Jun 24, 2013

Jim Cramer: "Not a soul is bullish"

The only bullish aspect of today is not a soul is bullish and there seems to be no reason to rally.

~ Jim Cramer, Twitter, June 24, 2013

Jun 23, 2013

Larry Fink: Investors need to take more equity risk in order to meet retirement needs

We’re not going to change human behavior, but we need to find ways to influence it. Investors don’t take a long-term view. They are too concerned about all the noise out there, all the ups and downs in the markets.  That noise – and the concern people have about outliving their savings – are ironically driving investors to investments they perceive to be safer, like traditional bonds.  But they should do just the opposite, taking advantage of their longer investment horizon to keep their money working for them.

[Pension plans and individuals have long used traditional government bonds to help fund retirement obligations.]  That worked for 30 years of falling inflation and interest rates and eight percent returns on Treasuries. But it doesn’t work today when the 10-year Treasury yields less than two percent. And the very real risk is that people over-allocating to traditional bond funds are going to lose money when interest rates rise.  The old rules of investing – 60 percent equities, 40 percent fixed income and an increasing share of fixed income the closer you got to retirement – won’t work today.

~ Laurence Fink, CEO of BlackRock with $3.936 trillion under management as of March 31, "BlackRock CEO Declares Longevity 'Defining Challenge of Our Age'," Business Wire, May 7, 2013

Alan Greenspan on the Fed's exit strategy

The sooner we come to grips with this excessive level of assets on the balance sheet of the Federal Reserve - that everybody agrees is excessive - the better.  There is a general presumption that we can wait indefinitely and make judgments on when we're going to move.  I'm not sure the market will allow us to do that.

~ Alan Greenspan, as appeared on CNBC, June 7, 2013

Ted Aronson on staying the course with stock and bond investments

For good reasons and bad, I’d hold tight. The good include my faith in capitalism and its ability to weather a storm, even one of biblical proportions. The bad reason is, I have no faith in my ability to time this sort of thing. Even if I got out in time, I probably wouldn’t be able to correctly time getting back in!

I remain a broken record. The song remains the same. I am sticking to it. Successful investing includes taking risk (where bonds clearly fall today, I admit), diversifying and keeping costs down.

~ Ted Aronson, head of AJO Partners with $22 billion under management, "Lazy Portfolio creators remain stock bulls," MarketWatch, Paul Farrell, June 22, 2013

Jun 21, 2013

Ken Fisher: We're in "the middle of a bull market"

The notion of having a couple of 25% back-to-back years is something that would shock most people.  And we still have a world where most investors over the recent years have been lightening up on equities.  Overall, the notion that it's actually maybe the middle of a bull market, and there's a lot ahead - that's a really impossible concept for most people to get. 

I've got this part of me that's a big fan of John Templeton's line that 'bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria,' and I think we're kind of at the point in time where we have one foot in skepticism and one foot in optimism, and we haven't finished straddling that transition.

~ Ken Fisher, interview on Bloomberg TV, June 21, 2013

Jun 20, 2013

Kevin Duffy: "We are on the edge of the precipice"

I think we are on the edge of the precipice, a combination of confidence, enthusiasm, selective euphoria, blind optimism, faith (in central bankers), and buy-the-dip mentality (any correction is healthy).  The Bernanke put is the hook.  Everyone fixated on the magical powers of the Fed, totally blind to the utter economic destruction going on.  No one is stopping to consider that stocks are long dated economically correlated assets… and that the economic foundation has been reduced to quicksand. There are signs of delusion everywhere.  Two of my favorites: cash on the sidelines and a wall of bearish sentiment for stocks to climb… patently absurd.

~ Kevin Duffy, June 20, 2013

Jun 18, 2013

Niall Ferguson on the limits of monetary policy

The main lesson to be learned this year is the limit of monetary policy.   The story last year was that the Central Banks are the only game in town. The story this year, is that despite stimulus spending which is simply an anti-volatility policy, the economy will not achieve “escape velocity.”

I predict that the limits of monetary policy will be witnessed by the end of this year. We have a structural economic policy problem – not a monetary one.
 
~ Niall Ferguson, Harvard historian, speech given at the 10th annual Strategic Investment Conference in California, May 3, 2013

Jun 16, 2013

Barron's editors: housing bubble blowoff still to come

There seems to be a bubble in news coverage about the housing bubble, which shows editors aren't much different from investors in trying to latch onto a hot trend.  But which stories should contrarians bet against - ones warning of the bubble bursting or those explaining why house prices are unlikely to crash?  In the late 1990s, when tomes forecasting Dow 10,000 came out, bears were slaughtered before they were vindicated.  Indeed, the final blowoff is the most violent phase.  We could be at a point in housing analogous to 3000 on the Nasdaq - which hit 5000 before crashing to 1200.

~ Barron's "Market Week," May 30, 2005

Jun 15, 2013

Jim Paulsen on the budget deficit: "laissez faire is taking care of that problem"

[F]or the last four years or more, people have avoided the stock market because of perceived fiscal woes that are overwhelming.  I think laissez faire Adam Smith is taking care of that problem all its own.  We've had deficit-to-GDP ratio that was 10.5% at the end of the '08 recession.  It's now maybe 5.5%.  It's sort of just melting away by about 1% a year, and government really hasn't done that.  It's just been a slow revitalization of economic growth, which is raise tax receipts faster than people appreciated and lower welfare outlays.  And I think that's going to continue.  I wouldn't worry about the deficit so much.

~ Jim Paulsen, Wells Capital Management, as appeared on CNBC (quote starts at 3:13 on video), June 10, 2013

Jun 13, 2013

Jim Paulsen on the BOJ, ECB, and Fed monetary experiments

I think Abenomics is working.  And I think thank that both Europe - Draghinomics - and Japan - Abenomics - is adopting the Ben [Bernanke] model of stimulate now and ask questions later, and I think the developed world's on the right track.

~ Jim Paulsen, Wells Capital Management, as appeared on CNBC (quote starts at 3:46 on video), June 13, 2013

Jun 8, 2013

Maria Bartiromo: 2-day correction is healthy and a buying opportunity

Finally my observation on this market sell-off today. This may sound strange. As an optimist I was happy the market stayed down and did not rally from the lows into the close. Why do I say that? Well, this market has been trading up in a straight line pretty much since November of 2012. In fact today and yesterday was the worst two-day drop since November. And still the S&P 500 and the Dow are up in the double digits year-to-date. This may be the moment market pros have been waiting for, an opportunity to actually get in at better levels, lower levels. So my point is seeing a pull-back is exactly what you would want from a healthy market.

The question of course has to be has anything really changed? And in some cases it has. Interest rates have begun to move up. The conversation on Wall Street has begun to shift, to not if, but when the Federal Reserve will slow down the stimulus by cutting the amounts of bonds it buys. And even amid the rally there remain a healthy level of skepticism - some 30% of accounts are sitting in cash. (You just heard that from [UBS Group CEO] Sergio Ermotti.)  At some point that money will come back into the market and go to work. And that point could be here in this pull-back. Because any clear-thinking investor knows, nothing goes up in a straight line.

Many traders I spoke with today told me they are hoping for further selling tomorrow because they want to see a clean sweep.  They want to truly believe that there is value to be had by getting in for the long-term at lower prices. And if we are down tomorrow, it would be the first three-day losing streak for the Dow this year. First three-day losing streak this year.  That's incredible, and not normal. There may be more selling to come.  In fact, it would probably be healthy if there was. But long-term, most people do believe it will once again be a buying opportunity.

~ Maria Bartiromo, "Maria's Observation," CNBC, June 5, 2013

Jun 6, 2013

Larry Fink on the Australian model of compulsory retirement accounts

Superannuation has been a huge success in supplementing the government pension scheme and taking the strain off it - an attractive prospect as we think about how to relieve the burden on Social Security in this country.  The current system is broken, and we need a comprehensive solution to retirement savings that includes some form of mandatory retirement savings.

~ Larry Fink, CEO of BlackRock, asset manager with nearly $4 trillion under management, from a lecture given to business school students at New York University in May, "Retirement Saving Done Right," Bloomberg BusinessWeek, June 3, 2013

Ralph Acampora: Dow 20,000, public investor "all in cash"

I see no speculation whatsoever...  People are starting to feel a little bit better.  They're willing to take a little bit more risk.  I think perhaps we're on the cusp of going from Phase 1 of disbelief to Phase 2, where we're starting to see belief and trust.  And I love it when people keep talking this market down.  And we haven't even talked about the public being all in cash and money markets and Treasuries.  Maria, this has got a long way to go.

~ Ralph Acampora, Altair Investment Solutions, as appeared on CNBC (quote starts at 2:54 on the video), May 3, 2013

(The DJIA just set a record, breaking 15,000 on May 3rd intraday.  Acampora predicted the Dow would reach 20,000 by 2017.  Keep in mind, he also predicted Dow 21,000 by 2011 on July 18, 2007 - right at the top of the credit - a blemish on his forecasting record interviewer Maria Bartiromo forgot to mention.)