Da Bulls, Da Bears, and Da Uncertain
Da Bulls
How Bulls and Bears See Fed Policy
Bearish investors look at the chart below and immediately notice that Fed intervention in the form of QE1 and QE2 (quantitative easing program 1 and 2, or perhaps more accurately, money printing programs 1 and 2) occurred after substantial market declines. QE1 is announced after the Lehman Brothers collapse in 2008 and QE2 is hinted…
Going Hollywood
Early this week I appeared on a panel discussing gold at the world’s largest exchange traded fund (ETF) conference, which took place in Hollywood, Florida. Given that the conference was being held in a picturesque setting on the beach, there were plenty of opportunities to be distracted by sun, surf, and sand. (Full Disclosure: My…
The Fed Throws More Fuel on the Fire
Stocks are on quite a roll as 2012 gets underway. The S&P 500 is up more than 5% already — it’s on an annualized pace of 130% — which is its best start since 1997, according to Bloomberg. And stocks received a further lift yesterday afternoon following the latest Federal Reserve meeting. The Fed extended…
Is Natural Gas Oversold?
On Thursday, we initiated a position in the First Trust Natural Gas ETF for our Dynamic Moderate, Dynamic Appreciation, and Dynamic Ultra-Appreciation clients. The price of natural gas — used by millions of homeowners for heating — reached a new 10-year low last week at $2.32 per MMBTUs (1 million British Thermal Units), or 1…
Exploiting Logical Errors of Inference
In my book, Buy and Hold is Dead (Again), I discuss in some detail Woody Brock’s views on the logical justification for active portfolio management. Brock lays out three ways active managers can outperform. First, they can better forecast structural changes in the economy. Second, they can better forecast how investors will react to changes…
Balancing Fat Tails in Both Directions
One of the things we’ve been defending against over the last few quarters is a rise in system risk. In particular the European banking system has been under fire, and for many months we’ve been watching sub surface risks rising in the credit markets. Bank lending is what moves world growth, so the idea that…
Managing Different Kinds of Risk
Buy and Hold investors tend to view risk as ‘tame’ rather than wild, and often believe it can’t be managed. In this view, risk (defined as volatility) can be measured by a standard bell curve or normal probability distribution, where unexpected events are highly unlikely. Also, market movements are assumed to be completely random, so…
The First Five Days of January
The beginning of the year might tell you the future direction of the stock market. The five days of trading, or more specifically the direction of the move, has an amazing track record when the direction is up. The last 38 up ‘first five days of trading’ have been followed 33 times by remaining year…
A Quick Trip Through the Way-Back Machine
Visitors to the Investment section of our website — the new home of the Echoes from the PIT blog — will notice that we’ve added an Archive feature to the right hand sidebar. It includes the archive of all our previous posts, going back to May 2009. By my count there are more than 400…
