Mid summer 2021: Tactics and strategy
Year 2021 has been very kind to the believers in the equity culture who had the courage to stay invested during the impressive multi year run since 2009. In the recent past, we have experienced brutal corrections in 2018 and 2020.
Market Comment August 2021
The effects of the pandemic on the economy have continued to diminish, but risks to the economic outlook remain. Progress on vaccinations has limited the spread of COVID-19. However, the pace of vaccinations has slowed, and the “delta” strain of the virus is spreading quickly in some areas.
Interest rates and Earnings : March 2021 experience and Tactical Investment ideas
I) The reason growth stocks suffer more with abruptly rising interest rates. The valuation of every investment should correspond to the present value of future cash flows . If we invest in a house, in education or in a stock we expect positive cash flows for several years and should compare them with the cost of Investment
On Market Timing
Very often we hear and read comments on the necessity to engage in excessive or radical market timing. Some old truths : A) ‘‘The graveyards of stock market participants is full of market timers ‘.’ B) “Sell Rosh Hashanah buy Yom Kippur”
Rationality and equilibrium in the economy and in capital markets : From Theory to Practice.
The issues of rationality and the attainment of equilibrium (as well as its stability and uniqueness ) in the macro economy and in capital markets lie in the center of the most important theoretical debates. Great original theories stressed the rationality of economic agents and investors.
Year 2020 in Retrospect
2020 in retrospect ….It was a very difficult year ! Indeed, it was a very difficult year (to paraphrase the song) for mankind, personal lives, relations, business and the stock market. Some Lessons We experienced an extreme shock, not witnessed since 1918, in early spring as the virus started spreading and led business activity ro be seriously […]
Transparency, Regulation and Fees
Traditional and Alternative Investments a) The recent revelation of the Madoff scheme dwarfs the losses at Societe Generale, Sumitomo or Barings Bank. This ‘Ponzi’ scheme reported phony high returns, attracted investors and paid outflows from inflows of funds. b) Lack of transparency and inadequate regulation are surprising and become a major issue in alternative investments. The black box approach in reporting profits and losses creates several questions.
…It is Elementary Mr Sherlock Holmes: The Growth Rate Should be Higher than Interest Rates
Part Α: Today’s Problem The great classical economist D. Ricardo is regarded as the father of the Equivalence Principle: When the Government borrows in order to spend, the citizens will reduce private consumption since they can be certain that they will be taxed in the future. Therefore, we have an equivalent reduction in private spending, irrespective of whether government spending is financed by present taxation or issuance of bonds (future taxation). Consumers are either perfectly rati
September 2010 Report
"Park Avenue apartments belong to the optimists" We would like to repeat our longer term view : Valuations relative to bonds and cash are compelling. Following the worst decade since the 1920's (all possible decades are included) we believe that the future of business is brighter and that equities will outperform alternative assets.
Second Quarter 2009
A quarter that brought a lot of pain to the Bears At the end of the first quarter of 2009 our report posed the question on whether we are experiencing the end of business, finance and capitalism or one of the greatest buying opportunities. We now have an answer: The S & P recovered by about 50% since the March lows exhibiting one the greatest performances in history.
NOVEMBER 2008
The Mother of all Recessions: All Sectors and Regions Stock market’s predictive Ability a) It appears that we are experiencing the worst recession since WWII. Housing, Banking, Shipping, the Auto Industry, Commodity producers, Industrial and Retail companies are suffering like never before.
May 2009 report
A nice thing about Bear markets is that they do not last Forever. a) Do we witness a bull rally, a bear rally or a stabilization process? The trillion dollar question remains. The recovery from the March 9 lows continued in April and we experienced the best monthly performance since March 2000. Financials recovered by about 70% from their lows. Moreover, the recovery continued in the first days of May. Probably, the free market system, business and finance are not dead after all!
Economic Hardship, Patience and Need for Effective Policies
A) We experienced the worst stock market performance in January ever, the worst last five months ever, the worst year along 1931 and 1937 and the worst decade (including January) in history! All asset classes (housing, stocks, bonds and even cash around the world) have suffered! We witnessed the worst disaster in financial institutions in history.
Market report End September 2008
Focus on the problems arising from pricing illiquid assets at market distressed prices a) September was a month that all investors would like to forget. Unfortunately the start of October was even worse. Last month stock prices experienced one of the weakest months in history. The major stock averages in USA and Europe last month suffered about 9% while the dollar appreciated and commodities fearing recession sold off. About 20 trillion $ in world stock market capitalization (about 30%) have no
End 2010 Report
Strategic and Tactical Allocation for 2011 We all know that in financial Investments : “The rear view window is much clearer than the front view” and “Hindsight is always 20/20 (perfect)” Moreover, we would like to state emphatically that : "Strategy (not Tactics) will determine long- lasting success", and "Investments should be approached with the planning involved in a marathon race and not as sprint event".
END 2009 REPORT
In our end of year 2008 report we predicted that the markets might rebound from an extremely oversold condition. Regression to the mean is a statistical fact of life in several disciplines (including medicine, biology, physics and economics ) The argument that “This time is different” can become both dangerous and costly.
Four major Bear Markets and two World Wars
The death of Business, Finance and of Equities? OR The Greatest Buying Opportunity of the Last 60 Years??? a) Since 1900 the world economy has experienced four major bear markets and two world wars. (i) The 2008-2009 Housing and Financial Bear market: The world index had fallen 53% until the end of 2008 and added over 20% in the first two months of 2009.