Our basic stock market message remains the same. The cyclical bull market is clearly intact, and deserves the benefit of the doubt until bearish evidence accumulates. Although some warning signs are emerging (e.g. rising bond yields, investor complacency), the stock market shows no signs of topping out. Technically, the stock market continues to look very healthy, although it is obviously overbought on a short term basis (Exhibit 1).
Exhibit 1
Charles Hugh Smith submits:
Four key factors in the 1970s were very different from present conditions, and that argues against 1970s-style stagflation as a model for 2010-2020.
Sometimes history rhymes–but only for the first line. On the surface, there are reasons to anticipate a 1970s-style stagflation in the decade ahead: a stagnating economy beset by rising inflation.
Four fundamental factors that profoundly influenced the economy in the 1970-1980 period are not present today. As a result, we must be careful not to expect history to rhyme stanza after stanza.
Morningstar submits:
By Ben Johnson
The desire to best the markets through active investment management perhaps stems from the same intrepid spirit that sent Sir Edmund Hillary to the summit of Mount Everest and Neil Armstrong to the moon. While similar legends have been made trumping the financial markets (think of Warren Buffett or Anthony Bolton), the truth is that, as with any endeavor, there have been both winners and losers along the way. The winners inspire hope among the masses that they too can achieve greatness, while the losers are often forgotten. (In the investment industry this is often referred to as ’survivorship bias’.)
Today’s the big day for former Fed chairman Alan Greenspan, correctly selected as the first witness to testify at a three-day hearing of the FCIC (Financial Crisis Inquiry Commission) on the subject of “Subprime Lending and Securitization and Government-Sponsored Enterprises (GSEs)”.
Tim Iacono submits:
The first session, with the 84-year-old Greenspan as the only panelist, begins at 9AM EDT, so, if you live on the West Coast, either plan to get up early or set your DVR, though, aside from the FCIC website (www.fcic.gov), I don’t know where you’ll find it – maybe on CSPAN, but a quick check of their schedule for today doesn’t show it.
Tom Lydon submits:
Although exchange traded funds provide an easy way to gain broad exposure to different market sectors, not all of them are created equal. ETFs that track the same sector, related indexes, and even the same index will vary in performance because of a number of different factors.
For example, let’s compare RevenueShares Financials Sector Fund (RWW) to PowerShares Dynamic Financial Sector Portfolio (PFI). Both funds track the financial sector, but they differ in their index composition and methodology. RWW weights stocks by revenue rather than market value, while PFI looks at trailing stock performance amongst other factors. As a result, RWW loaded up on the banking giants while PFI invested more in regional and community banks. The result? RWW gained 97% to PFI’s 33% over the past 12 months, reports Reshma Kapadia for The Wall Street Journal.
Street One Financial submits:
Paul Weisbruch is the VP of ETF/Index Sales and Trading at Street One Financial, an ETF liquidity provider focused on quality trade execution as well as portfolio construction and product strategy in the ETF space. He has been actively involved in the ETF space from both a product and trading standpoint since 2000. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009.
In the lead up to April 15, Paul took time out of his busy schedule to discuss tax issues related to ETFs and ETNs with Seeking Alpha’s Jonathan Liss.
AllAboutAlpha.com submits:
If there has long been an elusive aspect of being at the helm of a hedge fund firm, it is having a proper exit strategy – a way to gracefully bow out of the business, hopefully with some good retirement coin in hand, while ensuring the continuity of the business and the financial best-interests of the other partners and stakeholders.
It is a problem for any big company, particularly an investment shop with a niche or edge that lies in large part with the expertise and even personality of its founder: What happens when the founder decides he’s had enough with the day job?
The Diplomat submits:
And does Japan’s ruling party know what it’s doing? A top economist raises serious concerns—and takes aim at the Fed.
When Japan’s finance minister says jump and the Bank of Japan responds, does that mean its independence is a sham? Or is the real show being directed by the bank itself?
By Value in Stock Market:
Earlier, I wrote that Facebook’s (FB) IPO is becoming a sucker’s bet. On its IPO debut, Facebook started at $42, hit a high of $45 for a brief moment, and then [...]
By Steven Vincent:
Let me start by clarifying something. I am not saying that the market could crash spectacularly in the next few days and that in that event the Facebook (FB) IPO would be a [...]
By Chuck Carnevale:
There is a confluence of factors that are painting a very odd picture of current investor behavior. Common sense and a careful analysis of the market dynamics between equities and bonds today would [...]
By Sami J. Karam:
Expectations of a robust housing recovery are not well supported by US demographics.
From Bloomberg News (February 8, 2012): Chief Executive Officer Jamie Dimon told investors and analysts in a [...]