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« That 1937 Analogy Fits the Bigger Picture | Main | Hindenburg Omen Going Down in Statistical Flames »

Sunday, August 22, 2010

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Hockthefarm

Are today's earnings real:

http://www.chartoftheday.com/20100820.htm?T

H

Bull trade

Any sharp rally this week = LIGHTS OUT for the bears

More Bears have ended up as Prechter roadkill.

Account Deleted

Dow Jones futures before opening bell
http://niftychartsandpatterns.blogspot.com/2010/08/dow-jones-futures-before-opening-bell_23.html

twitter.com/DrBubb

Y.,
Why do you think incompetent and over-optimistic analysts are paid so much?

Is it because the excessive optimism makes it easier for Wall Street to steal from its clients?

What a bunch of clowns! I am keeping my money away from those Bozos

yelnick

Dr Bubb, most analysts are herd animals, trying not to be too outside the herd, so they look over each others shoulders for comfort. The really good analysts take a position that can subject them to derision until proven correct. Witness David Rosenberg. My overall point is not to be caught up in the "consensus" op[inion during a correction.

twitter.com/DrBubb

Thanks, a good point.
But I suppose it is "better" to be over-optimistic, since taht may be good for the firm's business. It is good to see the smart bears like Rosenberg, getting some positive press.

The problem is that most of Wall Streeet is now "short term greedy", rather than "long term greedy", and that means that they care less about how well their customers do. Result: many are running away.

JT

"Investors have pulled $33.12 billion from U.S. mutual funds this year through July, according to the Investment Company Institute, the mutual fund industry trade group. With the exception of 2008 (height of the financial crisis), that’s on pace to be the worst year for stock funds since the 1980s, reports The New York Times.

Investors poured $480.2 billion into mutual funds that focus on debt in the two years ending June, compared with the $496.9 billion received by equity funds from 1999 to 2000, according to data compiled by Bloomberg and the Washington-based Investment Company Institute.”

Just wait till the Asset Allocators start selling bonds and reallocating back into equities... The Equity Bears will be CRUSHED!!!

Michael

The economic numbers and expected earnings and P/E ratios by Wall Street analysts is indeed interesting.

That having been said, it is extremely important to note ( especially to people who are new to the financial markets, as traders ) that the market's reaction to aggregate earnings is much different than the reaction to firm earnings.

http://www.simon.rochester.edu/fac/warner/Jerry%20Papers/Earnings.pdf

Moreover, the correlation of real stock returns and GDP growth from 1958-2008 is more often than not Negative!!!

http://www.mscibarra.com/research/articles/2010/Is_There_a_Link_Between_GDP_Growth_and_Equity_Returns_May_2010.pdf


Michael

"Witness David Rosenberg. My overall point is not to be caught up in the "consensus" opinion during a correction." - Yelnick

Your statement assumes that the stockmarket has not already discounted expected earnings, and that there is a high correlation between earnings and equity prices.

David Rosenberg seems to have failed this most basic fundamental concept of "Investing 101A".

That is why he has been clammoring like a drunken sailor for a substantially lower S&P for the last 15 months, and has been horribly WRONG doing so.

Anyone remember his call back in mid-May of 2009 where he said "The Short-Covering Rally Is Finished, Here Comes The Leg Down"

http://www.businessinsider.com/david-rosenberg-the-short-covering-rally-is-finished-here-comes-the-leg-down-2009-5

Back then, the S&P 500 was trading around 900.
Anyone that folowed his advice and got short watched the market surge another 300 points in utter disbelief.

Trade what you see.
Not what you HOPE to see.
:)

Michael

"It is good to see the smart bears like Rosenberg, getting some positive press." - Dr. Bubb

Rosenberg a smart Bear???

Now that's pretty funny. Do you even have any idea what you are talking about? His "call" back in May 2009 at SPX 900 looks to have been anything but SMART.


yelnick

Michael, my point about rosenberg is not that he has been right, but that he has resisted the herd

Michael

Like Prechter, he MIGHT be right at some point when we see a correction in the market. But he MIGHT also continue to be wrong. The fact that he has resisted the "herd" all of this time provides no value whatseover.

Either way, Rosenberg has been completely useless when it comes to making calls on the US equity market BASED ON THE NEGATIVE MACRO-ECONOMIC that he uses as the basis for his calls.

He continues to believe that there is a strong correlation between the ECONOMY and stock prices. Sound familiar?


twitter.com/DrBubb

Michael,
His arguments make sense to me, and I have highlighted a recent video interview he has done on his website. You have cited a wrong forecast that he made. What about his many accurate forecasts?

You must be the only one on the planet who never gets it wrong. Personally, I find that a bit of humility works well with my trading.

Let's see where stocks go over the next month or two, and we can debate the accuracy of Rosenberg's views in November.

Daniel  - Taz

The Euro Swiss cross remains quite bearish. US Treasuries are on the verge of potentially going parabolic. Both of these are/would be quite bad for equities.

The problem for the bears however is the lack of conviction. The internal picture remains quite constructive from a medium-term viewpoint and suggests that we will get a complete retracement of whatever transpires in the next few days to weeks (for the bears we would need to see 1-2 days of downside with strong conviction to potentially negate the positive internal backdrop). So while I remain beared up to the hilt, I am not married to this position.

If bonds go parabolic, I am not sure how Neely will deal with the equity count (assuming stocks get ripped apart).

Taz

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