Dec 30, 2013

David Geffen on Bill and Hillary Clinton

Everybody in politics lies, but they do it with such ease, it's troubling.

~ David Geffen, February 21, 2007, interview with Maureen Dowd of the New York Times

CNBC's Bob Pisani admires the world's central bankers

Central bankers around the world should have been Time's Person of the Year this year.

~ Bob Pisani, CNBC, 9:40 AM, December 30, 2013

Dec 27, 2013

London’s Decca Records: “The Beatles have no future in show business" (1962)

The Beatles have no future in show business... Groups are out; four-piece groups with guitars, particularly, are finished.

~ An executive at London’s Decca Records as he turned down the chance to sign the Liverpool group in 1962 before signing up Brian Poole and the Tremeloes instead

Dec 9, 2013

Dow Theory Forecasts uses contrary opinion to justify running with the bullish herd

Despite this year's rally, the 2008 meltdown is still fresh in everyone's mind, causing investor sentiment to remain skittish.  And that could be a good thing.  "The riskiest thing in the investment world is the belief that there's no risk," says Howard Marks, CEO of asset manager Oaktree Capital Group...

~ Richard J. Moroney, Dow Theory Forecasts, December 6, 2013

Jeffrey Saut: Equities in "sweet spot" of 2.5%-3.5% GDP growth

Here in New York the restaurants are full, and just try to get into Century 21, a department store for luxury items at cut-rate prices, because you will have to elbow your way through throngs of folks who are non-English speaking...  Indeed, not only are foreigners transacting in cash, but many Americans are doing the same after having been burned by debt in the 2008-09 credit crisis.  Therefore, I continue to believe the economy is stronger than most think.

I believe GDP numbers will improve to 2.5% to 3.5% in 2014, which should be the "sweet spot" for equities...  When economies grow at a GDP rate of 7%, 8%, 9% - that is when bubbles develop.  I think 2.5% to 3.5% GDP growth is actually the sweet spot for the equity markets; and everyone is underinvested for that simple and sustainable growth rate.

~ Jeffrey D. Saut, December 5, 2013 note to clients, as reported in Barron's "Market Watch," p. M16, December 9, 2013

Dec 7, 2013

Fred Hickey: "Fear has left the building"

We all know the markets are driven by two sentiments: fear and greed.  Currently, investors show no fear but plenty of greed as they pile into stocks as if it were 1999 all over again.  The much-watched Investors Intelligence survey of investment newsletter writers last week reported that the percentage of bears was down to 14.4% - a level not seen in 26 years - 1987, before the crash.

The Consensus Bullish Sentiment Index is currently at 77% - putting it firmly in the "market is overbought" territory.  After four consecutive years of withdrawals (2009-2012) investors are now pouring money into stock mutual funds at the fastest pace in thirteen years (since the 2000 top).  Barron's estimates that equity mutual funds and ETFs are on pace to receive more than $450 billion in inflows this year, more than the previous four years combined.  Investors are chasing "story" stocks again.  Anything related to the "cloud," "Big-Data," social media and 3-D printing is fair game to drive into the stratosphere of infinite P/Es.  The Shiller cyclically adjusted price-to-earnings (P/E) ratio is now over 25, a level only exceeded three times before - prior to the 1929, 2000, and 2007 crashes.  According to Credit Suisse, U.S. nonfinancial stocks are 45% more expensive on a price-to-book basis than their global peers, an excess not seen since the 2000 crash period.

The Dow Jones Industrials and S&P 500 indices have risen for eight consecutive weeks, the S&P 500 has leapt 26.6% year to date and the Nasdaq Composite index has soared 34.5%.  There hasn't been a 10% correction since the fall of 2011.  Initial public offerings (IPOs) this year-to-date are more than at any time since 2000, with more than 60% of the IPOs funding money-losing companies.  Secondary stock offerings (over $160 billion) are at the heaviest pace ever (since Dealogic began keeping records in 1995).  Fear has left the building.

~ Fred Hickey, editor, The High-Tech Strategist, "Fear Will Make a Comeback," December 1, 2013

Dec 4, 2013

Greenspan spots bubble before the burst

It’s a bubble. It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.

I do not understand where the backing of Bitcoin is coming from. There is no fundamental issue of capabilities of repaying it in anything which is universally acceptable, which is either intrinsic value of the currency or the credit or trust of the individual who is issuing the money, whether it’s a government or an individual.

~ Greenspan says Bitcoin is a bubble with no intrinsic value, Bloomberg, December 4, 2013

Tepper stays bullish, predicts multiple expansion

I would be worried if I was a long/short guy and not long enough, that's what I'd be worried about. But I'm not worried, because I am long. But if I'm a long/short guy who can only go 60% long … the biggest risk for the market is you'll have multiple expansion, higher growth, 10% earnings growth next year, and you'll have another year of 20%-30%.

~ David Tepper, "David Tepper on why the bulls are right," Bloomberg, December 4, 2013