Posts filed under “Analysts”

Bob Farrell’s Rule #9 in Action

I think it’s likely that I introduced Bob Farrell’s Market Rules to Remember to the blogosphere (albeit to a smaller audience), as they’d been an integral part of my upbringing in the business and I was eager to share them when I started blogging.  (BR posted them here in August 2008.)

That said, let’s have a look at Farrell’s Rule #9 which states:

9. When all the experts and forecasts agree – something else is going to happen.

With the understanding that it’s early August, that there are almost five months left in the year, that the Trading Gods will frown upon what I’m about to do and that I’ll wind up with copious amounts of egg on my face, I offer up the following look at what the consensus was saying with regard to year-end S&P500 levels just a very short time ago (originally via a Bloomberg terminal and circulated liberally).  I simply do not have it in me to list any individuals’ names; I’ll leave it to the reader to figure out the who’s who.  Caveat:  There may have been updates to these forecasts since the time I first received them, but these were, in fact, the forecasts not all too long ago.  And I recently attended a meeting at which one strategist who’s officially in spitting distance of the mean provided attendees a “whisper” number closer to the high.  Oh well.

(We closed last year at 1257.)

So, the one thing that we could easily have inferred from this data when it was published was that the S&P would not close at (or near) 1400, which is now a cool 17% move from yesterday’s close in the context of an economy that is losing steam by the day.  1600 or 1200, yeah, but 1400, no way.

With that, I humbly ask the Trading Gods to be merciful in their punishment of me.  My intention — to demonstrate in real-time one of Farrell’s Rules — was noble.  Frankly, given our current circumstances, I find the prospect of a 17% gain between now and year-end fairly remote.  But I have been wrong a couple thousand times in my career.  Only time will tell if I should have waited until January 2012 to publish this, but that would evidence a total lack of cojones on my part; I’ll take my medicine at the appropriate time.

Category: Analysts, Data Analysis, Economy, Really, really bad calls, Research

Colbert Report: America’s Credit Grating

America should handle credit ratings agencies the way it does all terrorists: by marching the marines into their offices and whisking them off to Gitmo.

The Colbert Report Mon – Thurs 11:30pm / 10:30c
America’s Credit Grating
Colbert Report Full Episodes Political Humor & Satire Blog Video Archive

Hat tip Mike R

Category: Analysts, Credit, Humor, Video

“Moody’s Places AAA Ratings Of 177 U.S. Public Finance Issuers On Review For Possible Downgrade Due To Review Of U.S. Government’s AAA Rating” Moody’s announced today: Moody’s Investors Service has placed under review for possible downgrade the Aaa ratings of 177 public finance credits, affecting a combined $69 billion of outstanding debt. The credits include…Read More

Category: Analysts, Credit, Think Tank

Rating Agencies: Debt Police Go Rogue

How did a bunch of unelected corporate suits get the power to wreck the global economy? > Yesterday, I taped an interview with Canadian TV, where the question of the rating agencies came up. I stated my long held views about them: That they were a prime enabler of the credit crisis; that they were…Read More

Category: Analysts, Bailouts, Really, really bad calls

There’s Only One Way to Avoid a Downgrade to U.S. Credit

According to Reuters, a majority of economists now think that U.S. credit will be downgraded. The debt ceiling plans being proposed likely will not avoid a debt downgrade. Indeed, as Zero Hedge notes, the cuts being proposed in the debt ceiling proposals would be offset by the costs of the downgrade: The US downgrade alone,…Read More

Category: Analysts, Credit, Think Tank

When Will Apple Be Bigger than ExxonMobil?

Apple’s blowout numbers this week got tongues wagging about the tech juggernaut. David Wilson at Bloomberg charts the answer to the question as to when Apple Inc. will overtake Exxon Mobil as the world’s most valuable public company. Apple is currently at ~$358.7 billion, a mere 13%behind Exxon Mobil at $410.3 billion. Short answer: At…Read More

Category: Analysts, Trading, Valuation

S&P Threatens To Downgrade Everything

Media coverage of S&P downgrade threat; • Reuters – S&P threatens downgrade of U.S. financial companies Standard & Poor’s on Friday raised the pressure on debt negotiators in Washington, saying it could downgrade insurers, securities clearinghouses, mortgage agencies and a laundry list of other firms without a deal soon to lift the debt ceiling and…Read More

Category: Analysts, Credit, Think Tank

Reporting Season Farce

Albert Edwards is the uber-Bear who sits on the Global Strategy Team at Société Générale. Edwards notes:  “It’s that surreal time of the quarter, just ahead of the reporting season, when US companies cajole compliant analysts into reducing their profit forecasts so that on the day the company can record a positive earnings surprise.” Here’s…Read More

Category: Analysts, Corporate Management, Earnings, Trading

Stock Buybacks vs Insider Buying: 70:1 Ratio

“While insiders are willing to use corporate cash to try to support the value of their stock-based compensation, they don’t seem to think their stocks are attractively priced.“ -Charles Biderman, Trimtabs > Over the years, I have been critical of Trimtab’s Charles Biderman (See this, this, this and this). I suspect much of the visibility…Read More

Category: Analysts, Corporate Management, Investing

Analysts Exist to Make Economists Look Respectable

“The only function of economic forecasting is to make astrology look respectable.” -John Kenneth Galbraith > Regular readers know that I do not hold the economics profession in particularly high regard. These sociologists too often have an unfortunate unfamiliarity with how Human Beings behave in the wild. Forget forecasting — economic theories fail to adequately…Read More

Category: Analysts, Really, really bad calls