Posts filed under “Markets”

Secular Stock Markets Explained

We’ve been discussing the 100 year charts that look at the secular history of Bull and Bear markets, including Adjusting Stock Prices for Inflation. This has been a favorite of mine for some time, and I highlighted it in the technical segment (part II) of the Cult of the Bear.

Ed Easterling was kind enough to let us run his chart, and I find it to be the very best of these longterm secular views: He overlays the Bull and Bear periods with trailing P/E — this fits in very nicely with our contracting P/E thesis.

Dow Chart with P/E, 105 Years
click for larger chart


Source: Crestmont Research


Incidentally, in terms of what readers purchased via links at this site, Ed’s book, Understanding Secular Stock Market Cycles, is your most popular buy, just edging out Barton Bigg’s Hedgehogging this quarter.


Stock Cycles Explained
Ed Easterling
Crestmont Research,
2006 Secular Explained.pdf

Category: Apprenticed Investor, Earnings, Investing, Markets, Psychology, Technical Analysis

Read it here first: the 100-year Dow Chart

Category: Investing, Markets, Psychology, Technical Analysis

What Happens if Inflation Is Overstated?

Category: Data Analysis, Economy, Federal Reserve, Inflation, Markets, Real Estate

VIX hits 3 year highs

Category: Markets, Technical Analysis, Trading

A Consensus is Developing: Blame Greenspan

Category: Economy, Federal Reserve, Fixed Income/Interest Rates, Inflation, Markets, Psychology

Good News / Bad News

Category: Markets, Psychology, War/Defense

Is Willful Ignorance an Investment Strategy?

Category: Economy, Investing, Markets, Psychology, Technical Analysis

Bounce, Test, Bounce . . .

Category: Investing, Markets, Technical Analysis, Trading

NFP stinks — and Some People Still Don’t Get It

Today’s NFP number stunk the joint up: 75,000. That’s half of the monthly population growth, meaning the percentage of people working (relative to pop) actually went down, if we are to believe this data. 

Astonishingly, some people STILL do not understand the data or the context of the weak job growth within this recovery. To wit, my friend Cody Willard – a telecom strategist – writes:

"Surely, Barry, you’re not seriously trying to rekindle your argument about "job creation is not what it is typically at this phase of a recovery."

That statement has been a cornerstone of your bearish rants for the last couple years. Yes, I know you’ve been a "trading bull" and what not, and rightly so, but this economic argument of yours has been, in my view at least, wrong for the last few years and now that job creation is finally starting to slow — years after your repeated flagging of how this "recovery" (You still call this a "recovery" btw?)"

Ahhh, poor Cody. He is lost in a sea of data, unable to see the truth. He believes the spin.

Rekindle? Just because you close your eyes, the boogie man doesn’t disappear.

Hey Cody, please cite me some data revealing this to be an above-average private sector jobs creation recovery. Hell, I’ll take average.

You won’t, because you cannot.

Cody is engaging in several analytical foibles, but the best way to describe it is "ignore reality." But his subjective error does not change the objective reality for the rest of us: By any honest measure – e.g., NY Federal Reserve or Cleveland Federal Reserve research — this has been the worst modern jobs recovery on record.

This is not a meme I am pushing or a Bear story I fabricated.

It just “is.”

This doesn’t mean you run out and short everything; as I wrote last December, one should Never Confuse Economic Analysis With Trading.

But comprehending the reality of the economic situation is important. Why does this matter?  What Cody fails to consider is the importance of understanding the specifics of how a recovery comes about, and how it compares to prior recoveries. What it means as the massive government stimulus that goosed the economy begins to fade. What happens when the Pig is finally thought the Python?

I expect that as we begin to slow, there ain’t a whole lot of fat to get sliced. As unemployment starts ticking up, it will not be pretty. It suggests the next recession will be more severe than the last one. 

Yes, Virginia, there is inflation. And yes, Cody, this has been the worst Jobs recovery since WWII. But if you want to believe in Santa, who am I to disabuse you of that notion?


UPDATE:  June 2, 2006: 12: 47pm

Cody and I finish the debate below


Read More

Category: Economy, Employment, Inflation, Markets, Psychology

Apprenticed Investor: 10 Lessons Learned in the Selloff

Category: Apprenticed Investor, Economy, Investing, Markets, Psychology, Technical Analysis