Month: August 2014

Worth Reading 8.27.14

From CNBC today comes some bearish outlooks, including the below chart that is worth a look.

DOW-doolittle

 

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This Isn’t Going to End Well

Part One: Stocks are too Expensive

I.C. Angles Investment Post

The stock market is too expensive. This is what valuation methods that have been proven to work are showing. And at some point prices will decline significantly, in order for stocks to become fairly priced. Expensive valuations are just one reason, the current bull market is likely to end particularly badly, with a price decline that could very easily surpass either of the last two major bear markets. Given how high valuations have currently risen, a fall in the stock market of well over 50 percent is a very real possibility.

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Worth Reading (or viewing) 8.17.14

Recently in December I discussed that despite remaining a reluctant bull on the stock market, there are real reasons to fear a 1987 type scenario of a market crash. This is why I have recommended retail investors hold a significant cash position for over a year now despite stocks marching higher. Apparently I have some good company when it comes to this concern….

In this link, Passport Capital Founder and Chief Investing Officer John Burbank discusses his outlook for the markets and his concerns about a 1987 replay on Bloomberg TV’s ” Market Makers.”

Bloomberg8.14

 

 

 

 

 

In addition the most recent regulatory filing from Soros Fund Management reveals that the investment vehicle of legendary investor George Soros has increased its S&P 500 put option position to $2.2 billion or 17 percent of assets under management. In other words, they remain long on stocks, but at the same time have increased their investment in securities that will rise in value if the stock market were to crash.

 

Worth Reading 8.1.14

A perfect supplement to my post from yesterday, covering how valuation metrics point to a major market decline in the future, is today’s McClellan Market Report article, “A Scary Valuation Indicator” that includes the below chart using a blend of the Cyclically Adjusted P/E ratio and Moody’s Baa yield to predict market tops, with the implication we are much closer to a major top than away from one.

CAPE-Baa-July2014

Source: McClellan Financial