Financial topics

[Higgenbotham]

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[Higgenbotham]

"One day Higgenbotham will be right. I'm just looking for the right day to pull the trigger."
--Martin Riggs

[John]

So I guess the next stop must be 3500.

[Higgenbotham]

So I guess the next stop must be 3500.

You sound very optimistic.

"One day Higgenbotham will be right. I'm just looking for the right day to pull the trigger."
--Martin Riggs

I will be shorting lots of futures contracts today most likely.

"This is going to be the biggest crash in the history of the world."
--Vladimir Puts

[Higgenbotham]

These are representative quotes from the Financial Topics thread (this thread), all within a week of the March 2009 stock market low.

As an astute investor I always try to question my positions and assumptions and as a bear (currently, but certainly not permanently) I try to be even more open to evidence that would lead me to a bullish position. Having said that I truly believe we might have the clearest case of a bear market going forward as anytime I have experienced or studied, and that includes the Great Depression Era.

I was surprised to read a story on WSJ.com, apparently on page C1 of
today's printed paper, with the headline:

Dow 5000? A Bearish Bet That Looks Quite Possible
http://online.wsj.com/article/SB123654810850564723.html

It seems to me that if I were long in the stock market I would
immediately sell, in order to beat the rush to 5000.

As I've said several times in the web log, this continues to be a
time of "maximum danger" for investors, as a panic selloff may occur
at any time.

Now they are retiring and there is a structural outflow which will continue until more people are forced to invest than are forced to withdraw. The boomer population is so large that this won't happen for 20 years or so.

I am arguing that Obama's people are not incompetent, but either consciously or unconsciously trying to bring it (the economy) down.
They may think the only way to get virtually socialistic policy in place is to make things so bad that resistance will be futile.

It really fits the Gen-X archetype, high risk approach to problem solving.

Boomers have lived in a reality where the stock market and real estate were the best investments and the stock market always recovered from declines that were temporary. It’s very hard to accept that we are in a new reality – a new depression where stocks and real estate will not come back for decades. (Of course, the bears could still be wrong and the majority Boomers could still be correct.)

Take a look at the latest S&P earnings:
http://www2.standardandpoors.com/spf/xl ... EPSEST.XLS

They have a predicted P/E ratio of 181 on 9/30/09 and then it magically falls to the low 20's based on estimates. Funny how the estimates always seems to be better than reality. Until this changes I see no reason to expect a turn-around in stocks.

One interpretation is that The Great Pump-Up, which lasted over thirty years, is finished and the Age of De-Leverage is fast upon us.

Until the current administration shows a willingness to lead equities simply aren't a buy yet based on fundamentals based on information provided by John also.

[Higgenbotham]

Re these representative quotes from the Financial Topics thread (this thread), all within a week of the March 2009 stock market low:

I truly believe we might have the clearest case of a bear market going forward as anytime I have experienced or studied, and that includes the Great Depression Era.

STRONGLY AGREE, THIS IS THE STATEMENT I AGREE WITH MOST

It seems to me that if I were long in the stock market I would
immediately sell, in order to beat the rush to 5000.

As I've said several times in the web log, this continues to be a
time of "maximum danger" for investors, as a panic selloff may occur
at any time.

STRONGLY AGREE, AND WE WILL SEE 5000

Now they are retiring and there is a structural outflow which will continue until more people are forced to invest than are forced to withdraw. The boomer population is so large that this won't happen for 20 years or so.

STRONGLY AGREE THOUGH NOW IT IS 10 YEARS DEMOGRAPHICALLY SPEAKING WHICH MAKES THE EXIT HARDER TO FIT THROUGH

Boomers have lived in a reality where the stock market and real estate were the best investments and the stock market always recovered from declines that were temporary. It’s very hard to accept that we are in a new reality – a new depression where stocks and real estate will not come back for decades.

STRONGLY AGREE

Funny how the estimates always seems to be better than reality. Until this changes I see no reason to expect a turn-around in stocks.

STRONGLY AGREE, THOUGH SUBSTITUTE FURTHER UPSIDE FOR TURNAROUND

One interpretation is that The Great Pump-Up, which lasted over thirty years, is finished and the Age of De-Leverage is fast upon us.

Until the current administration shows a willingness to lead equities simply aren't a buy yet based on fundamentals based on information provided by John also.

STRONGLY AGREE AND NOW IT HAS BEEN OVER 40 YEARS AND IS FAR WORSE

[Higgenbotham]

Though I didn't quite agree with all these statements at 700 on the S&P and don't see any posts of mine from that time period near the low, a few months later I did and the market was vastly overvalued at 1000 in my opinion and is hideously overvalued at 2800.

mannfm11 made some excellent points that month about dividends and valuation.

Nothing has been solved. No restructuring has taken place. The debt continues to rise and rise because of that. The majority of the underlying big picture factors that contributed to the 2008 crash are worse.

[Higgenbotham]

http://obits.dignitymemorial.com/dignit ... id=6159009
https://seekingalpha.com/author/fred-voetsch/comments
https://www.linkedin.com/in/fred-voetsch-9110a93

Apparently freddyv passed away.
April 28, 1959 - October 14, 2014

Last active: Fri Sep 26, 2014 11:18 am
Occupation: Photographer/Business Owner
Location: Oregon, USA
(from his profile here)

I knew he posted on Seeking Alpha and was able to recall his last name from that.

[John]

From an FT e-mail:

> Carillion held just £29m in cash when it collapsed

> Carillion was left with just £29m in cash when it collapsed,
> according to a document that reveals the extent of the
> construction company’s financial black hole.

> Papers seen by the Financial Times show the insolvent construction
> company owed £1.29bn to its banks, including a £790m revolving
> credit facility and £349m in private placement notes.

> Keith Cochrane, the company’s interim chief executive, has stated
> in a document for the company’s insolvency process that there was
> so little funding available that the consultants PwC and EY both
> rejected requests that they be taken on as administrators amid
> concerns they would not be paid.

> The company would apparently have been left with a cash shortfall
> of £3.5m had it kept operating until Thursday without drawing down
> further debt facilities.

Wow!

From a WSJ e-mail:

> Prices can’t rise forever, but U.S. stock benchmarks rallied hard
> last week (again) and were poised to spring anew at Tuesday’s
> opening bell.

> The bad news for bears is that few clear “sell” signals have
> materialized, technicians say.

> The S&P 500 advanced 1.6% last week and is already up 4.2% in
> 2018. Extrapolating the year’s first nine trading sessions into a
> full year, the benchmark is pacing for an annual advance north
> of 160%, according to Instinet.

> While no one expects gains of that magnitude, the early-year swell
> calls to mind how bull-market rallies tend to spike hard before
> keeling over. If stocks are “melting up,” a phase used when gains
> are disconnected from business and economic realities, there could
> be much more to come. GMO’s Jeremy Grantham recently said
> U.S. stocks could rise as much as 50% before flaming out in
> spectacular fashion.

> A volcanic final phase for stocks would be consistent with the
> bookend-like shape of previous bull markets. On average, roughly
> 40% of gains accrue in the first 12 months and an additional 32%
> pile on on during the final 12, according to Longview Economics.

> Market watchers’ perpetual worry is that prolonged price gains
> carry benchmarks so far, so fast that they become “overbought,” or
> vulnerable as prospective buyers wear thin.

> Yet stocks appear to be gathering more steam, not losing
> it. One-third of S&P 500 ended Friday at their highest prices in
> at least a year, the strongest "breadth" reading since 2013,
> according to MKM Partners. At least nine out of ten stocks within
> six S&P 500 sectors (consumer discretionary, health care,
> materials, energy, industrials, telecom) last week coasted above
> their 50-day moving averages, another rare show of strength,
> according to Bespoke Investment Group.

> There's no surefire gauge to predict the next wobble but history
> suggests that a buyable dip will arrive before the ride is
> over. Take 1999, when the S&P 500 had a 12% correction before
> ending the year up 20% and peaking.

> “Even melt-up phases have pauses/breaks,” Longview writes.

Wow!

[Higgenbotham]

Financial Nonsense News Hour

Interview with Higgenbotham

Financial Nonsense: Today we have with us Higgenbotham, the developer of the SOLBLA indicator, which stands for Speed of Light Bubble Leakage Analogy. Welcome, Higgenbotham.

Higgenbotham: Glad to be here. Thank you for having me.

Financial Nonsense: Could you tell us a little bit about your background in finance?

Higgenbotham: Yes, I am a self taught investor. Early on, I figured it was better to teach myself how to lose money in the markets rather than pay $200,000 for a business degree to teach me how to lose money in the markets.

Financial Nonsense: Yes, but if you'd paid for the degree the government would cover your losses with a bailout.

Higgenbotham: True, I didn't consider that.

Financial Nonsense: What did you learn during your self teaching process?

Higgenbotham: I learned that both Isaac Newton and Albert Einstein lost money in the markets. Newton lost money in the South Sea Bubble and Einstein lost money in bonds that became worthless, as revealed by letters published after his death. I figured that since I am smarter than both Newton and Einstein I could make money in the markets.

Financial Nonsense: True, that's what we think too. How did you develop SOLBLA?

Higgenbotham: Well, I was losing money in the markets so I figured I'd better come up with something quick that I could sell. Since I was an engineer by training, I decided to build a bubble in the laboratory and what I noticed was that as the bubble got bigger, the gas got lighter, and the material used to construct the bubble allowed for a smaller diameter hole to be created when the bubble was pricked, the velocity of gas escaping the bubble approached the speed of light!

Financial Nonsense: That's amazing. Does the velocity really increase as the gas gets lighter? I thought it would be the opposite.

Higgenbotham: Well, the key here is that as you approach these higher pressures the gas enters criticality where the Van Der Waals forces flip polarity and the velocity actually increases when helium is used versus, say, air which has dipole dipole interactions.

Financial Nonsense: Fascinating! Thanks for stopping by, Higgenbotham.

Higgenbotham: It was my pleasure.