Posts Tagged ‘ S&P 500 ’

When Will the Market Start to be Forward Looking – Early Signals from Asia?

November 2, 2011
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When Will the Market Start to be Forward Looking – Early Signals from Asia?

The markets have been through a period of wicked volatility with a significant pullback almost to the point of entering a new bear market. Intraday the S&P 500 was down 20% from its high but closed above those levels and went up from there. From the market’s closing bottom of 1,099 the S&P had a tremendous move higher up about 17% in 4-weeks. During this period, the market maintained an obsession with day-to-day and even hour-to-hour news. The situation becomes impossible for investors because the news flow is utterly unpredictable and investors can get whipsawed and hacked up quite easily. Often the market is described as a voting mechanism for 6-9 months out. Understanding that this is the normal state of things will be important at some point in...

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A Guide for Q3 Earnings Season – What I’m Looking For

October 13, 2011
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A Guide for Q3 Earnings Season – What I’m Looking For

Earnings season officially gets started this week, with reports already released from Alcoa, Pepsi, JP Morgan and a few others. Tonight Google will be reporting after the close – a stock I continue to view favorably. Next week the reports will pour in and by the end of next week we’ll have a pretty good feel for the tenor of US Q3 earnings. It is an important quarter because the market started to price in an abrupt slowdown around the world which would naturally be expected to negatively impact earnings in subsequent quarters. It now appears the market got way ahead of itself with negativity and bearishness as the S&P 500 approached 1,100. Since the past couple weeks couldn’t produce evidence of a spiral into chaos in the Eurozone,...

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Crying Wolf – False Recession Calls Brutally Hurt Returns

October 7, 2011
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Crying Wolf – False Recession Calls Brutally Hurt Returns

The ECRI has come out and caused a stir from continually touting their “unavoidable recession” forecast. In addition, ECRI co-founder, Lakshman Achuthan has been continually highlighting their 3/3 track record without forecasting a false positive. While this track record is impressive, Crackerjack Finance would like to highlight a term from our disclaimer; “past performance is no guarantee of future results”. At economic inflection points, the investment stakes are doubly heightened. I thought it worthwhile to review and quantify S&P 500 investment returns when investing in an environment of recession fears that does not materialize into a recession. Reviewing the numbers clearly demonstrates that if you are not invested during the time of a false recession fear you miss out on out-sized excess returns over the next 12 months. Of...

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Europe’s Minimalist Approach Is the Wrong Course

September 22, 2011
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Europe’s Minimalist Approach Is the Wrong Course

What an 18 hours, as a conflux of negatives weigh on the market. In wrenching fashion, the US markets are down 6% since yesterday at 2:00pm. Most international markets around the world are down significantly more. Many emerging markets are off over 10% over two days. The Fed implemented Operation Twist yesterday, and the size and scope was actually greater than expected. The US Fed is not the crux of the current set of global financial problems, nor is it reasonable to expect that the Fed can fix things. I have highlighted previously that Europe has the capacity to avoid a full blown financial crisis by taking decisive actions. Unfortunately, Europe’s hard stance with respect to minimizing backstops, bailouts, the EFSF, coupled with a cavalier approach towards the French...

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Why the Market Will Bottom Higher than 2009 – An Analysis of S&P 500 Free Cash Flows

September 13, 2011
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Why the Market Will Bottom Higher than 2009 – An Analysis of S&P 500 Free Cash Flows

The market is in the midst of a crisis. The US sovereign credit rating has been downgraded. Developed market economies are demonstrating an inability to create jobs. Greece is about to default on its sovereign debt which will lead to contagion through the financial system in Europe. French and other European financials will be downgraded this week and markets are in a period of exceptional volatility and uncertainty. How does one invest in the crisis that everyone sees coming? I continue to hold a constructive view with respect to investing and taking risk. In order to be rationally bullish, one must have some view with regard to the amount that will be lost if a crisis gets out of control. Knowing what you can lose ahead of time, while an...

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