11 More Hard Facts About The Housing Recovery [View article]
MC:
Plato notwithstanding, home prices don't decline when rates rise. Rising rates almost always accompany strong economic conditions, and housing prices escalate in such periods. I recall moving to Silicon Valley in 1981, and the housing market was flying, even with mortgages at 12%.
The seemingly new (post-crisis) idea that home prices and interest rates are necessarily inversely related isn't so, even if it appears logical on its surface. The following chart demonstrates, in fact, that home-price appreciation has consistently followed inflation until the recent crisis.
Plunging Commodity Prices Are Ominous For Stock Market [View article]
When commodity prices are rising, we are warned that they will suck the life out of everybody's purchasing power and kill the economy and market. When they fall, we are warned that their downward price trend is "ominous."
The Current U.S. Stock Market Collapse Makes No Sense [View article]
This is where what I have gradually learned over years of investing pays off. It's more important to pay attention to what one's portfolio throws off each year than it is to guess about daily principal values or market directions. For the most part it's beyond anybody's control to make secuity prices behave as preferred (only up), but it's not impossible to set up a portfolio so it has a somewhat predictable and attractive yield. Over time, the "miracle of compounding" makes all those dividend and interest payments turn into real money.
Too many people want to make money "right now" by guessing about or hoping for price moves. This impatience and the increasing dependence on gambling on short-term price moves that it engenders are counterproductive to building wealth.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
"The S&P is still way overvalued ..."
Just printing the sentence doesn't necessarily make it so. U.S. corporate revenues and profits are at all-time highs, and expanding, yet the SPX is 15% lower than when those same revenues and profits were a lot lower.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
"Speaking of economy if you lose money on a single transaction you can't make up by increasing the volume."
From the macro perspective of an entire economy, money is never "lost." It merely slows down, which creates the appearance of loss. That's why the Fed attempts to increase the supply in circulation, so that more money in aggregate, moving at the slower rate, avoids the serious deflation that would ensue if supplies were kept stagnant.
The challenge will be for the Fed to reverse this policy when money again starts to move more quickly, reeling back in the extra liquidity they have created. The present irony is that its the Fed's very own ZIRP that's contributing to the lethargy in monetary velocity.
In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
UI:
Please list those dividend payers down 25-50%. Go ahead, if for no other reason than I want to buy some.
In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
Treasuries are like that tidbit of tasty cheese that the mouse nibbles on before the trap spings shut and crushes his little neck. You can keep nibbling, but that loud snap is always nearby.
Japan's core consumer price index rose 0.2% from the prior year, identical to its gain for March. Expectations were for a 0.1% rise. On a monthly basis, core CPI was also 0.2% higher, led by a 2.1% rise in clothing and footwear. Overall CPI rose 0.1%, for a 0.4% year-on-year gain. [View news story]
That's what happens when your currency is bid ever higher, and you're fundamentally an importer of consumable goods.
Japan has endemic reasons for its lack of ability to generate internal demand. In fact, Japan doesn't really suffer from classic deflation (a decrease of the money supply); it benefits from a currency that for a variety of reasons has been bid up to the moon.
If Japan suffered from a genuine deflation, folks would be living under bridges, but Japan has a very high standard of living.
Even if massive debt was written off, it doesn't matter, when the sovereign in question owns printing presses because that's all the original debt was, paper, and it can be replaced with new money supply just as easily. That's why fiat-currency is perpetually inflationary. Deflation could only occur with the willing participation of government through refusing to replenish the currency.
True deflations can only occur when the ability to print new currency doesn't exist, i.e., welded to a gold standard or using somebody else's currency (Greece). What people call deflation now is only a momentary reduction in monetary velocity, occasioned mostly by fear, not absence of liquidity.
I'm an old-fashioned guy. Think I'll stick with a diversified portfolio.
The percentage of bulls in the AAII Investment Sentiment Survey rises 6.9 points to 30.5% in the week ended May 23. The bear camp loses a similar amount, now at 38.7%. The bulls remain well below their long-term average of 39%, the bears above their average of 30%. [View news story]
He made a good call on rates. But, an investor in an SPX index fund made over 30% more than a 10-year Treasury holder during the same 30-year bond-bull period.
"Sell your house ... yesterday," Gary Shilling tells Bloomberg. It will take 4 years, he says, to work off still-high inventories, during which time prices could fall another 20%. Turning to Facebook: "(It's) the end of the social media boom ... reminds me of Pets.com." [View news story]
WSD:
I hold bonds, but not Treasuries, I use them to smooth out returns and volatility. That said, there's just no denying that over substantial time periods equities outperform bonds and have always done so. Now, if you wish to choose one narrow ten-year period, where the market has suffered once-in-70-years crisis and hysteria and use that as a typical bond-performance barometer, then, go ahead.
The charts showing 100-year historical bond yields makes it pretty clear that the bond halcyon days are in the rearview mirror. Even if rates didn't reverse themselves for several years, who wants to net <2% yields awaiting an inevitable reversal?
Frankly, I don't care what happened in the last ten years or last thirty, only where things look like they're positioned now. If something should scare people, it's that 100-year yield chart.
The "Death of Equities?" John Authers and Kate Burgess explore the end of more than a half-century "passion for equities," as institutions shed stock exposure for fixed income. The authors suggest stocks' relative cheapness is more about low bond yields, and unless said yields are going to go negative, any tailwind to equity prices from fixed income is about used up. (see also) [View news story]
re Tack's previous post:
(SA fouling up the link...Sorry; cannot transpose correctly)
Enter following three lines in browser on one line with no spaces and after http:
11 More Hard Facts About The Housing Recovery [View article]
Plato notwithstanding, home prices don't decline when rates rise. Rising rates almost always accompany strong economic conditions, and housing prices escalate in such periods. I recall moving to Silicon Valley in 1981, and the housing market was flying, even with mortgages at 12%.
The seemingly new (post-crisis) idea that home prices and interest rates are necessarily inversely related isn't so, even if it appears logical on its surface. The following chart demonstrates, in fact, that home-price appreciation has consistently followed inflation until the recent crisis.
http://bit.ly/KT5djw
Plunging Commodity Prices Are Ominous For Stock Market [View article]
OK, which is it?
The Current U.S. Stock Market Collapse Makes No Sense [View article]
Too many people want to make money "right now" by guessing about or hoping for price moves. This impatience and the increasing dependence on gambling on short-term price moves that it engenders are counterproductive to building wealth.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
Just printing the sentence doesn't necessarily make it so. U.S. corporate revenues and profits are at all-time highs, and expanding, yet the SPX is 15% lower than when those same revenues and profits were a lot lower.
How precisely is the SPX "way overvalued?"
The Current U.S. Stock Market Collapse Makes No Sense [View article]
From the macro perspective of an entire economy, money is never "lost." It merely slows down, which creates the appearance of loss. That's why the Fed attempts to increase the supply in circulation, so that more money in aggregate, moving at the slower rate, avoids the serious deflation that would ensue if supplies were kept stagnant.
The challenge will be for the Fed to reverse this policy when money again starts to move more quickly, reeling back in the extra liquidity they have created. The present irony is that its the Fed's very own ZIRP that's contributing to the lethargy in monetary velocity.
In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
Please list those dividend payers down 25-50%. Go ahead, if for no other reason than I want to buy some.
In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
Japan's core consumer price index rose 0.2% from the prior year, identical to its gain for March. Expectations were for a 0.1% rise. On a monthly basis, core CPI was also 0.2% higher, led by a 2.1% rise in clothing and footwear. Overall CPI rose 0.1%, for a 0.4% year-on-year gain. [View news story]
Let's Stop All The Pretending [View article]
Japan has endemic reasons for its lack of ability to generate internal demand. In fact, Japan doesn't really suffer from classic deflation (a decrease of the money supply); it benefits from a currency that for a variety of reasons has been bid up to the moon.
If Japan suffered from a genuine deflation, folks would be living under bridges, but Japan has a very high standard of living.
Let's Stop All The Pretending [View article]
Even if massive debt was written off, it doesn't matter, when the sovereign in question owns printing presses because that's all the original debt was, paper, and it can be replaced with new money supply just as easily. That's why fiat-currency is perpetually inflationary. Deflation could only occur with the willing participation of government through refusing to replenish the currency.
True deflations can only occur when the ability to print new currency doesn't exist, i.e., welded to a gold standard or using somebody else's currency (Greece). What people call deflation now is only a momentary reduction in monetary velocity, occasioned mostly by fear, not absence of liquidity.
I'm an old-fashioned guy. Think I'll stick with a diversified portfolio.
The percentage of bulls in the AAII Investment Sentiment Survey rises 6.9 points to 30.5% in the week ended May 23. The bear camp loses a similar amount, now at 38.7%. The bulls remain well below their long-term average of 39%, the bears above their average of 30%. [View news story]
Let's Stop All The Pretending [View article]
To view very interesting chart, enter following three lines in browser on one line with no spaces and after http:
pages.stern.nyu.edu/
~adamodar/New_Home_Page/
datafile/histret.html
Is It Time To Buy A House? [View article]
He made a good call on rates. But, an investor in an SPX index fund made over 30% more than a 10-year Treasury holder during the same 30-year bond-bull period.
"Sell your house ... yesterday," Gary Shilling tells Bloomberg. It will take 4 years, he says, to work off still-high inventories, during which time prices could fall another 20%. Turning to Facebook: "(It's) the end of the social media boom ... reminds me of Pets.com." [View news story]
I hold bonds, but not Treasuries, I use them to smooth out returns and volatility. That said, there's just no denying that over substantial time periods equities outperform bonds and have always done so. Now, if you wish to choose one narrow ten-year period, where the market has suffered once-in-70-years crisis and hysteria and use that as a typical bond-performance barometer, then, go ahead.
The charts showing 100-year historical bond yields makes it pretty clear that the bond halcyon days are in the rearview mirror. Even if rates didn't reverse themselves for several years, who wants to net <2% yields awaiting an inevitable reversal?
Frankly, I don't care what happened in the last ten years or last thirty, only where things look like they're positioned now. If something should scare people, it's that 100-year yield chart.
The "Death of Equities?" John Authers and Kate Burgess explore the end of more than a half-century "passion for equities," as institutions shed stock exposure for fixed income. The authors suggest stocks' relative cheapness is more about low bond yields, and unless said yields are going to go negative, any tailwind to equity prices from fixed income is about used up. (see also) [View news story]
(SA fouling up the link...Sorry; cannot transpose correctly)
Enter following three lines in browser on one line with no spaces and after http:
pages.stern.nyu.edu/
~adamodar/New_Home_Page/
datafile/histret.html