Recently, I had the pleasure of interviewing Nick as part of NYSSA's newly created video series re his upcoming NYSSA presentation on Bitcoin.
To learn more and view the interview, click here."
Musings on the Markets
In case you missed it, here are two recent media and event appearances that yours truly had the privilege to be involved in:
Wednesday's Bloomberg radio segments
"Taking Stock with Pimm Fox and Carol Massar"
excerpt from NYSSA's January 9 "Market Forecast" luncheon featuring Phil "The Thrill" Orlando and Rich "IH8ARNSL" Bernstein
"NYSSA January 9"
As John Lennon might say, "A splendid time was guaranteed for all".
Posted by Vinny Catalano, CFA at 10:49 AM
8 events, 8 cities, 6 weeks.
From the raging bulls in New York to the humorous (but very insightful) comments of a fixed income expert (yes, Matilda, they do have a sense of humor) to the sanguine views of Dr. Doom himself (say what!?), my early 2014 events are in the books and ready to share with all who care.
Today, at 2:15 (eastern), I get to do exactly that on Bloomberg radio's very popular program "Taking Stock with Pimm Fox and Carol Massar". Who knows, I may actually say something of value.
To listen, click here.
Posted by Vinny Catalano, CFA at 11:01 AM
My recent media appearances - "Taking Stock with Pimm Fox and Carol Massar", FT.com's "Authers' Note", and "On The Money" with Steve Pomeranz, CFP - along with my early 2014 upcoming events, featuring the likes of Liz Ann Sonders, Sam Stovall, Phil Orlando, CFA, Don Rissmiller, Glenn Reynolds, CFA, Heidi Richardson, Jeffrey Saut, Dan Clifton, Shane Shepherd, Peter Petas, Rich Bernstein, Joe Kalish, Ed Clissold, Tom Tzitzouris, Matt Orsagh, CFA, Jeffrey Sherman, and a cast of Inside ETFs experts too numerous to mention, are listed on my media blog, Beyond the Sound Bite.
Posted by Vinny Catalano, CFA at 1:00 PM
...to end a bull market.
Lots of talk of bubbles these days. In fact, I was interviewed on the subject just a few weeks ago. What seems to be left out of the chit chat about bubbles are the dynamics that go into bubbles (valuation model inputs) and the issue of how markets typically come to an end.
Granted, the popping of bubbles is one way to bear witness to the end of the current liquidity-driven global equity markets bull run. However, another, more likely (and more common) way would be a good, old fashioned garden variety market top. And, in that regard, there are few signs that the end of the party (replete with music and dancing and a punch bowl full of central bank liquidity) is at hand. For when the dominant players in the markets (investment professionals) are highly dependent on relative performance metrics (a/k/a alpha), trailing your peers is one of the best ways to lose clients (and your job, and your house in Greenwich). So, when one is flush with cash, dance and make merry is what you do - confident that one possesses the skills necessary to exit the dance hall just as the music ends and the central bank libations cease to flow.
Now, could such merriment lead to a bubble?
Bubble talk refers to the inputs that go into valuation models - earnings, growth rates, and interest rates - and their relation to price. History is used to reference prior periods when bubbles were formed and what followed when they burst. However, quantifiable as we want them to be, valuation models contain very highly subjective elements. They are tied to factors that reside in the social science worlds of the real and political economies and the financial economy. They are useful in the sense that they provide a zone of vulnerability where, in the past, bad things followed. They are, in many respects, like the psychology of investors in which rubber band-like qualities of investor sentiment can stretch beyond reason - and do so for far longer than one presumes*.
Bubble predictions are not, however, a statement of fact nor are they a justification for the need to explain how only an extraordinary event can disrupt the party underway. (Which is another way of saying "I, the investment professional, cannot possibly get it wrong on something so ordinary as a garden variety market top. It just has to be something unique - like a bubble!")
Investment Strategy Implications
Bubble talk is entertaining, interesting and somewhat informative. But understanding and appreciating the realities of a changed financial marketplace intersecting with the extraordinary economic, political, and monetary times we live in make for a more useful exercise. As for the signs of a market top, they just are not there. Divergences between markets exist but not to the degree that has in the past signaled the end of a trend. And the price and other momentum indicators are equally supportive of the existing trend in place.
That said, if one wishes to indulge in extraordinary items, perhaps a far more productive use of one's time might be the search for and understanding of how Black Swans form (the subject of my upcoming CFA Society San Francisco presentation next Thursday).
*"Markets can remain irrational longer than you can remain solvent."
John Maynard Keynes
Posted by Vinny Catalano, CFA at 10:36 AM
Posted by Vinny Catalano, CFA at 3:17 PM
Today's appearance on "Taking Stock with Pimm Fox and Carol Massar" (4:15 to 4:45 PM eastern) will provide the opportunity to share with listeners what Pimm and I heard at the New York Society of Security Analysts' "Market Forecast" luncheon of August 8th. The event covered a wide range of important topics - economic, financial markets (both equity and fixed income), and currencies - with six excellent experts: Marc Chandler, Don Rissmiller, Alec Young, Tom McManus, Thomas Lee, and Jonathan Mackay.
In today's radio segment two central areas will be explored: What were the points of view expressed? Based on their questions to the panelists, what were the attendees areas of interest?
Discussing the first area is obvious - what did the six experts say and why? The second area, what was on the minds of attendees, is less obvious but no less important as it reveals the mindset of investors (primarily professional investors). While anecdotal on its own, it is insightful when compared with similar such events conducted throughout the US this year.
Having produced and conducted such events since 1998, I can assure you that everyone involved - panelists and attendees - has found the time well spent.
Note: I will also give my take on market related matters, including why Obama will pick Summers as the next Fed chair plus what alpha males, short term market momentum players, and overconfidence have to do with each other.
If spending your time in a productive manner is high on your list, consider tuning in today at 4:15 PM (eastern) via radio, app, or here.
Posted by Vinny Catalano, CFA at 8:23 AM
Posted by Vinny Catalano, CFA at 12:47 PM
This Thursday, August 8, The New York Society of Security Analysts will conduct its latest "Market Forecast" luncheon. Featured speakers are Tom McManus, Thomas Lee, Don Rissmiller, Alec Young, Marc Chandler, and Jonathan Mackay.
Bloomberg's Pimm Fox will conduct the special interview segment. Yours truly moderates the panel discussion. A spirited discussion and debate regarding the trends and themes impacting today's markets and economy will ensue. Insights will be gained. And actionable ideas will be rendered.
Then again, one could choose not to attend and continue to digest what they already know.
For details and to register, click here.
Posted by Vinny Catalano, CFA at 10:24 AM
We begin with the following excerpt from Sam Stovall's (Chief Equity Strategist at S&P Cap IQ) latest missive:
"Since WWII, bull markets have averaged four years in duration, mainly because of the treacherous third year. Of the prior 10 bull markets, five declined in price in year three, with three of these resulting in new bear markets."... "Surviving the critical third year has traditionally resulted in a revival of upward momentum. Indeed, of the six bull markets that celebrated their fourth birthday, five (83%) went on to celebrate their fifth birthday, recording an average price increase of 21%."
So, lets do the math.
On the bull's 4th anniversary date of March 9, 2013, the S&P 500 stood at 1551.18. If we add to that the average price increase noted in Sam's commentary, 21%, we get to 1877 next spring. Using a good operating earnings estimate for the twelve months ending March 2014 of $106, stocks will be priced at 17.7 times earnings. At virtually 18 times earnings, the most enthusiastic types will note that the rule of 20 roolz: 20 - inflation rate = appropriate P/E ratio*.
Sounds good. Then there's this from Orcam Financial Group (via Pragmatic Capitalism via Marc Chandler's marctomarket.com).
Posted by Vinny Catalano, CFA at 10:58 AM