Weekly Update

This Time IS Different

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Published June 30, 2017

timingcube_cartoon063017We found this recent post from Ben Carlson to be of interest:

Sir John Templeton wrote “16 Rules for Investment Success” in 1993. The following is by far the most quoted passage:

The investor who says, ‘This time is different,’ when in fact it’s virtually a repeat of an earlier situation, has uttered among the four most costly words in the annals of investing.

“This time is different” is something of a sacrilegious phrase in the investment industry. Every time markets, corporate fundamentals or long-followed economic ratios enter above-average territory there are sure to be pundits or investors warning about complacency and imminent mean reversion. Anyone who claims it’s different this time is mocked with disdain for daring to question long-term financial relationships. (more…)

Weekly Update

The Seduction of Pessimism

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Published June 23, 2017

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We strive in our weekly blog posts to present all the major prevailing views on markets. Nevertheless, we have marveled over the years about the staying power of the doom-and-gloom crowd. How is it, in the midst of a long running bull market that the doom and gloom crowd has any remaining followers at all? (more…)

Weekly Update

A Technical Reflection on the QQQ

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Published June 16, 2017

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This week, for the first time this year, the Nasdaq 100 (symbol: QQQ) said “hello!” to its 50-day moving average. The 50-day moving average is a very common reference point for investors and machines programmed to trade. In Chart 1 below, the 50-day moving average is the blue upward sloping line. (more…)

Weekly Update

Volatility at Decade Lows

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Published June 9, 2017

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A couple of months ago we posted on our blog an article titled “Risk Rises” which talked about the VIX volatility index shooting up almost +50% over a period of a few days. At the time it seemed this sharp jump in market volatility might presage a shift in market tone. (more…)

Weekly Update

The Fed’s Post-Crisis Strategy

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Published June 2, 2017

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We are now a decade into the Federal Reserve’s latest period of monetary policy seeking to stimulate the economy. Prior periods of monetary policy focused on pushing very short-term interest rates higher or lower to accelerate or decelerate the economy and/or inflation. The unprecedented impacts of the financial crisis forced the Fed to adopt additional monetary policy tools, such as “quantitative easing” or “QE” for short. (more…)

Weekly Update

The Bull Market Is Just Beginning…?

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Published May 26, 2017

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One of the frequent narratives about this stock market is how it just keeps on rolling higher and must soon change its character. That there is a gravitational pull that will bring it back to something lower – e.g. a more “reasonable” valuation, a reset of time, etc. In consideration of the notion that this bull market is now some eight years old, we offer the recent article from market observer Mark Hulbert discussing whether this bull market is indeed quite as old as some might argue: (more…)

Weekly Update

Risk Management

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Published May 19, 2017

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When we talk about risk we usually think about our potential for losing money. But there is obviously a very big difference between losing 1% of our portfolio and losing 10% of it. We can use the size of the investment to manage our risk. To do this, we determine how much money we are willing to “lose”. (more…)

Weekly Update

Economic data versus the stock market

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Published May 12, 2017

TimingCube_cartoon051217There is a natural tendency for investors to believe that the stock market will follow economic trends.  What some people fail to realize, at least initially, is that investors are looking out into the future and the expected movement in the economy.  Only when an economic datapoint shows up that is at odds with that expected outlook do stocks react.  The Citigroup Economic Surprise Index (CESI) seeks to measure how those datapoints are matching up to what has been expected.  (more…)

Weekly Update

Getting Nervous?

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Published May 5, 2017

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When our most recent TimingCube Turbo Model Buy signal was sent out on December 6 we can bet that no one expected it would still be in place five months later with a gain (using the QQQ) of over +18%. While the trend, especially on the Nasdaq 100 (QQQ), remains up, and strong earnings growth reports coming in this month appear supportive of the market, some fund managers are nervous. (more…)

Weekly Update

It’s All About Earnings

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Published April 28, 2017

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An excellent overview of the current state of the stock market from the folks at Schwab:

Investors appear to be taking another look at the risks they are willing to take, while also considering whether the reflation story may not develop as hoped. Reflation is the process of getting economic growth and price broadly back to pre-recession levels. While progress has been made, growth is still not accelerating. First quarter real gross domestic product (GDP) is forecasted to come in around a 1% annualized level according to Bloomberg. (more…)