperately Seeking Susan is a 1985 American comedy-drama film. We recalled the movie, and its title, while talking to a 70-year-old contemporary who told us that in this low interest rate environment he is, “Desperately seeking savings.”
We were surprised by last Friday’s stock market action. Of course, we did not anticipate the escalation of tariffs, or the Tweet Triage. Friday’s plunge was the forth test of the August lows between 2822 and 2835. To us this looks like a search for a bottom, yet Friday’s drop is a bit concerning.
Last week on CNBC I stated that maybe what we have is a new toolbox; but nobody knows what new tool to use for analyzing the economy, stock market, bond market, etc. Our friend, CNBC’s uber-smart Steve Liesman, hinted at this point in our interview, but I do not think many folks picked up on it, and it is a very important point.
What I really think has happened is that given the years of quantitative easing, exceptionally low interest rates, low inflation, etc. what we have is a new “toolbox” and we do not know what “tools” to use in quantifying the current economic, bond market, and stock market environments.
Chapter 1 in the seminal book “The Intelligent Investor” by Benjamin Graham is titled “Investment versus Speculation"
So, we hate to keep issuing these Trading Flashes, but given the stock market action since Wednesday 7-31-19 it seems such comments are warrened.
Have we changed? Have circumstances changed? Our answer was, “Maybe.” With what the PBOC did in basically resetting the U.S. Dollar/ Renminbi exchange rate, it suggests the trade war is going to go on for a lot longer than most anticipated, including us.
Last week many traders, not investors, became “trapped” in the equity markets as most of the major averages had their worst week of the year. I wish we could say we called the downturn, but all we thought would happen was a mild pullback.
"Ich bin ein Berliner" (German pronunciation: [ˈʔɪç ˈbɪn ʔaɪn bɛɐ̯ˈliːnɐ], "I am a Berliner") is a well-known quote from a speech by United States President John F. Kennedy given on June 26, 1963, in West Berlin. It is widely regarded as the best-known speech of the Cold War and the most famous anti-communist speech.
I was talking to my friend, and 60-year stock market veteran, Jim Rivenes (Raymond James) last week and somehow, we got on the subject about Edward Thorp an individual Jim use to have as a client. It reminded me of a report I wrote in 2005. I like this report.
I entered this business in 1971 on a trading desk in New York city. Since then I have been a trade desk manager, a retail stock broker, branch manager, analyst, portfolio manager, Director of Research at five different firms, and head of Capital Markets at three firms. As such, I used to do reviews on the analysts.
Greetings from Montréal one of my favorite cities in the World. The climes here are cooler than in Florida and the weather is perfect, which is a nice respite from Florida’s heat and humidity. I am here to see some institutional accounts and speak at an event in one of my favorite restaurants on Peel Street...
Overbought means an extended price move to the upside; oversold to the downside. When price reaches these extreme levels, a reversal is possible. The Relative Strength Index (RSI) can be used to confirm a reversal.
“Don’t tell me WHAT to buy, tell me WHEN to buy” is an old stock market “saw” that has survived the test of time. The reason it’s true is because a rising tide tends to lift all ships.
This morning, however, we changed the name from The Big Chill to The Big Stall because on June 3, 2019 we issued a “Trading Flash” stating that we though a trading bottom was being formed. At the time the S&P 500 (SPX/2886.98) was trading at ~2729. Four sessions later, Thursday 6-6-19, the SPX was changing hands at 2852 and we scribed another “Trading Flash.”
Oops; as the stock market’s fore-reach carried the SPX some 50-points higher into Friday’s session.
Last week CWP’s founder and CEO, namely Kevin Simpson, accompanied me to my various haunts in New York City to meet some folks and do media “hits.” I will not bore you with the events of the entire week, but I will share with you what a typical day looked like.
I turn to “Page Two” of my career after a wonderful experience at the venerable firm of Raymond James. I hope I have left Raymond James on the high road because I cannot tell you how much I appreciate the opportunities Tom James, and the firm, have afforded me over the last 20+ years, but it was time to move on.
Clearly I have been “sitting here in limbo” for the last few weeks relaxing in Key West, which is a profoundly different planet. I love it! We stayed at Casa Marina, a resort I would highly recommend to anyone. So while I was limbo, it would seem as though the stock market was in limbo, as well.
“Ark Invest” is a money management firm that manages money in ETFs, mutual funds, and separately managed accounts. Ark believes that innovation is the key to growth and alpha.
Last Friday I spoke to a number of money managers. One of the attendees was Linda Bradford Raschke, a professional trader, who used to trade on the Pacific and Philadelphia Stock Exchanges, founded a number of hedge funds, well you get the idea.
A long time ago in a galaxy far far away I began working on Wall Street. The year was 1971 and I had joined a small firm making markets in over-the-counter stocks and options. My salary was $100 a week and it was Camelot.
As I wrote on Friday, the weak economic outlook from the ECB, continuing reduced earnings estimates, worries about the Mueller Report, renewed Chinese trade war tensions, and the underperformance of the cyclical sectors bringing on cries of recession all proved too much for stocks...
Sacagawea lived from May 1788 to December 1812. She was a Lemhi Shoshone woman who is best known for her help guiding the Lewis and Clark Expedition in achieving their mission objectives by exploring thousands of miles from North Dakota to the Pacific Ocean.
I was traveling last week seeing portfolio managers and doing gigs for our financial advisors and their clients. I have been doing such events for much of the past six months. The recurring question from clients is, “What about the national debt?”
Despite Friday’s Fling, there was a very negative NYSE breadth divergence which appeared during the final two hours of trading. It feels like a blow off trading top to me.
We revisit this “Who do you trust” meme this morning because of what I have been saying the past few weeks. After identifying the selling climax low of December 24, when 48.5% of stocks made new lows, I recorded two 90% upside days (90% of volume and upticks came on the upside).
So, I need to apologize to everyone for not being able to do a verbal recorded call last week, or write a missive the last three sessions of the week. The problem was that while in NYC my media events began around 6:00 a.m., followed by more media events, then it was portfolio manager meetings.
"Time is Archimedes’ Lever in Investing - Archimedes is often quoted as saying, 'Give me a lever long enough and I can move the earth.' In investing, that lever is time. The length of time investments will be held, the period of time over which investment results will be measured and judged, is the single most powerful factor in any investment program.
Ned Davis wrote the book “Being Right or Making Money” in 1991. As most of you know, Ned is one of the best on Wall Street. The book resides on my desk, because I often refer to it.
Recently, much has been written, and said, about a retest. The reference is about the major indices pulling back to their recent December closing lows, creating a double-bottom in the charts.
Everyone knows how to win. Few know how to lose. Yet the secret to making money in the various markets is knowing how to lose. How to control your losses.
Watch out indeed, for 2017’s December low was violated in February 2018 and the rest, as they say, is history. Accordingly, it will be interesting to see what the December Low Indicator says in 2019.
Recently, our email box has been filled up with questions like this one from one particularly bright Raymond James financial advisor, namely, Michael McCormick of the venerable Chicago-based money management firm of McCormick Retirement Group, who wrote, and we responded...
Looking around, we don’t see many people who used to be in this business. Maybe they just couldn’t take being wrong. Or, maybe their clients couldn’t take their claiming they were always right. Or, maybe they got tired of issuing lots of predictions while, at the same time, watching the stock market going nowhere this year.
For years we have quoted Benjamin Graham’s book The Intelligent Investor, which Warren Buffet has said is the best book ever written on investing. The operative quote from said book is “The essence of portfolio management is the management of risks, not the management of returns.” He closes that thought by saying, “All good portfolio management begins, and ends, with this premise.”
Years ago we studied the tactics of Jesse Livermore, along with a number of other stock market operators, and have found many of those strategies to be just as valid today as they were decades ago.
The Leonid meteor shower hit its zenith over the weekend, and you didn’t even need a telescope to see it. You did need a warm blanket, but all you had to do was lay down on your back to enjoy a great show.
We could almost hear our history professor espousing Hoffer’s works recently when we were asked by a particularly smart media type if trust and character would really command a “premium” price earnings (P/E) ratio in today’s environment? Our response was “of course,” and as an example we offered up a quote from John Pierpont Morgan...
Up until last Monday (October 29, 2018) we had focused on our short-term model’s “sell signal” of October 2, 2018. The “S” word alone makes most investors uneasy. They find the “B” word, “buying” more pleasant.
And the perfect storm has hit the equity markets over the past month. However, we had an early warning of such events when, on October 2, 2018, our short-term proprietary model registered a “sell signal” and we said to sell trading positions.