Monthly Archives: November 2013

November 27th 2013 – Smashing through the wall of worry

There is a certain market doctrine that in order to rise stocks are meant to climb a “wall of worry”. Along with other immutable laws of free market economics this market has completely ignored this age old adage. Forget climbing any walls of worry. That is for wimps. This market just smashes through them!

Now that everyman and his dog are screaming to anyone listening to buy stocks, is it folly to stay out of this incredible move?

Perhaps. Perhaps not.

 

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26th November 2013 – Crash or correction – Shiller P/E crosses the all important 25

A running theme here at Spreadbet Magazine has been this market’s refusal to revert to the mean. Mean reversion is the quintessential characteristic of price movements but thanks to the hugely distortive effects of quantitative easing, today’s investors/traders/speculators seem largely to have forgotten this. At some point they will be reminded of it, but the question is will this be in the form of a crash or a correction?

As things stand now, I am going to bet on there being a correction, not a crash. I’m certainly not suggesting shorting this market, but rather waiting until a decent opportunity presents itself to get long again.

 

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21st November 2013 – How long must we keep falling for it?

The financial sector has been the great con of both the Industrial and the Information Ages.

The free movement of capital has allowed humanity to strive forward in its pursuit of ever greater technological, scientific, engineering and societal feats. Unfortunately, for well over 100 years, those in charge of the flow of money have found ever more creative and deceitful ways and means of extracting their pounds of flesh. Generation after generation of financiers has shrugged off crash after crisis, which they’ve been instrumental in creating, managing somehow to preserve their primacy of position. Politicians and policy makers remain enraptured by the supposed intrinsic role this industry plays in the happy function of our society.

 

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19th November 2013 — No bubble here Part II

As if we needed it, last week we were served further evidence of the precarious position policy makers find themselves in and the poor state of journalism covering this crucial issue, which is likely to define several generations. This all took place in the events surrounding Janet Yellen’s confirmation hearing before the Senate Banking Committee and I am, of course, talking about how the Fed ever hopes to withdraw and unwind its Quantitative Easing programme.

The headlines after Yellen read her prepared remarks were what you’d expect in this “keep calm and carry on” world of ours – “Yellen sails through confirmation hearing”, “Yellen says imperative to promote strong recovery”, “Yellen says Fed has more work to do to promote recovery” etc etc.

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15th November 2013 — No bubble here – Part 1

Guggenheim Partners’ “Macro View” is written by the firm’s Chief Investment Officer, Scott Minerd. It is an excellent market round-up and is rare in that it offers genuine insight into what guides the decision making of one of the most successful fund managers around. And it’s free to sign up to!

OK so now I’ve got the fawning praise out of the way (and no I haven’t received a PR commission to write this blog) I want to draw attention to Mr Minerd’s latest piece. Building on last week’s theme, that liquidity drowned equity markets could be about to experience a crescendo similar to 1999, this week he’s used the S&P500 Equity Risk Premium as a means of further demonstrating that stocks still have some way to go in their irresistible march higher.

 

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13th November 2013 — Bowleven – a victim of insider trading?

Too many writers pussy foot around the goings-on in London’s Alternative Investment Market. This needs to change and something has to be done about this market.

Today there was an absolute shocker of an announcement from Bowleven (BLVN), but it was yesterday’s price action that has set alarm bells ringing.

I am convinced that there was insider trading of BLVN’s stock.

 

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12th November 2013 — Speculative buy: oil at $95.71

In August’s issue of SpreadBet Magazine I wrote that the Gold/Oil ratio suggested gold was due a rally and/or oil was due a pullback. Although I have remained bullish on gold throughout the summer, at the time I thought it more likely that there was a decent opportunity to short oil. And so there proved to be.

(As an aside if you haven’t added the Gold/Oil ratio to your watch list it probably is time you did…)

 

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8th November 2013 — Who do you think you are kidding Mr Draghi?

OK, referencing little war time ditties probably isn’t the most politically correct thing to do when talking about the ECB – but it made me chuckle.

Yesterday’s utterly, utterly pointless decision by Europe’s central bank to lower interest rates by a whopping 0.25% to 0.25% smacks of desperation and has convinced me the fear-on trade is due an almighty come back. In the last month we’ve seen the Fed’s nerve fail catastrophically, Carney suggest the BoE isn’t yet done in its efforts to prop up the financial sector and the Bank of Japan carry on with its extraordinary printing operation.

 

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6th November 2013 — Twitter IPO — portent of a market top?

I’ve had half an eye on the Twitter IPO over the last month. The big ticket IPOs rarely interest me. They are generally too much of a coin flip. I didn’t care about Facebook, I was bored by Royal Mail’s market debut and as for Zynga – well anyone who plays Farmville deserves to be shot, in my opinion!

 

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2nd November 2013 — Baltic Dry at 1500, what is it telling us?

I know we have the charting equivalent of a man crush on the Baltic Dry Index (BDI) at the moment, but it is such an important chart for anyone with the slightest interest in the health of the mining sector. And as regular readers of SpreadBet Magazine will know, if we have a bit of a man crush on the BDI then we are downright obsessive stalkers of miners!

To remind you, the BDI tracks 23 of the world’s busiest shipping lanes. Thanks to the dynamics of the shipping industry the BDI is extremely sensitive to increases and decreases in demand. This makes the chart prone to fairly extreme spikes. It is one of the purest indicators of global economic activity around and has been an excellent leading indicator for mining stocks in the past. The reason for this is because the overwhelming majority of raw materials are still shipped by sea. Therefore, it stands to reason that the more that is being shipped by sea the more materials mining companies are selling; simple really.

 

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