The theme of stock margin debt and its obvious correlation to QE episodes continued into December. Margin debt levels are at record highs, but more importantly investor net worth in the aggregate has finally closed in on the dot-com levels. While just a bit short of the most extreme month of the dot-com mania, margin debt and negative net worth [...]
Well, 2013 is in the books and it was a stellar year for anyone who had the moxy to ignore all the rules we've been taught about investing. Diversification? Didn't need it last year. All you had to do was buy US stocks, the more speculative the better, and let it ride. Bonds to reduce risk? Nope, that didn't work [...]
As we ponder 2014’s headwinds and reminisce about the bubble/not bubble in stocks, there is one more factor to add to my note from yesterday about the time value of assets. For simplicity’s sake I kept all the calculations as nominal; no need to introduce complexity when the elegance of simple math made the point very nicely. Despite record highs [...]
There is an age-old, simple axiom that should form the basis of portfolio management but often gets pushed aside in shorter-term considerations. Whether in the form of “buy when there’s blood in the streets”, or “be fearful when others are greedy”, it preaches about extremes. At its core this idea is really about managing asymmetric risks. When everyone wants to [...]
With a view on credit and dollar markets, there is already the unsettling prospect of markets moving beyond unshakable belief in the efficacy of monetary intrusions. I cannot help but wonder if that is beginning to extend into the real economy as well. There can be little but retribution over the growing disaster that is the holiday sales season. Stock [...]
I've been laid up the last week after a minor surgical procedure and while I haven't been that productive at getting any actual work done, it has given me a lot of time to watch CNBC and Bloomberg. The portfolio managers, strategists and assorted market soothsayers stream across my screen, talking about markets the way they always have, as if [...]
With so much talk about bubbles resurfacing lately, it’s worth an attempt to try to draw out exactly what a stock bubble looks like. There is little dispute about the bubble nature of the dot-com era, but the market has drastically changed in its appearance and structure beyond just Greenspan’s exuberant creation. In this instance it is more than just [...]
If the government shutdown ends in the near future, there will be a data dump unlike anything we have seen before. The September jobs report at the end of October the same time as retail sales and US imports/exports, etc. The backup in data crunching to fit survey results into seasonally adjusted output may delay the timing of the more [...]
Now that the drama in DC is reaching a semi-crescendo, everybody wants to pay attention to the t-bill marketplace. The rapid ascent in shorter-duration bills is certainly abnormal but not at all unprecedented. Bill rates traded much the same in the 2011 version of the debt drama. Money market funds, now ultra-sensitive to any potential “losses”, are likely the primary [...]
Before 1950, if you asked who owned stocks, the answer was very straightforward: wealthy individuals. Ninety percent of all equities were owned by the household sector, concentrated in the wealthiest segments. Most individuals had little savings to speak of, so stocks really were a plaything of the rich. All data below is taken from the Federal Reserve’s Financial Accounts of [...]
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