Posts filed under “Contrary Indicators”

Fidelity’s Bond Funds Now Larger Than Equity Offerings

Way back in the Summer of 2003, I wrote a report that analyzed the Contrary Indicators 2000 – 2003 Bear market. It consisted of both internal and external signals that strongly suggested that the 2000 crash was over, and it was safe to get back into equities.

The second of the external signals was that PIMCO’s Total Return Bond fund had surpassed the Vanguard S&P500 fund to become the largest mutual fund (as of October 2002) in the world.

I bring that up this morning, with futures solidly to the upside, as a similar (if more modest) contrary signal has appeared: Last week, “bond and money market assets at Boston-based Fidelity now total $848.9 billion, more than half of the company’s $1.6 trillion in managed assets.

What makes this so noteworthy was that for most of its history, Stocks were king at Fidelity Investments. Recall the days of Peter Lynch‘s Magellan fund. The thought of investing in a bond fund was almost laughable back then. It was an era of stock picking, the residue of which remains a misplaced and nearly obsessive focus in the media even today.

The PIMCO vs Vanguard observation was noteworthy in October 2002, when Bonds surpassed Equities as the bottom of a brutal crash was occurring. The technical types will point out markets were tracing a double bottom, with March 2003 holding near the October lows setting up the start of the next leg higher.

Now that Stocks have been eclipsed by bonds at Fidelity, are we approaching a very similar moment? The key difference is that markets are up 100% over the past 3 years, not down 81%, like the Nasdaq was in October 2002. Regardless, this is an interesting contrarian sign; it suggests to me we are closer to the end of the secular bear that began in March 2000 than we are to the beginning.

My best guess? This is the seventh inning stretch. If we get a recession in 2013-14, you will have one terrific chance at a low cost, lower risk entry point into equities. If only the markets were so accommodating . . .
 

Source:
Fidelity’s stock funds eclipsed by bond and money market assets
Tim McLaughlin
Reuters, Sep 26, 2012 7:45pm EDT
http://www.reuters.com/article/2012/09/26/us-fidelity-bonds-idUSBRE88P1U520120926

Category: Contrary Indicators, Investing, Psychology

The Chart That Keeps Us Up At Night

The only major global equity index which we monitor — and it is a big one – that is down for the year is the Shanghai Composite.   The chart looks ugly and ready to break to new lows after its post crash peak of 3,477, way back in August 2009. The Shanghai is down 39.2…Read More

Category: Contrary Indicators, Markets

Small Investors Should Be Furious at Stock Market

WSJ personal finance columnist Jason Zweig stops by Mean Street and says Wednesday’s trading glitch is more than enough to give small investors reason to be disgusted with the stock market.

Category: Contrary Indicators, Investing, Video

Strategists Most Bearish on Equities since 1985

Yesterday in the office, we were discussing when to take a little something off of the table. This upthrust has been very strong (itself a positive), but we tend to be wary when rallies are seemingly built on rumors. The 19th trial balloon of some new ECB intervention should not trump slowing fundamentals and peaking…Read More

Category: Contrary Indicators, Investing, Psychology

Uh Oh: Barron’s Cover — Best Bond Funds

So I am still catching up with some of the more interesting reads from while I was away, and this THIS damned cover made me fall off my chair:   Source: Barron’s   A few words about this: The classic magazine cover contrary indicator is a non-business press issue. This is because by the time…Read More

Category: Contrary Indicators, Fixed Income/Interest Rates

The Not So Golden Years, Revisited

Over the years, debate has waxed and waned over the effects of the minimum wage and/or immigration policy on employment, particularly teen/youth employment. When the issue flared up most recently, a couple of years ago, I posted a rebuttal to that argument here, my point being that it was – at least this time around…Read More

Category: Contrary Indicators, Cycles, Data Analysis, Economy, Employment, Inflation, Really, really bad calls

MIA: Bond Vigilantes

Following up on a previous matter, Karl Denninger  posted what is supposed to pass for a rebuttal to my recent post on government spending. To my eyes, as Jay Bookman so aptly put it, it looks like “the octopus trick, squirting black ink to cloud your retreat.” True enough. Anyway, done with that discussion. Paul…Read More

Category: Contrary Indicators, Data Analysis, Economy, Inflation, Markets, Really, really bad calls

Safest Best Investment According to the Public? Gold

>; Update: the Gallup poll used the word “Best” not “Safest”. Jordan Weissmann has a fascinating discussion going on at the Atlantic about a recent Gallup poll regarding “safe investments.” (The full discussion is well worth your time). Its appears that a plurality of “Americans believe Gold is the single safest long term investment option.”…Read More

Category: Contrary Indicators, Gold & Precious Metals

Uh-Oh: Greenspan Says U.S. Stocks Very Cheap

Category: Contrary Indicators, Video

I’ve been meaning to address this for some time, and today is as a good a time as any. Over the years, I  have participated in interviews at Yahoo Finance — its always a fun time, Aaron Task, Jeff Macke, Henry Blodget, Dan Gross & Co. are very sharp guys. Its usually a short, smart…Read More

Category: Contrary Indicators, Psychology, Really, really bad calls, Web/Tech