And Then There is Bernanke http://t.co/oGvuj9EP5z
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Category Archive: Finance & Markets
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Equity Risk Premium is High (This is Bullish)
Last week, I posted the above chart from the NY Fed’s Liberty Street Economics. This morning on Squawk Box, David Tepper of Appaloosa discussed it — and his comments reversed the futures from negative to positive. Here is a brief explanation of what this chart — a compilation of 29 valuation models — means: The equity risk premium is [...]
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Boring, Diversified, And (Still) Tough To Beat
Most investors suffer high fees and earn low returns. There are no sure-fire solutions, at least for the second problem, although playing defense by way of investing in a broadly diversified portfolio across the major asset classes with low-cost index products is a good start. This isn’t a silver bullet, but history suggests you can do quite [...]
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Two Key Drivers Lift Dollar, Pressure Yen
The break of the JPY100 has unleashed the animal spirits. The US dollar is broadly higher and equity markets are finishing the week on a strong note. Bond yields are mostly higher, led by a sharp 9 bp rise in 10-year JGB yields. Indeed, at almost 69 bp, the benchmark 10-year yield is the highest [...]
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No ‘Peak Natural Gas’ Anytime Soon
One does not hear much these days about “peak oil”, as new technologies are developed and implemented that, together with market conditions, make feasible the exploitation of previously uneconomical or irretrievable deposits. A new report by the Diplomatic Center for Strategic Studies (DCSS), based in Kuwait, just published, confirms an International Energy Agency report from [...]
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The Soaring Stock Market
Broad market indicators like the S&P500 have been making all-time nominal highs. What’s the significance of that for investors and the economy? S&P500. Source: Google Finance. Rather than just look at nominal stock prices, it makes more sense to compare the price relative to earnings. Yale Professor Robert Shiller has suggested relating the current inflation-adjusted S&P500 to the [...]
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Dow 20K – Halfway There
Three years ago I wrote one of my most controversial posts: Dow 20K. The Dow had been toying with the 10,000 mark, after a 10% correction. The news from Europe seemed to be terrible, and everyone was on board with the domino theory. We were in the midst of the worst May since 1940. The most bullish [...]
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The Whole & The Parts
One of the biggest challenges for successfully managing asset allocation comes from a familiar source: you. There are many resources to tap for excelling on the technical side of portfolio management. From researching fund products to sorting market valuations to dissecting risk and return, there are countless analytical tools at your disposal in the information [...]
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The Cost of (Equity) Capital
For years, the world’s largest banks have been up in arms over threats by regulators to increase their (equity) capital requirements. Making banks hold more capital, they argue, will force them to reduce lending and will increase their cost of funding, making credit more expensive throughout the economy. One of the chief defenders of the megabanks [...]
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Oh, No! 2013 Fiscal Cliff Could Crush Stocks!
Is there a more reliable fade than Donald Luskin? Exactly one year ago this week (May 4, 2012), Luskin exhorted WSJ readers to dump equities because The 2013 Fiscal Cliff Could Crush Stocks. “Do the math on dividend taxes” he advised, warning that dividend yields would be lower, and stock prices would be considerably lower — [...]
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Can You Say “Bubble”?
Yesterday’s Wall Street Journal had an article titled “Foosball over Finance” about how people in finance have been switching to technology startups, for all the predictable reasons: The long hours in finance. “Technology is collaborative. In finance, it’s the opposite.” “The prospect of ‘building something new.’” Jeans. Foosball tables. Or, in the most un-self-conscious, over-engineered, revealing turn [...]
