Worth Reading

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

 

 

 

Worth Reading 5.25.14

One of my favorite websites is Advisor Perspective’s dshort.com from which all of the following recent May articles originated. They are all worth a quick read.

“Bulls Gaining Ground” presents a balanced bullish argument for the near future of the stock market.

“How Long is Long Term” is a good overview of how returns historically occur in the stock market in contrast to the perceptions of most and why returns in the future may disappoint.

“Corporate Profits and Market Crashes” explores what I believe  is one of the most important issues in the current stock market in regards to the ominous implications of current record corporate profits.

“Economic Recovery Analysis” explores negative characteristics of the current economic recovery, which I believe strengthen the case that this secular bear market is unfortunately not yet over.