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Ned Davis interview in Barron’s

Posted By Barry Ritholtz On April 17, 2004 @ 7:12 am In Finance,Media | Comments Disabled

barrons_ol_logo.gif [1]

We quoted Ned Davis in Friday’s commentary [2]. He has a full interview in Barron’s [3] today.

Ned is always worth reading; He has a consistent model driven by the supply and demand equation. Most importantly, he looks at a variety of quantitative indicators which provide additonal insight into the Supply/Demand question — beyond mere price.

Here’s the ubiquitous excerpt:

“We’re at a very interesting juncture. The fundamentals have gotten very bullish. Conventional wisdom says maybe there is some geopolitical risk, but based on the fundamentals, the outlook is clear-cut bullish. The thinking goes that more good earnings and a clear upturn in employment will be the trigger to get us above 1200 in the S&P 500 and remove any final doubts about the sustainability of the economic and earnings expansion.

For a contrarian, that’s the worst news there can be. The problem is when there are no doubts left, everybody is pretty much invested. Our own polls of sentiment indicate 68.1% of investors are bullish, which is well in the extreme-optimism zone, and that tells me some of the demand has been used up. At the same time, we’ve been watching the previous-week offerings data in Barron’s, a combination of initial public offerings and secondary offerings, and that is up to $64.7 billion in the past 13 weeks. I can’t say there is a magic number, but it was at $55 billion based on a 13-week average at the April top in 1998, which was as high as it ever was outside the bubble years. This is a lot of supply. These are the problems: There is too much optimism. There is no doubt left about the economy, and that’s a problem on the demand side. And on the supply side, the offerings bother me.”

As always, good stuff from NDR.

Sources:
Contrarian Jitters [3]
Barron’s MONDAY, APRIL 19, 2004 
A master technician sees a yellow light flashing

http://online.wsj.com/barrons/article/0,,SB108215678443785333,00.html


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2004/04/ned-davis-interview-in-barrons/

URLs in this post:

[1] Image: http://online.wsj.com/barrons/article/0,,SB108034671358166825,00.html

[2] Friday’s commentary: http://bigpicture.typepad.com/comments/2004/04/that_dont_impre.html

[3] Barron’s: http://online.wsj.com/barrons/article/0,,SB108215678443785333,00.html

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