Archive for January, 2013

Uh-Oh: NYT’s Front Page Cover Indicator

“Americans seem to be falling in love with stocks again.”


That is the first sentence of a front page NYTimes article, titled As Worries Ebb, Small Investors Propel Markets.

The rest of the article is just as bullish:

“Millions of people all but abandoned the market after the 2008 financial crisis, but now individual investors are pouring more money than they have in years into stock mutual funds. The flood, prompted by fading economic threats and better news on housing and jobs, has helped propel the broad market to within striking distance of its highest nominal level ever.”

To be sure, there are some caveats throughout:

“While the rising market may lift the nation’s collective spirits, it will not necessarily restore everyone’s portfolios. In good times and bad, many individual investors tend to buy and sell at precisely the wrong moments. They dump stocks after the market falls and buy stocks after the market rises, the opposite of what investors aim to do.”

But overall, there is no escaping the sentiment of either the headline of that first sentence or the gist of the entire column. Stocks are back, baby! Now is the time to jump onboard.

I have been fairly selective as to what qualifies as a magazine cover indicator and what is merely media noise. Let us look at the details of this one:

1) A mainstream non-business publication;

2) Front page or cover story

3) About rallying asset class

4) With a decidely bullish tone to it

That is how I determine when the magazine cover has been initiated. I cannot think of any reason why this one does not qualify.

This chart accompanied the article:

A Steady Ascent

Source: NYT



Uh-Oh: Time Magazine on Housing (June 6, 2005) BEARISH
Uh-Oh: Facebook’s Zuckerberg is Time Man of the Year (December 17th, 2010) BEARISH
Uh-Oh: Gold on the Cover of NYT Magazine? (May 15th, 2011) BEARISH
NYT Sunday Business: Magazine Cover Indicator? (January 1, 2012) BULLISH
Barron’s Cover: Don’t Lose My Money (January 28th, 2012) BULLISH
Magazine Cover Indicator: New York “End of Wall Street” (February 6th, 2012) BULLISH

As Worries Ebb, Small Investors Propel Markets
NYT, January 25, 2013

Category: Contrary Indicators, Investing, Psychology

My Hometown

My mother had a two-tone Maxima, light and dark blue. It replaced the five cylinder Audi which was a great car when it ran right, which was rarely. Only buy Japanese cars. Unless you’re rich, or leasing, or both. And it was in this car I found myself driving on Route 7 from Middlebury to…Read More

Category: Music, Weekend

Prisoner of the Bureaucracy

Prisoner of the Bureaucracy
By John Mauldin
January 25, 2013



Greece Must Stay in the Euro
Beware of Greeks Bearing Bonds
Contagion, Thy Name Was Greece
Prisoner of the Bureaucracy
Toronto, New York, Washington DC, Las Vegas, and Argentina


I wrote some time ago that Greece had a choice between Disaster A: staying in the euro; and Disaster B: leaving the euro. I have recently come back from four days in Greece, meeting with lots of people at all levels of society, and will share with you in this letter my analysis of their choices and the results. I’ll also have a few things to say about what the developments in Greece might mean for the rest of Europe and the developed world.

I penned these words in January of 2010:

“Everyone knows the problems of Greece. There is no political will in the country (so far) to do what Ireland has done, and really cut their budget. I think Spain is an even bigger nightmare for the EU when compared to relatively small Greece. Italy? Belgium? Portugal? All those countries (and their voters) will be watching to see how the EU deals with Greece.”

Which was good for Greece, as it gave good reason for the rest of Europe to care about what happened to Athens.

Greece Must Stay in the Euro

Let’s start with the conclusion: they have chosen to stay in the euro. If a depression meets your definition of an economic disaster, then it is reasonable to conclude that their choice has been a disaster. Greek GDP is projected to be down by 25% by the end of 2013, as measured from the beginning of the crisis. Exiting the euro at this time would only double the disaster. They must now finish what they began. As we will see next week, this may be the story all over Europe. The cost of breaking up the euro, or of a country leaving on its own, is simply now too high. For better or worse, the marriage must endure.

Let’s rewind the tape to see what I meant when I said that whatever Greece decided to do would be a disaster. At the beginning of the crisis, Greece was totally dependent on borrowed money both to finance its government spending and its massive trade imbalance in the private sector. While the cause of the crisis was too much debt and a deficit (both public and private) that was out of control, the immediate trigger was the loss of access to the bond market as interest rates rather quickly spiraled out of control.

Let’s look at two graphs. The first is the Greek ten-year bond for the last five years. Notice that three years ago Greek interest rates had not yet moved up. The bond market was clearly not seeing what I and other observers (and multiple hedge funds) were seeing: Greece simply could not pay its bills. Greek (and peripheral-country) debt had become the new subprime. But European leaders were in massive denial about Greek solvency. You only have to do a simple Google search to find dozens of quotes from said leaders assuring us that Greece would not default, almost right up until the moment they did! (One even admitted that it was necessary to lie about it!)

The second chart is Greek two-year debt. By this time last year interest rates had skyrocketed to 177.37% (and bond values had plunged!).

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Category: Think Tank

Your Three Investing Opponents

“Tough Year!” We hear that around the office nearly every day – from professional traders to money managers to even the ‘most-hedged’ of the hedge fund community. This year’s markets have perplexed the best of them. Each week brings another event that sets up some confusing crosscurrent: call them reversals or head fakes or bear…Read More

Category: Apprenticed Investor, Investing, Psychology

Tea Party Membership Cards

Source: Talking Points Memo

Category: Humor, Politics, Weekend

Shiller: U.S. Housing Decline `Could Go On’

Robert Shiller, a professor at Yale University and co-creator of the S&P/Case-Shiller index of property values, talks about the global economy and the U.S. housing market. He speaks with Tom Keene on Bloomberg Television’s “Surveillance” on the sidelines of the World Economic Forum in Davos, Switzerland. (Source: Bloomberg)

Bloomberg, Jan. 24 2013

Category: Real Estate, Video

10 Weekend Reads

Ahhh, good to be back. Here are my long form pieces of journalism to start your snowy weekend: • Siri Rising: The Inside Story Of Siri’s Origins — And Why She Could Overshadow The iPhone (Huffington Post) • What Is Middle Class in Manhattan? (NYT) • Exposed: The regime of fear inside Barclays – and…Read More

Category: Financial Press

Cost of Borrowing Shocks and Fiscal Adjustment

Category: Think Tank

Greatest Movie Comedies of All Time

Flying home today, I recalled something someone sent me — a list of the funniest comedies of all time, with the number 1 flick . . . Caddyshack.

Now, for those of you not of a certain age, who may not have seen Caddyshack, it is an amusing little film filmed with memorable quotes and an insane, hilarious performance by Bill Murray. But funniest movie comedy of all time? It’s not even in the top 10.

Which raises an interesting question: What are the all time funniest films?

No rules (like last time) — the only requirements: 1) Funny and 2) Movie.

I’ll get you started with a list that I am sure I rearrange easily into other orders:

50. Pee-Wee’s Big Adventure
49. Rat Race
48. Life of Brian
47. When Harry Met Sally
46. Planes, Trains and Automobiles
45. Fast Times at Ridgemont High
44. Clueless
43. Airplane!
42. It’s a Mad Mad Mad Mad World
41. Naked Gun

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Category: Film, Humor

How to Create Great Slides for Presentations

How to create great slides for presentations from Mike Jeffs

Category: Think Tank