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Category Archives: Economy
Now that we have a good set of top economic reads on the state of the economy and a list of the top 6 individual economic indicators, we can tackle using these indicators to get a gauge on where we are in the economic cycle. In this post we’ll present a simple heat map of the top 6 economic indicators, look at what the heat map looked like in previous recessionary periods, and finally compare it to what the heat map is saying today. This will become a regular monthly post, published on or just after the third Friday of … Continue reading
A quick post on a new page I have added to the blog. In the top menu you will see a page called ‘Top 6 Economic Indicators“. On this page you will find FRED graphs of 6 economic indicators, updated automatically when new data is available. I’ll tell you a bit more about these indicators below and why they were chosen. First, there are a lot of economic indicators these days. There are individual indicators (we track 66 of them), like the unemployment rate, for very measuring very specific aspects of the economy, and composite indicators (made up of many individual … Continue reading
The fiscal cliff is coming and the politicians are going to let us drive right over it. At least that’s the drumbeat you hear in the financial news media. And with 5 months to go until the end of 2012 the drumbeat is picking up its tempo. With that in mind I thought it would be useful to take a look at what impact the fiscal cliff would have on asset classes, the likely outcomes, and the implications for investors. That’s the bad, scary news. The likely outcome of what I described above is very very small in my opinion. … Continue reading
I don’t know why I feel the need to do an outlook post. I don’t pay any attention to market forecasts. I don’t invest in indexes. So, why the need for an outlook post? Well, over the years I have to come to the opinion that it is quite helpful to your investment results to know at a very broad level if you’re investing with a head wind or with a tail wind. For me this affects my broad allocation to cash versus risk investments and also helps me determine how much risk to take in my trading account. The … Continue reading
Today I wanted to update my top 3 contrarian indicators. The market selloff continues and looking at contrarian indicators can give an investor an edge in determining the right time to buy. I introduced these indicators in this post; money flows; investors sentiment, and margin debt. Lets see what they’re telling us. First up, money flows. Money continues to pour out of equity mutual funds. The latest data from ICI is below. The $30B outflow out of equity funds in the week ending Aug 10th was the worst since Q1 2009. On a monthly basis you can see the comparison … Continue reading
With all the discussion of the current economic situation in the US, jobs, deficits, etc.. it constantly amazes me how short term oriented and myopic investors can sometimes be. In this regard I think we could gain some insight by looking at what’s happened in Japan since 1990. Barry Ritholz at the Big Picture has a great post comparing the Japanese and US stock markets from their great boom peaks. Take a look. As the famous saying goes, history doesn’t necessarily repeat but it often rhymes. In the most optimistic light I can put this, there are enough gloom and … Continue reading
Earlier this week my wife and I were discussing the stock market events that were taking place in front of us; markets gripped by political intrigue, both domestic and overseas, violent swings in volatility, slowing economic growth, and lots of uncertainty. I then started telling her about what my plan was (I was actually getting excited) and she chimed in “it’s like the Hitchhiker’s Guide to the Galaxy!” I stared at her a bit taken aback while I searched my memory banks for any relevant investment wisdom from that hilarious tome. And then it hit me…… Right there, printed in … Continue reading
I am a contrarian investor by nature. When there is too much fanfare around an investment, be it a stock or whole asset class, I usually find myself wanting to run for the exits. The hair on the back of my neck literally stands on edge sometimes. Most value investors tend to be at least somewhat contrarian. You almost have to be to buy cheap asset classes which by definition are unloved. Besides applying my contrarian nature in looking for cheap dividend paying stocks I also monitor the overall market for signs of what asset classes and when it may … Continue reading
Here is the Income Investor Dashboard for April 2011. Prices are as of the close of markets on March 31, 2011. Despite a very exciting and volatile month not much changed in terms of market prices and yields. At one point during the month US markets were down, on the Japan and Libya situations, about 6% but managed to comeback in the end. There was basically no changed in stock index or sector yields except for the Vanguard High Yield Index. Also, the MLP index, AMZ, got a little cheaper during the month but only by less than 1%. In … Continue reading
In my 2011 outlook post earlier this month I mentioned that I had raised the cash portion of my portfolio to 40%. I did this by selling out of my commodity positions. A recent post I read at Pragmatic Capitalism reminded of me of this and that I should explicitly talk about it here on the blog. I highly recommend reading Cullen’s entire post but I’ll just use some highlights from it here to make my point. In general, I don’t view commodities as investments in the classic sense. They are a speculation pure and simple relying on selling your … Continue reading