Myopia & Market Function

My latest post for Alpha Baskets looks at myopic loss aversion (putting short term emotion ahead of long term interests) along with ways to try to avoid it. From the post; We’ve talked about this before going back before the crisis albeit with some different wording. Before and during the last major decline, as well as many times since then, I’ve said that when the market does take a serious hit that it will then recover to make a new high with the variable being how long it takes. While this seems obvious now it is one of many things frequently forgotten in the heat of a large decline. Please click through to read the entire post. The picture is Devil’s Tower in Wyoming from 2012....

Jobs Up! Rate Hike On?

The weekly Market Update is posted at Alpha Baskets and includes the following; Part of the initial reaction to the report was that the Ten Year US Treasury Note rocketed up to 2.33% and stayed there after closing the week before at 2.15%. As the equity session opened and wore on, utilities got torched with the two largest sector ETFs dropping about 3.5%. The reason of course for these reactions was that the strength in the jobs report gives the FOMC cover to raise rates in December as various Fed-Heads have been saying. As a bit of a not so fast my friend (with a nod to Lee Corso) Morgan Creek CEO Mark Yusko Tweeted on Friday that the Fed has never raised rates when the PCE was below 2%. Please click through to read the entire update. The picture is from...

Does 60/40 Need To Evolve?

My latest post for Alpha Baskets looks at an article on alternative strategies along with some of my thoughts on the subject (hint: I believe in using them in moderation). From the post; While past performance is no guarantee of future returns it can set expectations for how a fund might perform. A fund, regardless of strategy, is unlikely to be a bond market proxy (or what people hope a bond fund will do) if it captured a large portion of the equity market rally. That fact wouldn’t invalidate the strategy/fund but many funds that look like equities on the way up will look like equities on the way down. Please click through to read the entire post. The picture is from Phoenix International Raceway last March. That is Jeff Gordon in for a pit stop, not sure who that is out on the track in the...

Markets Party Like It’s 2011

This week’s Market Update is posted and includes the following; Barron’s explored the breadth in great detail over the weekend noting that 52% of S&P 500 components are below their respective 200 day moving averages, only the technology and staples sectors have a majority of their stocks above the August highs and that the index’ ability to make gains from here relies on a handful of megacap tech stocks being able to keep their momentum. Bespoke Investment Group reports that with more than 80% of companies reporting earnings things have improved on the bottom line with 63% of companies beating earnings estimates but top line performance is still “depressed” with only 46.9% of companies beating revenue estimates. On earnings Barron’s noted that thus far earnings have contracted by 1% but that excluding energy they are up 6.1%. Please click through to read the entire post....