Category Archive: Finance & Markets
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Evaluating 3 Bullish Arguments
These are indeed interesting times that we live in. As the markets elevate higher on the back of the global central bank interventions it is important to keep in context the historical tendencies of the markets over time. It is not uncommon at major market peaks to see“irrational exuberance” begin to grip the markets. In March [...]
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Proposal for New Hedge Fund Fee Structure: 1% + 33% of Alpha
One of my pet peeves is the way that insiders — whether corporate CEOs, hedge fund managers, or elected politicos — capture compensation (or credit) for normal cyclical gains they had little or nothing to do with. This is the approach favored by the Crony Capitalists — those people pretending to be free market participants, [...]
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Weighing the Week Ahead: Time For More Volatility?
Eureka! Markets can move in both directions – even in a single day! The relentless market rally since the fiscal cliff was averted has left everyone expecting a correction, looking for an entry point – or both. This came to a sudden end last week. We can see this readily from Doug Short’s graphic summary [...]
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Great Graphic: G3 Bond Yields–One Global Capital Market
The rise of US Treasury and Japanese government bond yields has captured the imagination and focused the attention of investors. The rise in yields have knock on effects on bank’s, which are significant owners of sovereign bonds. Unrealized gains get pared and the capital levels are eroded. This Great Graphic, created on Bloomberg, shows 10-year yields [...]
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Is Jamie Dimon Really Out of the Woods With Shareholder Thumbs Down on Splitting CEO/Chairman Roles?
There’s a surprising degree of blogosphere acceptance of JP Morgan’s messaging on the shareholder vote today regarding whether to split the CEO and Chairman roles, that this result was a vote of confidence in his prowess as CEO. Yet New York Magazine described the extent to which Dimon had to call in the big guns like Warren [...]
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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 [...]
