Down goes the Dow

Now that's more like it! Back comes the conspiracy theorist side if K5. Very entertaining.

K5 Detector wrote:

Hi, K5/Igy! Perhaps if you offered some of your insight into the markets

Nobody has a problem with his opinion of what he thinks the market is going to do. Everybody has an opinion. But claiming your assessment has been accurate over 3 years (when obviously it has not) you lose all credibility.

You would do well to admit (up to this point) you have been wrong, but you still believe bad things are on the horizon. Insinuating there has been no benefit to being in the NASDAQ since 2000 is your way of being a stubborn jerk.

That old crook Carl Icahn is also betting against the market.

We celebrated Cinco de Mayo with another S&P record high! Take that, France! 😀

Earnings Scorecard: As of Friday (with 83% of the companies in the S&P 500 reporting actual results for Q1 2017), 75% of S&P 500 companies have beat the mean EPS estimate and 66% of S&P 500 companies have beat the mean sales estimate.

It's a good time to be invested.

Earnie wrote:

Earnings Scorecard: As of Friday (with 83% of the companies in the S&P 500 reporting actual results for Q1 2017), 75% of S&P 500 companies have beat the mean EPS estimate and 66% of S&P 500 companies have beat the mean sales estimate.

For QI 2017, est Reported EPS now $28.09, was $26.41 last week! If this holds up it will mean back to back quarters of 27% YOY growth of earnings. $28.09 will also be the largest EPS ever; but not of earnings. Q III 2014 was $243.998 biillion and Q I 2017 would be $241.058 billion. There was a 3.4% reduction in the divisor due to buybacks.

With Macron winning in France, I think we can expect a good day for the markets tomorrow.

Odd that something like this affects the value of a company's stock.

But it does.

The market is a casino and we ain't the house.

I don't think it's odd. Certainly government actions, or inactions, affect the business atmosphere which obviously has an effect on the markets. Look at what happened after Trump's election. The markets are forward looking and they react to what they think will happen.

On a separate note, it's nice to see the thread mostly return to an intelligent discussion. The last 72 hours, or so, have mostly been a breath of fresh air.

Investment Advisor wrote:

The markets are forward looking and they react to what they think will happen.

“Stock prices returned to record levels yesterday, building on the rally that began in late trading on Wednesday... ‘It’s all real buying’ [said the head of index futures at Shearson Lehman Brothers], ‘The excitement here is unbelievable. It’s steaming.’ The continuing surge in American stock prices has produced a spate of theories. [The] chief economist of Kemper Financial Services Inc. in Chicago argued in a report that, contrary to common opinion, American equities may not be significantly overpriced. For one thing, [he] said, ‘The market may be discounting a far-larger rise in future corporate earnings than most investors realize is possible, [and foreign investment] may be altering the traditional valuation parameters used to determine share-price multiples.’ He added, ‘It is quite possible that we have entered a new era for share price evaluation.’”

- The New York Times, August 21, 1987 (the S&P advanced by less than 1% over the next 3 sessions, and then crashed)

all time low on the VIX, as far as I can tell.

amazing stuff.

From John Hussman, Weekly Commentary 5/8/2017:

"As Grantham mentioned, we do see investors engaging in put-writing strategies as a way to generate "income." In the illusion that stocks cannot decline steeply, these strategies have become so aggressive that implied option volatilities were recently driven to levels seen in just 1% of history. That's not a crash warning by itself, but depressed volatility did appear in combination with divergent market internals and overvalued, overbought, overbullish conditions approaching the 1987 and 2007 peaks. In my view, shorting cheap put options in a high-risk environment like this one is like writing cheap auto insurance at the Demolition Derby. In the short-run, these strategies crush the volatility index (VIX), but if (and I expect when) a steep market loss turns those short puts into in-the-money obligations to take stock off of other investors' hands at a fixed price, they are likely to contribute to an acceleration of selling pressure, just as portfolio insurance did in 1987."

sounds right.

and it sounds like options volumes are just drying up - people aren't using options anymore to hedge with. I suspect they use ETFs to do the job for them.

https://www.wsj.com/articles/traders-are-fleeing-the-options-market-1494158400

Makes sense, in that, if no one is willing to buy the other side of the contract it is impossible to issue to demand.

be useful to Hoka11 buyers wrote:

https://seekingalpha.com/article/4051193-deckers-activist-hit-run

please thank you

Any of you guys follow Marcato and the UGG/Deckers deal?

What does it mean for the Hoka division?

All you King Of the hedge Funds type guys help a kid out

"At present, our own recession ensembles, as well as ECRI's official views, remain firmly entrenched in the recession camp. This feels more than a little bit disconcerting, as the entire investment world appears to have the opposite view. My problem is that the data don't support that rosy "U.S. leads the world off the recession track" scenario. Leading data leads. Lagging data lags. Weak data is weak data. To anticipate a sustained economic upturn here would require us to place greater weight on weak, lagging data than we presently place on strong leading data. It's really that simple. If the evidence turns, we will shift our view - and frankly with some amount of relief. At present, though, we continue to expect a concerted economic downturn."

- John Hussman, Jan 9 2012 (the Dow is up about 70% since then)

"Having anticipated both the 2000-2002 and 2007-2009 market collapses, and having advocated a constructive or even leveraged investment outlook after every bear market decline across three decades in the financial markets, we’ve come out admirably over the course of complete market cycles - the notable exception being the advancing half-cycle since 2009. It’s impossible to appreciate present market risks without recognizing the difference between present conditions and those that prevailed during most of the period from 2009 through 2014.

As I’ve frequently noted, our own difficulty in the recent half-cycle followed my insistence in early 2009, after a market collapse that we fully anticipated, to stress-test our methods against Depression-era data. The resulting methods improved the robustness of our discipline to Depression-like outcomes, but they also captured a historical regularity that turned out to be our Achilles Heel in the face of the Federal Reserve’s zero interest rate policy. In prior market cycles across history, the emergence of extreme “overvalued, overbought, overbullish” syndromes was regularly accompanied or quickly followed by a shift toward risk-aversion among investors (which we infer from the uniformity of market action across a wide range of securities and security types). Because of that overlap, these “overvalued, overbought, overbullish” syndromes, in and of themselves, could historically be taken as reliable warnings of likely air-pockets, panics, or crashes. Unfortunately, the Federal Reserve’s zero interest rate policies disrupted that overlap. With the relentless encouragement of the Fed, investors came to believe that there was no alternative to speculating in stocks, and even obscene valuations and overextended conditions were followed by further speculation. In the face of zero interest rates, it was necessary to wait until market internals deteriorated explicitly before adopting a hard-negative market outlook. We implemented that restriction to our approach in 2014."

John Hussman has admitted to his mistakes. Will you admit to yours when he is right and you wrong?

He's wrong far more often than he is right.

"Hussman is a very bright man. He provides compelling analysis and opinions, which I typically find quite interesting. The only problem is that the evidence, including his own track record, demonstrates that investors are best served by ignoring his opinions."

http://www.etf.com/sections/index-investor-corner/23004-swedroe-why-care-what-hussman-forecasts.html?nopaging=1