Market Insights

Nikkei is below DJI again

yogibearbull — Thu, 05 Nov 2009 14:49:08 GMT

Nikkei has crossed below DJIA again. It has happened few times before. Who would have thought that in 1990?

http://finance.yahoo.com/q/ta?t=my&l=on&z=m&q=l&p=m50%2Cm200&a=&c=&s=%5En225+%5Edji

End Of The "Great Recession"

jimmynj12 — Sat, 31 Oct 2009 16:17:45 GMT

Is the "Great Recession" presently winding down to an end?

Is this approaching end an illusion as happened many times during the "Great Depression" before it finally ended?

Are we in for multiple bumby false end illusions and, if so, can one predict what they might look like?

Is the present giant rise in the stock market the first of many illusions to come or is it really the ultimate proof that we can start to say goodby to the one year long "Great Recession"?

Advice needed re: AIB

freddie4 — Wed, 05 Aug 2009 17:57:41 GMT

Hello, I admit I'm completely ignorant about stocks and investments, being one of the working poor. I am writing on behalf of my 16-year old son, who decided to use his allowance money to buy some stocks after being told in his high school economics class that in the long-run stock pays off. After reading about Warren Buffett's recommendations, he put all his allowance money into AIB. Admittedly, it's not alot (about $300), but for him it's a fortune. Anyway, he has lost about 88% of his money. Could someone tell me why this stock is going down so much? Does anyone expect it to go back up? I'm not sure how to advise him. Thanks for your help.

I got out....

buster — Tue, 17 Nov 2009 10:55:02 GMT

I decided to hang onto my +37% plus dividends and get out of Veirx(Vanguard's equity income fund), yesterday. Wasn't thrilled with any of the choices but exchanged to Vfsux(Vanguard's short-term, investment grade bond fund). Now, we'll see....

Is this a recovery yet?

Riprock — Sat, 12 Sep 2009 01:44:07 GMT

Hi all,

Do we have some momentum going in this market? Do you think all the money on sidelines will start coming back in? Can I do a little dance around my computer? We made some money this week baby. Is most money that is on sidelines smart investors or just ones scared silly from downturn? When money comes back into market from timid investors, where does it go? Core funds? Balanced funds? Will they chase returns in Emerging Markets and Small Caps? What does everyone think? Thanks

Riprock

Health Care Stocks

Riprock — Mon, 09 Nov 2009 01:54:23 GMT

Hi,

What do you think the effect of the Health Care Legislation passing the House will have on the market and health care stocks this week, month, and rest of 2009? I got out of health care mutual funds last year; is this a time to get back in? It seems that this is mostly insurance based legislation.

Riprock

Cit to file bankruptcy!?

lucky7 — Sun, 01 Nov 2009 18:23:47 GMT

See M* report on a Wall Str. Journal report?

Maybe it is about time?

See link, http://online.wsj.com/article/SB125709781695721315.html?ru=MKTW&mod=MKTW

2.3 billion govt infusion at risk, noted in subheading. okay may not seem like much, but is this another round of trouble??? Hard to be an optimist. (sorry for the freudian slip of citi-correction noted)

Bob

Merger Fund

Toni B — Mon, 28 Sep 2009 00:15:28 GMT

I have heard good things about the Merger Fund(MERFX). With money market funds now paying nothing I was wandering about using the Merger Fund as a replacement for money market funds. The Merger Fund seems to make steady, if small, advances. Can anyone tell me their opinion of it.

Toni

Double Dip

lucky7 — Thu, 01 Oct 2009 22:00:01 GMT

Do you think we are or about to enter a double dip recession?

Bob

Dollar Rally Coming?

lucky7 — Thu, 29 Oct 2009 22:19:12 GMT

Dollar Rally Coming, at least per Gundlach of the successful TGLMX fund. Morningstar has article and video, from earlier this month. Here is link Dollar Rally Coming

Was at time looking for good unhedged foreign bond fund, but this changed my mind for now. What is your opinion????

Bob

Correlation as of late

pjhunter — Sun, 01 Nov 2009 02:36:11 GMT

Hi,

Seem like it gets really unfortunate, as correlation among equities, bonds, commodities, and foreign equities is way too high.

As of late all these move in same direction almost daily.

What can we do? What "other", non correlated investments should we put into our basket?

Much appreciate your insight.

How will Preferred Stock React??

Fairwind — Fri, 30 Oct 2009 21:14:01 GMT

At some point, the FED will be forced to start tightening things up, raising interest rates to defend the Dollar and cut off inflation before it gets out of hand.. Bond prices will sag as interest rates move upward..

Is it safe to say preferred stock, in general, will react the same way and share prices (which have still not recovered fully from the big crash) will drop once more as "safer" Treasuries become more attractive and spooked investors flee from risk? Are preferred stocks just too risky for individual retired investers to be holding in their portfolios?

Aden Sisters, Harry Dent

Ineophyte — Thu, 29 Oct 2009 01:38:21 GMT

I get each of their newsletters but only for the last several months. Was wondering if anyone had an opinion on them. Thanks.

Thomas

Who do the Chinese Borrow Money From; Their Fx Reserves, and Total Debt

tangent1.57 — Wed, 28 Oct 2009 19:19:37 GMT

Who do the Chinese Borrow Money From; Their Fx Reserves, and Total Debt

China has a DEBT/GDP of about 20% for their $4.3T economy. This means that their total DEBT is about $860B.

First of all, HOW DO THE CHINESE BORROW money when they have a pegged currency which can't be bought/sold by governments and institutional investors? The Americans can borrow money by issuing t-bills and bonds. How do the Chinese do this?

Second of all, since the Chinese own $800 of USDs in the form of t-bills and bonds, does this mean that the Chinese have a "REAL DEBT" of $60B (since $860B - $800B = $60B)?

Bloomberg article on shift in treasury offerings

Sudonim — Mon, 26 Oct 2009 05:44:36 GMT

Here:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1OOwqJXS2Kw

Is an article which reinforces some other things I've read regarding the Treasury's plans to extend the average due date of debt (from 49 months to 72 months). Borrowing longer term while interest rates are low makes sense (from the borrowers point of view).

However, some comments suggest that the additional supply will lead to longer term rates going up. I think I understand how additional longer term supply could conceivably lead to higher longer term interest rates... if there isn't adequate demand. However, I question if that is the goal and therefore the likely outcome.

On one hand, my understanding is that a steep yield curve is beneficial to the banks and they are the favored ones <spit>. In addition, I've read some things which suggest that we may see home prices fall through at least 2010 as a result of banks releasing their shadow inventory. Were mortgage rates to be rising during that time, it might encourage people to suck up the supply. Aside: a drop in home prices between now and then could also be used to mute/obscure the upcoming surge in CPI-U.

However, I get the feeling that the ultimate goal of the US (and all heavily indebted entities) is to achieve extremely low and preferably negative REAL interest rates for many years to come. 10-year treasuries are around 3.50% and although that may be low enough, the lower the better from a debtor's point of view. Up to a point at least, the US also desires a weaker currency. It seems as though a declining dollar essentially forces many other countries to maintain if not increase their treasuries purchases in order to keep a lid on their currency appreciation. If the US cuts back on short-term offerings and increases long-term offerings, might the foreign purchasers (and others for that matter) also have to shift to longer term and in doing so drive longer term treasury yields even LOWER? That is, unless they don't shift to controlling their currency through taxes on foreign inflows or investments period <gasp>.

Roubini

lucky7 — Sun, 25 Oct 2009 14:35:57 GMT

Roubini continues to be pessimistic to say the least. My question, for perspective, is whether he has at any point in his career been optimistic?

Bob

Inflation and interest rates, and inflation targets VS pegged currency

tangent1.57 — Thu, 22 Oct 2009 15:36:58 GMT

I'm analyzing the Black Wednesday of Sept. 16th, 1992, which caused the UK Sterling to be removed from the exchange rate mechanism (ERM). I am reading a lot about this, and I'm also slightly confused about this whole thing about pegged currency *VS* inflation targets, and interest rates *VS* currency appreciation.

Here is a link to an online article, and after this, I will pose a question:

From: http://www.economicsuk.com/blog/000182.html

"What was the lasting legacy? The Major-Lamont-Budd argument is that we are still enjoying the benefits of the fact that ERM membership destroyed inflation. The policy framework put in place after the exit in the autumn of 1992, including the adoption for the first time of an inflation target, paved the way for eventual Bank of England independence, and brilliantly created triumph out of disaster."

Question 1: Is adopting an inflation target MUTUALLY EXCLUSIVE to pegging your currency within a range of another currency? Another words, does China, which pegs its currency to that of the USA's, have the ability to change its rates? Or, does the USA, which has a target inflation rate, have the ability to peg our currency to others?

Question 2: Is it possible for a country to have (a) high interest rates but low inflation,or (b) low interest rates, but high inflation? If so, what are the macroeconomics of this?

Reasons for the markets direction?

oneslip — Thu, 15 Oct 2009 14:35:19 GMT

Why I think the market is headed south:

The government will be pulling back their financial support

The co.s will not be able to exceed earnings because all the cost cutting will be factored in

As the dollar continues to slide the price of Oil will continue to climb which will have a negative effect on an already strapped consumer, the government pulling back may stop some of this from happening

The unemployed is still rising just not as much as before which is going to continue to stall consumer spending and forclosures will continue

Banks are still holding toxic assets and lending is still tight, m2m accounting is saving them right now and low interest rates. The fed will need to pull back soon.

Finally, the p/e of the S&P is priced too high for the earnings going forward

Why I think the market will continue its climb up:

Cash on the sidelines will be looking for higher returns and is getting anxious after missing out on the ride up from the depths.

Some of the infrastructure programs will be started or continue and some will be hired

Money is cheap right now and some in a stable position will be able to expand and spend to help GDP

I find it much easier to come up with reasons for the market to falter then for it to continue to rise. Obviously from my post that I am looking at this from an average person on the street, but would appreciate if I am missing anything to fill in the blanks.

It has been proposed that the dollar will see a resurgence and value upward.

judyken — Sat, 24 Oct 2009 17:14:39 GMT

Where would you put your money if you believe this senario?

Who has the largest Variable Rate Loan?

dpanderson — Fri, 23 Oct 2009 04:30:46 GMT

If enough financing were done at a variable rate, would the US economy be placed in a situation of excessive risk?

Is borrowing money at a variable rate always riskier than at a fixed rate -- specifically, if the term of the loan is many years?

What is the largest amount of financing, that has ever been undertaken, not at a fixed rate? I'm not talking about persons - think big.

Dave

What would you ask these CEOs?

M*_Jeremy — Mon, 12 Oct 2009 19:51:16 GMT

Eighteen top management teams are coming to Chicago Nov 5th-6th for the Morningstar Stocks Forum. CEOs, CFOs and other executives will have a chance to explain their companies’ strategies for growing and strengthening their moats in a tough economic climate.

There will also be plenty of time for Q&A.

What would you want to ask these management teams?

Do you think the economy has truly bottomed? Will there be a double-dip? Do we need executive compensation reform? Or maybe something company specific.

-Jeremy

Scheduled to present are:

Company Name	Ticker	Moat
Alcon	ACL	Wide
Aptar	ATR	Narrow
BB&T	BBT	Narrow
Cintas	CTAS	Wide
CoStar Group	CSGP	Narrow
Ecolab	ECL	Narrow
Fastenal	FAST	Wide
General Mills	GIS	Narrow
IMS Health	RX	Narrow
Maxim Integrated	MXIM	Wide
Nalco	NLC	Narrow
National Oilwell Varco	NOV	Narrow
Realty Income	O	Narrow
Steel Dynamics	STLD	Narrow
Stericycle	SRCL	Wide
Strayer	STRA	Wide
Sysco	SYY	Wide

Home sales rise

chipmunk — Fri, 23 Oct 2009 19:26:17 GMT

"Home resales in September clocked the largest monthly increase in 26 years as buyers scrambled to complete their purchases before a tax credit for first-time owners expires.

"Sales jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million last month, from a downwardly revised pace of 5.1 million in August, the National Association of Realtors said Friday."

- Home sales rise 9.4 percent in September, Associated Press, October 23, 2009

Here is a bit of much needed good news, but it looks like Mr. Market is shrugging it off.

By the way, for those folks who want to take advantage of the tax credit, the deadline for closing the deal is November 30. Now is the time to buy, IMO.

Dan

Please explain/clarify Black Wednesday and the Fall of the Sterling

tangent1.57 — Wed, 21 Oct 2009 21:03:10 GMT

Please explain/clarify Black Wednesday and the Fall of the Sterling

I have many questions on George Soros' correct speculations against the Sterling (and Lira), and his bet on the Frank.

1. According to http://www.inthenews.co.uk/news/features/finance-features/productivity-monitor/black-or-white-$1133609.htm : "Soros guessed that the Bank of England would not raise its interest levels to those of other countries that used the ERM and would also not want to float the pound."

However, UK did raise interest rates to as high as 15% very briefly. Moreover, the UK DID allow the sterling to float as a consequence of Black Wednesday. Please clarify this for me.

2. Second of all, according to http://everything2.com/title/black+wednesday :
"For the Conservative government and John Major, however, this was the beginning of the end. The pound was devalued by 30%, and interest rates on Black Wednesday peaked at 15%. The ensuing embarrasment and financial turmoil are cited as the main factors in the collapse of the Tory party and their massive defeat at the 1997 General Election. Echoes of Black Wednesday are still felt to this day, as its memory is often called upon by opponents of Britain's entry into the euro."

I realize that Soros shorted about $10B in Sterlings. He was betting that the Sterling would weaken. Everything that he speculated on was correct, and his net profit that day may have been $1B. However, according to this passage, the Sterling went down 30%. This implies that his profit should have been $3B. Also, I strongly think that his profits were not all realized in just one day, but perhaps it was realized on November of '92. Why do I suggest this? Please refer to this graph, and you will see that the Sterling weakened by about 25%: http://www.x-rates.com/d/USD/GBP/hist1992.html

3. Most importantly, what I'm confused about is the interest rates and currency movement relationship. On one hand, if you lower rates, then your currency will strengthen. This mechanism prevents arbitrage. When the UK wanted to increase the rates just prior to Black Wednesday, they did so with the intentions of STRENGTHENING their currency. However, I though that by raising their rates, that this WOULD WEAKEN their currency due to the Fischer Relations. Please clarify.

Tobin’s Q Now Bearish Long-Term

Governor — Fri, 09 Oct 2009 21:57:32 GMT

The latest data for Tobin’s Q-Ratio, a valuation metric shown by academic studies to be highly predictive of market performance, show that investors should brace themselves for sub-par returns over the next 10 years.

“Tobin’s Q is now sending a long-term bearish signal,” said John Mihaljevic, whose publication, The Manual of Ideas, provides regular updates on movements in the Q-Ratio. Mihaljevic was a research assistant for James Tobin, the Nobel Prize-winning economist who introduced the Q-Ratio.

LINK

World Stock Market Historical Valuations (P/E Ratios)

dave1d — Sat, 17 Oct 2009 02:56:49 GMT

Does anybody know where I can find price charts of world stock markets (Hong Kong, Chile, etc.) with overlays of their historical p/e ratios?

Market Insights

Nikkei is below DJI again

End Of The "Great Recession"

Advice needed re: AIB

I got out....

Is this a recovery yet?

Health Care Stocks

Cit to file bankruptcy!?

Merger Fund

Double Dip

Dollar Rally Coming?

Correlation as of late

How will Preferred Stock React??

Aden Sisters, Harry Dent

Who do the Chinese Borrow Money From; Their Fx Reserves, and Total Debt

Bloomberg article on shift in treasury offerings

Roubini

Inflation and interest rates, and inflation targets *VS* pegged currency

Reasons for the markets direction?

It has been proposed that the dollar will see a resurgence and value upward.

Who has the largest Variable Rate Loan?

What would you ask these CEOs?

Home sales rise

Please explain/clarify Black Wednesday and the Fall of the Sterling

Tobin’s Q Now Bearish Long-Term

World Stock Market Historical Valuations (P/E Ratios)

Inflation and interest rates, and inflation targets VS pegged currency