"Jeremy Grantham, founder and chief investment strategist of GMO, a $118bn investment house based in Boston, expects the stock market to continue to march higher in the coming year, eventually sucking in retail investors and setting up a serious decline around the time of the US elections in late 2016."
Tuesday, August 18, 2015
Wednesday, July 1, 2015
Online Stock Analysis tools
http://quotes.wsj.com/SPG/research-ratings
http://www.nasdaq.com/symbol/spg/analyst-research
http://money.cnn.com/quote/forecast/forecast.html?symb=spg
http://www.nasdaq.com/symbol/spg/analyst-research
http://money.cnn.com/quote/forecast/forecast.html?symb=spg
Wednesday, June 17, 2015
The life cycle of firms
People tend to parrot Warren Buffett too often. One of my pet peeve "Buffet-isms" is "our favorite holding period is forever". We as humans cannot gauge the future, how the economy will shift, what new technologies will arise, or how consumer preferences will change.
The important message from Warren Buffett is that it is good to have a long term holding period, but personally I think this should be much shorter than 'forever'. You don't want to focus on quarterly performance and overtrade, so a good middle ground is 5-10 years.
A good example of a company that shifts, GAP.
What they sold was just not in fashion anymore. Management, no matter how skilled, cannot fight this trend.
GAP could have been a great buy 10 years ago. But its a very different world now.
The important message from Warren Buffett is that it is good to have a long term holding period, but personally I think this should be much shorter than 'forever'. You don't want to focus on quarterly performance and overtrade, so a good middle ground is 5-10 years.
A good example of a company that shifts, GAP.
What they sold was just not in fashion anymore. Management, no matter how skilled, cannot fight this trend.
GAP could have been a great buy 10 years ago. But its a very different world now.
Sunday, June 14, 2015
Explaining US growth outperformance
PIMCO recently out out a short note talking about US economic outperformance relative to DM peers. Their summary is reproduced below:
Q: The U.S. appears to be the furthest advanced in its post-crisis normalization among developed countries. Why? And what is the chance of a surprise to the upside for growth or inflation?
Mather: There are three key reasons why the U.S. is furthest along. First, the U.S. was more aggressive in its response to the financial crisis through monetary policy, with interest rate cuts and quantitative easing. Second, private balance sheets were cleaned up more quickly, even if through defaults. Third, new regulation forced banks in the U.S. to recapitalize sooner than those in other countries. Many developed nations simply took longer to respond to the crisis for a variety of reasons, so it is not unexpected that the U.S. is further along in the normalization process.
This is the standard explanation of the US economy since the crisis. In my personal opinion this is an INCORRECT representation of the economic forces that were at play. US came just into a period of surplus, primarily from the fracking boom. This created a jobs, investment and current account boost that outweighed all policy actions that were taken. It's a recurring problem that investment analysts downplay the enormity of the US fracking revolution.
Q: The U.S. appears to be the furthest advanced in its post-crisis normalization among developed countries. Why? And what is the chance of a surprise to the upside for growth or inflation?
Mather: There are three key reasons why the U.S. is furthest along. First, the U.S. was more aggressive in its response to the financial crisis through monetary policy, with interest rate cuts and quantitative easing. Second, private balance sheets were cleaned up more quickly, even if through defaults. Third, new regulation forced banks in the U.S. to recapitalize sooner than those in other countries. Many developed nations simply took longer to respond to the crisis for a variety of reasons, so it is not unexpected that the U.S. is further along in the normalization process.
This is the standard explanation of the US economy since the crisis. In my personal opinion this is an INCORRECT representation of the economic forces that were at play. US came just into a period of surplus, primarily from the fracking boom. This created a jobs, investment and current account boost that outweighed all policy actions that were taken. It's a recurring problem that investment analysts downplay the enormity of the US fracking revolution.
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