Down goes the Dow

Investing in stocks should be based on cash flows. That's an interesting concept.

Jeff Gundlach says "passive investing is a myth." More:

http://www.zerohedge.com/news/2017-05-08/jeff-gundlach-explains-why-its-time-sell-us-stocks-buy-emerging-markets

How did Gundlach's trade recommendation from last year's Sohn conference fare? In 2016, Gundlach recommended shorting the Utilities Sector ETF (XLU) while buying the Mortgage Real Estate Capped ETF (REM). While the utilities ETF returned 8.8% during the past 12 months, this is nearly 10% less than the S&P 500's 18.5% return, while the long end of his trade, the Mortgage ETF, returned 28%, for a generous ~20% return.

...go long.

Yes, long EM, short S&P....

JG

I hope you all enjoyed the nice respite from trolling we had around the weekend. It's over now that Igy has returned and brought back his aliases and posts from authors that have long been discredited here and elsewhere.

Yes, Gundlach and Hussman have been discredited, and that is why they are so often quoted. Go take a Gruntz.

Igy

How quickly this thread goes back into the sewer when Igy is around.

Yea, and you and your clones can keep patting yourselves on the back for your collective wisdom. And besides you don't have to read anything factual to counter your misguided views.

I don't think the issue is Gundlach as much as it's zerohedge.com. Those are not people that any upstanding financial person would take seriously given their well documented past.

Ben There wrote:

I don't think the issue is Gundlach as much as it's zerohedge.com. Those are not people that any upstanding financial person would take seriously given their well documented past.

Are you happy Now?

Ignore, ignore, ignore that guy

No, you shouldn't ignore Jeffrey Gundlach, he has quite a record.

I told you to ignore that guy, and I didn't mean Gundlach.

Not good is an article from July of 2016.

Profit surge continues - justifying high valuations?:

http://www.foxbusiness.com/features/2017/05/06/profits-jump-spending-lags-wsj.html

The largest U.S. companies are booking their strongest quarterly profits in five years, as firms reap the benefits of years of belt tightening and finally see a pickup in demand. But part of the improvement has come from keeping a lid on spending, and many CEOs remain reluctant to change and open their wallets for new projects, plants and people.

Profits at S&P 500 companies jumped an estimated 13.9% in the first quarter, growing nearly twice as fast as revenue. The gains stretched across industries, from Wall Street's banks to Silicon Valley's web giants, and were helped by a rebound in the battered energy sector. The picture was a marked improvement from a year ago, when profits fell 5%, and was the best performance since the third quarter of 2011.

Ghost of Igloi wrote:[/b

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

The better question is will you admit to yours?

We all know the answer. NO!

"firms reap the benefits of years of belt tightening and" ....stock buybacks

"Years of slow economic growth have trained companies to be lean, something that amplifies earnings when the top line finally does pick up. Heavy-equipment maker Caterpillar Inc. reported its first quarterly sales increase since 2015, with revenue rising about 4%, but doubled its profit, excluding restructuring costs."

....of course, excluding restructuring costs, but if you include them well, not so good....

mellon wrote:

Ghost of Igloi wrote:[/b

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

The better question is will you admit to yours?

We all know the answer. NO!

I will admit to this, I am surprised that investors have learned very little since 2009. We will see how it all plays out Mr. mellon , won't we?

Igy

Today from Lance Roberts on the rise of corporate earnings:

"Currently, while earnings have ticked up modestly with the recovery in oil prices, the price of the S&P 500 has moved substantially more than the earnings recovery would justify.

Furthermore, the recovery in earnings, without the direct bottom line impact from tax cuts, may be fleeting as the dollar remains persistently strong.

Of course, we already know much of the rise in “profitability,” since the recessionary lows, has come from a variety of cost-cutting measures and accounting gimmicks rather than actual increases in top line revenue. As shown in the chart below, there has been a stunning surge in corporate profitability despite a lack of revenue growth.

Since 2009, the reported earnings per share of corporations has increased by a total of 221%. This is the sharpest post-recession rise in reported EPS in history. However, that sharp increase in earnings did not come from revenue which is reported at the top line of the income statement. Revenue from sales of goods and services has only increased by a marginal 28% during the same period.

In order for profitability to surge, despite rather weak revenue growth, corporations have resorted to four primary weapons: wage reduction, productivity increases, labor suppression and stock buybacks. The problem is that each of these tools creates a mirage of corporate profitability which masks the real underlying weakness of the overall economic environment. Furthermore, each of the tools used to boost EPS suffer from both being finite in nature and having diminishing rates of return over time."