Jul 20, 2014

Jim Paulsen: "Confidence is still too low" for a recession

The U.S. has a large “confidence gap.” Most confidence measures are still only average by postwar standards. In our view, confidence is typically the central catalyst for a recession. When economic players become confident they engage in the type of excessive behaviors which necessitate a recession. It takes confidence to over-spend, over-borrow, over-lend, over-build, over-hire, over-tighten (the Fed), or over-invest (in risky assets). None of these behaviors are yet evident because confidence is still too low.

~ Jim Paulsen, Wells Capital Management, "Economic and Market Perspective," July 10, 2014

Jul 13, 2014

Arkansas Teacher Retirement System executive director on Pershing Square's 25% return in the first half

When you are with the best of the best, there is no being excited about these numbers.  It just confirms what you already knew. Brilliant people will make you money over time.

~ George Hopkins, executive director at Arkansas Teacher Retirement System, an investor in Pershing Square, "Ackman's hedge fund Pershing Square surges 25% in first half," Reuters, July 3, 2014

Jul 12, 2014

Bethany McLean on bank capital levels

Capital isn’t this pile of money sitting somewhere, it’s an accounting construct.  And if you don’t have the accounting right then the capital is just an illusion anyway so I am a little weary of this notion that has taken hold…that if we have enough capital we’re safe come hell or high-water, I don’t buy it.

~ Bethany McLean, "Bank capital is an illusion: Bethany McLean," Daily Ticker, April 29, 2014

(McLean thinks we’re much better off than we were in 2008 and that though there might be another crisis, it won’t be in the banking sector.)

Jul 9, 2014

Joseph Stiglitz on how asset inflation does not translate into real economic growth

There very strong stock market prices are, in a sense, a symptom of the weak economy, not a symptom that we are about to have a strong recovery to our real economy.

~ Joseph Stiglitz, as appeared on CNBC, July 7, 2014

Jul 7, 2014

John Rogers on investing and opportunity

Long-term investment success is not about making little decisions.  It's the big decisions that matter.  These big decisions in periods of hyperoptimism or pessimism (like now) are what separate outstanding investment managers from the pack.  No player ever made it to the Baseball Hall of Fame for his distinguished bunting record.  Now is the time to swing for the fences, not recklessly or nervously, but in a studied, calm and controlled manner.

I will submit that there is a bit of luck involved here.  But as the chemist Louis Pasteur once said, "Chance favors only the prepared mind."  An investment manager's big decisions are not a coin toss; they come from years of relentless reading, studying those who have excelled and those who have fallen short, dissecting one's own successes and failures, networking with those who can shed new light on a stock or industry and teasing out contrarian points of view.

~ John W. Rogers Jr., "Swing For The Fences," Forbes, May 25, 2009

Jul 3, 2014

Jim Cramer on Janet Yellen looking out for the little guy

She's pro-Main Street!  The Fed hasn't been pro-Main Street in a long time.

~ Jim Cramer, CNBC, July 3, 2014

Jun 24, 2014

Brian Belski: Bull market has another 10 years to run

We’ve been on record since the 4th quarter of 2008 saying that U.S. stocks were entering a 15 to 20 year bull secular bull market. While people have come around to being more bullish I don’t think people believe we have another 10 years left.

There remains a tremendous amount of fear with respect to my industry [financials].  Investors don’t trust us, regulators are tough. All of that will normalize over the next several years. That is excessively bullish for the market.

~ Brian Belski, GMO Capital Markets, "Bull markets don’t die of old age, why Dow 44,000 is coming," interview with Jeff Macke on Yahoo!Finance, June 24, 2014