I've got a stomach full it's not
a chip on my shoulder
I've got this growl in my tummy
and I'm gonna stop it today
I eat too much
I drink too much
I want too much
~ Dave Matthews Band, "Too Much"
We look at this market and we see "too much." Too much divergence, too much complacency, too much embedded downside risk… the list goes on and covers many things. Let's make the rounds and see what we find.
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1) Too much asset class divergence. Most of the major indices - Dow Jones Industrial Average (DJIA), S&P 500 (SPX), Transports (TRAN) - are at or near their all-time highs. So far so good. But small caps, as shown via the Russell 2000 (RUT) above, have broken trend and potentially-double topped. This is not a sign of roaring risk appetite. If anything it is
By Tim Melvin
Have you read the book There's Always Something to Do by Christopher Russo-Gill?
If not, it should move right to the top of your summer reading list. It is the accumulated reflections of Peter Cundill. A Canadian value investor, Cundill used the Graham Deep Value Approach to return a little more than 15 percent, on average annually, to investors for almost 30 years.
Cundill once described his approach as looking to buy dollars for $0.40, and he focused almost entirely on the balance sheet. He once commented that he did liquidation analysis and liquidation analysis only. He wanted to buy stocks in companies that traded below where he estimated they could be profitably liquidated.
1. Things To Do
Cundill looked all over the world for ideas, and felt that most of the time he could find enough bargain issues to get his funds invested in such bargain
Since last March I've been tracking the confluence of a reduction in the growth of bank savings deposits, the pickup in bank lending, and the Fed's tapering of its QE3 program ("Tracking the perfect storm"), looking for signs of declining money demand that the Fed might be underestimating. The Fed recently told us that tapering will finish within 3 months; bank lending continues to be strong; but bank savings deposit growth has not slowed further. Although there's no evidence of any further significant decline in money demand, these all remain symptomatic of a slow and gradual decline in the demand for money and money equivalents. As such, it is appropriate for the Fed to taper its QE purchases (which were designed primarily to satisfy the world's seemingly insatiable demand for money and money substitutes, since bank reserves are now functionally equivalent to T-bills), and there is no reason