March 2017

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Investing, Opinion March 28, 2017

Don’t Buy the Next Amazon

THIS STOCK COULD BE LIKE BUYING AMAZON IN 1997!  So reads the ad disguised as a headline on Yahoo Finance.  Here’s the thing: you don’t want to buy the next Amazon. Clicking on the ad takes you to a wall of text.  The performance is stellar.  The method is so easy an idiot could do it.  Two idiots say as much in quoted testimonials.  This is a no-brainer.  Then comes the catch – just subscribe to the newsletter. Disguising ads as news headlines is what finally pushed me off of Yahoo Finance.  I clicked the ad today (google took me to the site while looking for news on a company) because I’ve seen this same ad for years.  Either there’s a new Amazon every week or maybe, just maybe these guys are full of it. Don’t Buy The Next Amazon Amazon is up 43,000% (for real) since IPO.  Why wouldn’t…

News, Opinion March 21, 2017

Red Herring, Red Swan

Red Herring With headlines proclaiming the worst day for the stock market in 2017, you might think the market has plummeted in a bout of panic-selling.  This is a red herring.  The S&P 500 hasn’t been down more than 1% in over 100 days.  Of course we’re going to have another 1% down day some time, but the real story is the lack of big down days rather than breaking this streak.  I’m sure some poor souls are reaching out to their brokers to ask what they should do.  CNBC is shaking the tree with the noise around this ridiculous headline and brokers are happy to collect the commissions that fall into their laps. Red Swan The concept of Black Swans has been bastardized almost beyond recognition.  Nicholas Taleb put forth the idea of a Black Swan event being something outside the realm of normal expectation making a significant impact that…

News March 16, 2017

March Madness and a Special Dispensation in Cleveland

A quick update today as March Madness takes hold and Cleveland prepares for St. Patty’s Day.  How big is St. Patrick’s Day in Cleveland?  The Catholic Diocese of Cleveland issued a notice regarding corned beef and Lent.  My Catholic friends are encouraged to enjoy corned beef and perform a work of mercy rather than abstain from meat. Fed The Federal Reserve raised rates by 25bps.  The decision was nearly unanimous with the lone dissent being hometown boy Neel Kashkari.  Kashkari is a Northeast Ohio native and scary smart.  I think his dissent was more to attract attention to a political issue (economic inequality) rather than an actual desire to hold rates.  He has run for public office before (governor of California, no less!) and I think he will again.   The community that is smart enough to elect him will be very lucky.  I don’t agree with all of his…

Due Diligence, Investing, News March 7, 2017

An Anniversary and Some Words on Garbage

This week marks the anniversary of the bull market whether you measure from the intraday bottom on 3/6/2009 or the day’s closing bottom on 3/9/2009.  It’s not as simple as all that, though. After a 19% annualized gain or over 300% cumulative, it’s hard to ignore claims that the market is over-valued.  Sure, the doom and gloom folks have been saying that all the way up, but it’s getting harder to find statistics that don’t show the market at least fairly valued.  JP Morgan’s David Kelly shows P/Es slightly above historic averages, but the Shiller CAPE is really elevated. Some things to keep in mind After a long run, it feels like we are due for calamity or at least a pullback.  We’ve already had a pullback – four of them, in fact.  And we only need to look at last year to remind ourselves that the market’s rise was…

Market Top?

News March 2, 2017

The Market Top and Procrastination

If it bleeds, it leads and in the investing world that means finding someone willing to call the market top.  There are plenty of statistics and charts that show the market as being over-valued pretty much since the end of the financial crisis.  While we can identify how the market looks relative to the past, the information is less useful in predicting the future. I’ve been critical of Cyclically Adjusted Price/Earnings (CAPE), but I do watch this and other valuation metrics as I think they provide information about the markets and market participants.  I don’t think any one of these fundamentals provides actionable information, however.  That is to say it would be unwise to try to time entry and exit in the market based on these statistics.  I feel the same way about charts.  It seems to me that you can overlay a chart from any time period and make it look just…