These high valuations are coming at a time when investors are heavily invested in stocks

“Corrections happen during growth-rate cycle slowdowns, they don’t require a recession.” – Lakshman Achuthan, Economic Cycle Research Institute Q1 hedge fund letters, conference, scoops etc On Sunday afternoon, I fly to Dallas to attend the 16th annual Mauldin Economics Strategic Investment Conference (SIC). Last year, I presented on market valuations and [...]

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History of Bull and Bear Markets

“Peace is its own reward.” – Mahatma Gandhi This week’s post is holiday-weekend short. Grab that coffee and find your favorite chair. You’ll find a simple chart that shows the history of cyclical bull and bear markets (with returns before and after inflation). It is easy to read and may [...]

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The elephant in the room is debt

“The economy is a collection of emotions.” – Kenneth Langone Q1 hedge fund letters, conference, scoops etc Speaking to first-year NYU medical students, Kenneth G. Langone and his wife, Elaine, stepped to the podium. Their announcement shook the room. “From this point on, NYU Medical School is tuition-free for all students,” [...]

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Recession Obsession And Why It Matters

“Meanwhile, over the past 10 years, low interest rates meant that we kept bringing tomorrow’s growth forward to today. Unfortunately, we may now have run out of tomorrow’s growth, and are about to start to regret eating today’s growth yesterday.” – Louis-Vincent Gave, Gavekal Research Q4 hedge fund letters, conference, [...]

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QE Is Coming Back

“This U-Turn on nothing fundamentally changing is unprecedented. Three months ago, we were on ‘autopilot’ with the balance sheet and now the bond market is priced for a rate cut this year. The reversal in their stance is stunning.” – Jeffrey Gundlach - CEO, DoubleLine Capital LP Q4 hedge fund [...]

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On My Radar: Peak Profit Margins – And What They Tell Us

"Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises: a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions, contractions and revivals which merge into [...]

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“People and firms reward the providers of dangerously misleading information more than they reward truth tellers Daniel” Kahneman

“Optimism is highly valued, socially and in the market; people and firms reward the providers of dangerously misleading information more than they reward truth tellers. One of the lessons of the financial crisis that led to the Great Recession is that there are periods in which competition, among experts [...]

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More Money Than Fools Or More Fools Than Money

“More money than fools or more fools than money. When there is more money than fools asset prices go up. When there are more fools than money, asset prices go down.” – Louis-Vincent Gave, Founding Partner & CEO, Gavekal Research Q4 hedge fund letters, conference, scoops etc At last March’s Mauldin [...]

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RIP Jack Bogle, Welcome Home

“Overoptimism and overconfidence are two well-known psychological traits of our species. They are particularly dangerous in the late stages of an economic cycle where these terrible twins result in investors overestimating return and underestimating risk – a potentially lethal combination of errors.” – James Montier, GMO The Late Cycle Lament: The [...]

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How The Market And Economic Machines Work

“History is on our side.  There have been 13 Fed tightening cycles since 1950. Ten of these landed the economy in recession, and neither the consensus nor the Fed staff saw them coming when they actually started. So before knowing anything else, the fact that we have been in [...]

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Late in the Cycle

“I saw her today at the reception A glass of wine in her hand I knew she was gonna meet her connection At her feet was her footloose man You can’t always get what you want You can’t always get what you want You can’t always get what you want But if you try sometimes you [...]

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Opportunity, Not Crisis, Looms In 2019?

“I think we’re going to see a lot more of what we just saw, which is a lot more volatility, it’s really easy to say ‘I’m really bullish’ or ‘I’m really bearish.’ I kind of see a two-sided market.” “I think in the next year it will be, from where [...]

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The End Of The Beginning

“The training wheels are coming off. Next week, the European Central Bank will conduct its final meeting of 2018 and is widely expected to announce the cessation of its QE asset purchase program. The ECB began buying sovereign bonds in 2015 and added corporate debt to the mix a [...]

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The Big Short

“When it comes to investing, we never know what the future holds or where we are going, but we should do all we can to know where we stand, since the current position of the cycle has powerful implications for how we should cope with its possible future.” – [...]

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