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Выбор редакции
23 марта, 03:15

5 Charts That Scream "This Is It"

Authored by Stephen McBride via GarretGalland.com, Before yesterday, the S&P 500 and DJIA hadn’t seen a 1% drop since October 2016. For some perspective, Hillary Clinton was the presidential frontrunner the last time markets fell 1%. This was the longest such streak for both indices in over 20 years. In February, the DJIA recorded its longest “winning streak” since 1987. It closed 2,000 points above its 200-day moving average for the first time ever. Also in February, the combined market cap of the S&P 500 topped $20 trillion for the first time. Its market cap has increased by over $2 trillion since the election—staggering. Like we discussed last month, with a proliferation of “record” highs in 2017, where are market valuations at today? The five charts below paint the whole picture best. Chart #1: S&P 500 Price/EBITDA Today, the S&P 500 price/EBITDA sits at an all-time high. Source: The Credit Strategist This tells us that the current rally can be largely attributed to “valuation expansion.” Indeed, around 60% of the gains since 2009 have come from this source. At the same time, earnings growth has been anemic. From 2012–2016, annual earnings growth was just 0.49%. In comparison, from 1995–1999, growth was 9.5%. Chart #2: CAPE Another commonly used metric is the cyclically adjusted, price-to-earnings ratio (CAPE). Currently, the CAPE is 73% above its mean. Besides its reading before the 1929 crash and dot-com bubble, the ratio is at its highest level on record. Source: Robert Shiller Chart #3: Total Market Cap/GDP Warren Buffet’s favorite valuation metric, total market cap relative to GDP, currently stands at 130%—a 129% increase since 2009. This rise also brings the ratio to its highest level since 2000. Source: Gurufocus Chart #4: NYSE Margin Debt High levels of margin debt lead to increased volatility as more people are forced to sell due to margin calls. In January, margin debt hit another record high. The two previous tops were one month and three months prior to the respective 2000 and 2008 market crashes. Source: Advisor Perspectives Chart #5: The Complacency Index Margin debt making another “all-time high” signals the cycle is in late stages when complacency takes hold. And surprise, surprise, that too is at all-time highs. Source: Bloomberg In the past, when the complacency index was high, stocks invariably saw big corrections shortly thereafter. By most metrics, equities look pricey. But even with the bull market now eight years old, sentiment continues to be extremely bullish. So, what are the takeaways from these lofty valuations? Lower Future Returns and Higher Downside Risk To quote Warren Buffet, “The price you pay determines your rate of return.” In a nutshell, this sums up what today’s valuations mean for investors. High valuation metrics aren’t indicative of an imminent market crash. What they do tell us is that we must lower our expectations of future returns. While the correlation isn’t perfect, this chart shows a higher CAPE ratio usually means lower future returns. Source: Bloomberg With the stunning run-up in markets since 2009, investors can’t reasonably expect returns to continue at double the long-term average. At a time of exuberance, it’s important to remember markets are cyclical. The other takeaway from today’s valuations is that when the drawdown does come, it will be severe. As this chart from Star Capital shows, downside risk tends to increase as market valuations become excessive. Source: Star Capital Given current market levels, investors may want to lower their future expected returns. It’s important to note that “record highs” are records for a reason. It’s where previous limits were reached. With that in mind, how should investors approach the markets today? Adopt a Contrarian Investment Strategy While markets continue to make new highs, investors should proceed with care. This is the second-longest period in stock market history without a 10% correction. As detailed above, the higher valuations go, the worst the subsequent drop. The average decline during the last five bear markets was 33% - the next one could be much worse. Of course, markets could rise another 50% from here before falling. But given their run-up since 2009—is it a risk worth taking? *  *  * Learn More About the Contrarian Value Strategy in Our Free Report, 3 Proven Strategies to Invest in Uncertain Markets Like These - In this report, we detail three strategies investors can use to find value in today’s generally overpriced markets. Click here to learn more about this proven investment system that will change how you invest forever.

22 марта, 18:27

Американская экономика уверенности

Финансовые рынки, кажется, убеждены в том, что недавний всплеск деловой и потребительской уверенности в США вскоре найдёт отражение в реальной экономической статистике, например, в темпах роста ВВП, бизнес-инвестиций, потребления и зарплат. Однако экономисты и политики не до конца разделяют эту уверенность. Если их сомнения оправдаются, последствия будут весьма серьёзны как для США, так и для мировой экономики.

20 марта, 19:59

Shiller's CAPE: Is It Really Just B.S.? – Part 1

Authored by Lance Roberts via RealInvestmentAdvice.com, One of the hallmarks of very late stage bull market cycles is the inevitable bashing of long-term valuation metrics. In the late 90’s if you were buying shares of Berkshire Hathaway stock it was mocked as “driving Dad’s old Pontiac.” In 2007, valuation metrics were being dismissed because the markets were flush with liquidity, interest rates were low and “Subprime was contained.” Today, we once again see repeated arguments as to why “this time is different” because of the “Central Bank put.”  First, let me just say that I have tremendous respect for the guys at HedgEye. They are insightful and thoughtful in their analysis and well worth your time to read. However, a recent article by HedgEye made a very interesting point that bears discussion. “Meanwhile, a number of stubborn bears out there continue to make the specious argument that the U.S. stock market is expensive. ‘At 22 times trailing twelve-month earnings,’ they ask, ‘how on earth could an investor possibly buy the S&P 500?’   The answer is simple, really. Valuation is not a catalyst.” They are absolutely right. Valuations are not a catalyst. They are the fuel. But the debate over the value, and current validity, of the Shiller’s CAPE ratio, is not new. Critics argue that the earnings component of CAPE is just too low, changes to accounting rules have suppressed earnings, and the financial crisis changed everything.  This was a point made by Wade Slome previously: “If something sounds like BS, looks like BS, and smells like BS, there’s a good chance you’re probably eyeball-deep in BS. In the investment world, I encounter a lot of very intelligent analysis, but at the same time I also continually step into piles of investment BS. One of those piles of BS I repeatedly step into is the CAPE ratio (Cyclically Adjusted Price-to-Earnings) created by Robert Shiller.” Let’s break down Wade’s arguments against Dr. Shiller’s CAPE P/E individually. Shiller’s Ratio Is Useless? Wade states: “The short answer…not very. For example, if investors followed the implicit recommendation of the CAPE for the periods when Shiller’s model showed stocks as expensive they would have missed a more than quintupling (+469% ex-dividends) in the S&P 500 index. Over a shorter timeframe (2009 – 2014) the S&P 500 is up +114% ex-dividends (+190% since March 2009).” Wade’s analysis is correct.  However, the problem is that valuation models are not, and were never meant to be, “market timing indicators.”  The vast majority of analysts assume that if a measure of valuation (P/E, P/S, P/B, etc.) reaches some specific level it means that: The market is about to crash, and; Investors should be in 100% cash. This is incorrect. Valuation measures are simply just that – a measure of current valuation. More, importantly, it is a much better measure of “investor psychology” and a manifestation of the “greater fool theory.” If you “overpay” for something today, the future net return will be lower than if you had paid a discount for it. Think about housing prices for a moment as shown in the chart below. There are two things to take away from the chart above in relation to valuation models.  The first is that if a home was purchased at any time (and not sold) when the average 12-month price was above the long-term linear trend, the forward annualized returns were significantly worse than if the home was purchased below that trend. Secondly, if a home was purchased near the peak in valuations, forward returns are likely to be extremely low, if not negative, for a very long time. This is the same with the financial markets. When investors “pay” too much for an investment, future returns will suffer. “Buy cheap and sell dear” is not just some Wall Street slogan printed on a coffee mug, but a reality of virtually all of the great investors of our time in some form or another. Cliff Asness discussed this issue in particular stating: “Ten-year forward average returns fall nearly monotonically as starting Shiller P/E’s increase. Also, as starting Shiller P/E’s go up, worst cases get worse and best cases get weaker.   If today’s Shiller P/E is 22.2, and your long-term plan calls for a 10% nominal (or with today’s inflation about 7-8% real) return on the stock market, you are basically rooting for the absolute best case in history to play out again, and rooting for something drastically above the average case from these valuations.” We can prove that by looking at forward 10-year total returns versus various levels of PE ratios historically. Asness continues: “It [Shiller’s CAPE] has very limited use for market timing (certainly on its own) and there is still great variability around its predictions over even decades. But, if you don’t lower your expectations when Shiller P/E’s are high without a good reason — and in my view, the critics have not provided a good reason this time around — I think you are making a mistake.” While, Wade is correct that investors who got out of the market using Shiller’s P/E ratio would have missed the run in the markets from 2009 to present, those same individuals most likely sold at the bottom of the market in 2008 and only recently began to return as shown by net equity inflows below. In other words, they missed the “run up” anyway. Investor psychology has more to do with long-term investment outcomes than just about anything else. What valuations tell us, is that at current levels investors are strictly betting on there always being someone to pay more in the future for an asset than they paid today.  Huckster Alert… It is not surprising that due to the elevated level of P/E ratios since the turn of the century, which have been fostered by one financial bubble after the next due to Federal Reserve interventions, there has been a growing chorus of views suggesting that valuations are no longer as relevant. There is also the issue of the expanded use of forward operating earnings. First, it is true that P/E’s have been higher over the last decade due to the aberration in prices versus earnings leading up to the 2000 peak. However, as shown in the chart below, the “reversion” process of that excessive overvaluation is still underway. It is likely the next mean reverting event will complete this process. Cliff directly addressed the issue of the abuse of forward operating earnings. “Some outright hucksters still use the trick of comparing current P/E’s based on ‘forecast’ ‘operating’ earnings with historical average P/E’s based on total trailing earnings. In addition, some critics say you can’t compare today to the past because accounting standards have changed, and the long-term past contains things like World Wars and Depressions. While I don’t buy it, this argument applies equally to the one-year P/E which many are still somehow willing to use. Also, it’s ironic that the chief argument of the critics, their big gun that I address exhaustively above [from the earlier post], is that the last 10 years are just too disastrous to be meaningful (recall they are actually mildly above average).” Cliff is correct, of course, as it is important to remember that when discussing valuations, particularly regarding historic over/undervaluation, it is ALWAYS based on trailing REPORTED earnings. This is what is actually sitting on the bottom line of corporate income statements versus operating earnings, which is “what I would have earned if XYZ hadn’t happened.” Beginning in the late 90’s, as the Wall Street casino opened its doors to the mass retail public, use of forward operating earning estimates to justify extremely overvalued markets came into vogue. However, the problem with forward operating earning estimates is they are historically wrong by an average of 33%. To wit: “The biggest single problem with Wall Street, both today and in the past, is the consistent disregard of the possibilities for unexpected, random events. In a 2010 study, by the McKinsey Group, they found that analysts have been persistently overly optimistic for 25 years. During the 25-year time frame, Wall Street analysts pegged earnings growth at 10-12% a year when in reality earnings grew at 6% which, as we have discussed in the past, is the growth rate of the economy.” Ed Yardeni published the two following charts which shows analysts are always overly optimistic in their estimates. “This is why using forward earnings estimates as a valuation metric is so incredibly flawed – as the estimates are always overly optimistic roughly 33% on average. Furthermore, the reason that earnings only grew at 6% over the last 25 years is because the companies that make up the stock market are a reflection of real economic growth. Stocks cannot outgrow the economy in the long term…remember that.   The McKenzie study noted that on average ‘analysts’ forecasts have been almost 100% too high’ and this leads investors into making much more aggressive bets in the financial markets.” The consistent error rate in forward earnings projections makes using such data dangerous when making long-term investments. This is why trailing reported earnings is the only “honest” way to approach valuing financial markets. Importantly, long-term investors should be abundantly aware of what the future expected returns will be when buying into overvalued markets. Bill Hester recently wrote a very good note in this regard in response to critics of Shiller’s CAPE ratio and future annualized returns: “We feel no particular obligation defend the CAPE ratio. It has a strong long-term relationship to subsequent 10-year market returns. And it’s only one of numerous valuation indicators that we use in our work – many which are considerably more reliable. All of these valuation indicators – particularly when record-high profit margins are accounted for – are sending the same message: The market is steeply overvalued, leaving investors with the prospect of low, single-digit long-term expected returns.“ As clearly stated throughout this missive, fundamental valuation metrics are not, and were never meant to be, market timing indicators. This was a point made by Dr. Robert Shiller himself in an interview with Henry Blodgett: “John Campbell, who’s now a professor at Harvard, and I presented our findings first to the Federal Reserve Board in 1996, and we had a regression, showing how the P/E ratio predicts returns. And we had scatter diagrams, showing 10-year subsequent returns against the CAPE, what we call the cyclically adjusted price-earnings ratio. And that had a pretty good fit. So I think the bottom line that we were giving – and maybe we didn’t stress or emphasize it enough – was that it’s continual. It’s not a timing mechanism, it doesn’t tell you – and I had the same mistake in my mind, to some extent — wait until it goes all the way down to a P/E of 7, or something.” Currently, there is clear evidence that future expectations should be significantly lower than the long-term historical averages. Do current valuation levels suggest you should be all in cash? No. However, it does suggest that a more cautious stance to equity allocations and increased risk management will likely offset much of the next “reversion” when it occurs. My job is to protect investment capital from major market reversions and meet investment returns anchored to retirement planning projections. Not paying attention to rising investment risks, or adjusting for lower expected future returns, are detrimental to both of those objectives. Next week, I will introduce a modified version of the Shiller CAPE ratio which is more constructive for shorter-term outlooks.

19 марта, 09:19

Низкие ставки - смерть инвестиционного бизнеса

Москва, 17 марта - "Вести.Экономика". Если сегодня есть что-то, что способно будет поразить финансовых историков будущего, то это, безусловно, беспрецедентно низкие процентные ставки. Никогда раньше ставки по депозитам или доходность облигаций не были такими низкими в номинальном выражении, причем некоторым правительствам удается даже занимать по отрицательным ставкам.

17 марта, 18:01

Низкие ставки - смерть инвестиционного бизнеса

Если сегодня есть что-то, что способно будет поразить финансовых историков будущего, то это, безусловно, беспрецедентно низкие процентные ставки.

17 марта, 18:01

Низкие ставки - смерть инвестиционного бизнеса

Если сегодня есть что-то, что способно будет поразить финансовых историков будущего, то это, безусловно, беспрецедентно низкие процентные ставки.

16 марта, 18:30

This Is What a Stock Market Bubble Looks Like

Let’s compare today’s market to the 1990s tech bubble, which pretty much sets the standard for a modern stock market mania...

15 марта, 13:36

Биржи США на краю пропасти: ничем хорошим для «быков» это не кончится

В последний раз, когда американский ученый-экономист, профессор экономики Йельского университета, лауреат Нобелевской премии по экономике Роберт Шиллер слышал подобные рассуждения фондовых инвесторов в 2000 г., ничем хорошим для «быков» это не закончилось.

15 марта, 10:25

Почему эксперты прогнозируют обвал, а инвесторы играют на стороне «быков»?

Тогда Шиллер понимал, что трейдеры были очарованы новой эпохой технологической трансформации: Интернет стал определяющим фактором в американском бизнесе, традиционные показатели рыночной стоимости акционерного капитала устарели. Сегодня уже политические перемены грозят поменять правила игры: Дональд Трамп и его смелые планы сократить налоги и дать резкий толчок экономическому росту с расходами на инфраструктуру в триллион долларов.

14 марта, 20:24

Биржи США на краю пропасти, но "быки" не боятся

Москва, 14 марта - "Вести.Экономика". В последний раз, когда американский ученый-экономист, профессор экономики Йельского университета, лауреат Нобелевской премии по экономике Роберт Шиллер слышал подобные рассуждения фондовых инвесторов в 2000 г., ничем хорошим для "быков" это не закончилось.

14 марта, 18:29

Биржи США на краю пропасти, но быки не боятся

Сегодня уже политические перемены грозят поменять правила игры: Дональд Трамп и его смелые планы сократить налоги и дать резкий толчок экономическому росту с расходами на инфраструктуру в триллион долларов.

14 марта, 18:29

Биржи США на краю пропасти, но "быки" не боятся

Сегодня политические перемены уже грозят поменять правила игры: Дональд Трамп и его смелые планы сократить налоги и дать резкий толчок экономическому росту с расходами на инфраструктуру в триллион долларов.

Выбор редакции
14 марта, 16:33

Why Robert Shiller Is Worried About The Market

The last time Robert Shiller heard stock-market investors talk like this in 2000, it didn’t end well for the bulls. As Bloomberg reports, Shiller says when markets are as buoyant as they are now, resisting the urge to pile in is hard regardless of what else might be happening in society. “I was tempted to do it, too,” he says. “Trump keeps talking about a new spirit for America and so you could (A) believe that or (B) you could believe that other investors believe that.” What Shiller will say now is that he’s refrained from adding to his own U.S. stock positions, emphasizing overseas markets instead. One factor that makes him cautious on American shares is the S&P 500’s cyclically-adjusted price-earnings ratio: While the metric is still about 30 percent below its high in 2000, it shows stocks are almost as expensive now as they were on the eve of the 1929 crash. Shiller is not alone. “I don’t generally call the entire market wrong -- investors are very smart, highly motivated individuals -- but I find it hard to say why stock markets are so un-volatile right now," says Nicholas Bloom, a Stanford University economist who co-designed the uncertainty gauge with colleagues from the University of Chicago and Northwestern University.   For Hersh Shefrin, a finance professor at Santa Clara University and author of a 2007 book on the role of psychology in markets, the rally is just another example of investors’ remarkable penchant for tunnel vision. Shefrin has a favorite analogy to illustrate his point: the great tulip-mania of 17th century Holland. Even the most casual students of financial history are familiar with the frenzy, during which a rare tulip bulb was worth enough money to buy a mansion. What often gets overlooked, though, is that the mania happened during an outbreak of bubonic plague. “People were dying left and right,” Shefrin says. “So here you have financial markets sending signals completely at odds with the social mood of the time, with the degree of fear at the time.” But while the academics can look back and study and reflect on the nature of bubbles, the Wall Street types will always find excuses: “It’s been a period of repeated shocks, and I think people get toughened against that,” Ethan Harris, Bank of America Merrill Lynch’s global economist in New York, says. “It seems like uncertainty is the new norm, so you just learn to live with it.” We leave it to Mr. Shiller to sum it all up... “The market is way over-priced," he says. "It’s not as intellectual as people would think, or as economists would have you believe." Trade accordingly.

14 марта, 14:50

Frontrunning: March 14

U.S. East Coast Braces for Late-Winter Blizzard (WSJ) U.S. Blizzard Grounds Flights, Raises Power as Trump Tweets (BBG) Debt Ceiling Fight May Be Too Tempting for Trump to Pass Up (BBG) Russia appears to deploy forces in Egypt, eyes on Libya role (Reuters) EU headscarf ban ruling sparks faith group backlash (Reuters) Pound Tumbles in Delayed Reaction as May Gets Brexit Go-Ahead (BBG) The Most Important Player in the AIG CEO Resignation: Carl Icahn (WSJ) Waning Sales Force Layoffs By Gun Maker in New York (WSJ) German police raid flats, shut mosque visited by Berlin truck attacker (Reuters) Musk's bold offer of Tesla batteries won't solve Australia's power problems  (Reuters) Proof Wall Street Is Still a Boys’ Club (BBG) Why Robert Shiller Is Worried About the Trump Rally (BBG) Macquarie Loosens Trading-Research Link With a la Carte Service (BBG) Somali pirates hijack first commercial ship since 2012 (Reuters) Tillerson used email alias at Exxon to talk climate: New York attorney general (Reuters) South Korean prosecutors to summon ousted president Park (Reuters) The Monumentally Expensive Quest to Pull Off an Alaskan Oil Miracle (BBG) Fall in Volkswagen brand profit shows long road to recovery (Reuters) German investor morale improves less than expected in March (Reuters) Overnight Media Digest WSJ - Intel Corp agreed to buy Israeli car-camera pioneer Mobileye NV for $15.3 billion, one of the chip maker's biggest acquisitions ever and the latest bet on Silicon Valley's vision of cars as turbocharged computers on wheels. http://on.wsj.com/2nhZq4L - Oil-field services company John Wood Group Plc said it would acquire rival Amec Foster Wheeler Plc in a 2.23 billion pounds ($2.72 billion) all-share deal, the latest sign of consolidation in an industry that has been upended by weak oil prices. http://on.wsj.com/2nhZIsz - Facebook Inc said that data about its users cannot be used for surveillance, cracking down on a method police departments allegedly used to track protesters and activists. http://on.wsj.com/2nhWB3y - Two software startups, Okta Inc and Yext Inc, are trying to pick up where Snap Inc left off, becoming the first tech companies to file for an initial public offering since the parent of Snapchat's blockbuster IPO earlier this month. http://on.wsj.com/2ni2Swd - Yahoo Inc detailed a golden parachute of $23 million for Chief Executive Marissa Mayer as part of her planned departure from what's left of the company after it sells its core assets to Verizon Communications Inc. http://on.wsj.com/2ni1BWe - The New York attorney general accused Exxon Mobil Corp of withholding documents from his office as it investigates whether the energy company misrepresented its understanding of climate change to investors and the public. http://on.wsj.com/2ni79jc - Top executives at United Parcel Service Inc took home higher compensation in 2016 even as the parcel carrier missed many of its performance targets. http://on.wsj.com/2nhRgcK - A SpaceX rocket scheduled to boost a commercial satellite into orbit from Florida before dawn on Tuesday carries five times as much liability coverage for prelaunch operations as launches in previous years. The higher limit, mandated by federal officials, reflects heightened U.S. concerns about the potential extent of damage to nearby government property in the event of an accident before blastoff. http://on.wsj.com/2nhWZ20   FT British Prime Minister Theresa May is on track to start Brexit negotiations in the last week of March after parliament passed legislation on Monday that gives her the power to do so and the Lords balked at picking a fight over their own efforts to soften it. Scotland's First Minister Nicola Sturgeon on Monday demanded a new independence referendum in late 2018 or early 2019, handing Theresa May the challenge of keeping the UK united just as she grapples with the country's plans to leave the European Union. UK hiring is expected to slow down in the second quarter of this year according to Manpower's quarterly survey of about 2,000 employers that found corporate Britain in a slightly less bullish mood in the second quarter compared with the first. A parliamentary committee preparing a report about Charlotte Hogg's suitability for the post of the Bank of England's new deputy governor is waiting to see whether Hogg will tough it out or abandon her candidature, according to those involved in the discussions. British oilfield services company John Wood Group Plc agreed to buy its struggling rival Amec Foster Wheeler Plc in a 2.2 billion pounds ($2.68 billion) all-share deal that highlights the pressure on the UK North Sea oil industry from weak crude prices. British homebuilder Redrow Plc said on Monday it will continue its pursuit of rival Bovis Homes Plc, despite discussions having been "terminated" while its target is in separate talks with another suitor, Galliford Try Plc   Canada THE GLOBE AND MAIL ** Tim Hortons franchisees are banding together to push back against the cost-cutting campaign run by its parent company, Restaurant Brands International Inc, saying that it is causing product shortages, declining quality and even safety concerns that are harming the brand. https://tgam.ca/2mmMEgp ** After issuing an apology earlier this month saying that it "did not live up to" its relationship with members, Air Miles is making changes to its loyalty program in an effort to hold on to customers. https://tgam.ca/2mmDXTy ** The British Columbia Liberal government has opened the door to limits on political donations for the first time, promising to establish an independent panel to shape reform of what has been described as the "wild west" of campaign finance in Canada. https://tgam.ca/2mmFRDz ** British Columbia's highest court has ruled drug dealers pushing fentanyl should receive sentences of up to 36 months - three times longer than other street-level dealers – to recognize the "scourge" of the deadly synthetic opioid. https://tgam.ca/2mmUB5k NATIONAL POST ** Canadians don't trust U.S. President Donald Trump to treat Canada gently in upcoming North American Free Trade Agreement re-negotiations, according to a new poll from the Angus Reid Institute. http://bit.ly/2mn2He1 ** Western Canadian natural gas producers could get a $25 billion boost in revenue with a pipeline shipping deal struck with TransCanada Corp on Monday, analysts said. http://bit.ly/2mmYfvR ** Canadian financial technology provider DH Corp has entered into an agreement to be acquired by Texas-based Vista Equity Partners for roughly C$2.7 billion ($2.01 billion), the companies announced Monday. http://bit.ly/2mn0aAD   Britain The Times * Nicola Sturgeon shocked her political opponents and Westminster in equal measure when the Scottish First Minister said on Monday that she intends to hold a second referendum on Scottish independence. Sturgeon added she would hold a fresh poll within the next two years to prevent Scotland from being taken out of the European Union "against its will". http://bit.ly/2mDcOz5 * Thousands of employees are facing an uncertain future as a result of oil services company Wood Group's all-share takeover of rival Amec Foster Wheeler. The deal values Amec Foster Wheeler at about 2.3 billion pounds ($2.7 billion). http://bit.ly/2n1BYs6 The Guardian * The Southern franchise has been hit by a series of strikes in recent months, but Monday's industrial action also involved the Merseyrail and Northern networks. The RMT union is protesting against plans to introduce new trains with doors that can be operated by the driver, and change the role of guard to on-board supervisors. http://bit.ly/2nhhNXE The Telegraph * British Prime Minister Theresa May has ruled out Nicola Sturgeon's plans for a new Scottish independence referendum before Brexit, but postponed triggering Article 50 after the First Minister's demands caught her by surprise. http://bit.ly/2nw1YIq * Hutchison China MediTech's chief executive said 2017 would be a "very important year" for the pharmaceuticals company, paving the way for it to launch the first China-made oncology drug onto the market. http://bit.ly/2mG4bUo Sky News * Two-thirds of Britons oppose a second Scottish independence referendum, a Sky Data poll reveals. The UK public would strongly oppose such a move, with 65 percent saying there should not be a second independence referendum, while 30 percent say there should. http://bit.ly/2mlgL8H * British energy supplier SSE has followed a majority of its rivals in announcing inflation-busting hikes to its standard tariffs. The company said it was raising its standard electricity tariff by 14.9 percent from April 28 but would not hike gas prices. http://bit.ly/2lUP3U4 The Independent * The British Chambers of Commerce has upgraded its GDP growth forecast for this year from 1.1 percent to 1.4 percent, though this rate of growth would still be considerably lower than what is expected by the Bank of England and the Office for Budget Responsibility. http://ind.pn/2nne3Ay * The EU has said an independent Scotland would have to join a queue of nations seeking membership of the bloc, after Nicola Sturgeon announced plans for a second independence referendum. http://ind.pn/2n0P9JH  

08 марта, 23:10

A Scientists' March On Washington Is A Bad Idea – Here's Why

Andrea Saltelli, University of Bergen The April 22 March for Science, like the Women’s March before it, will confront United States President Donald Trump on his home turf – this time to challenge his stance on climate change and vaccinations, among other controversial scientific issues. But not everyone who supports scientific research and evidence-based policymaking is on board. Some fear that a scientists’ march will reinforce the sceptical conservative narrative that scientists have become an interest group whose findings are politicised. Others are concerned that the march is more about identity politics than science. From my perspective, the march – which is being planned by the Earth Day Network, League of Extraordinary Scientists and Engineers and the Natural History Museum, among other partner organisations – is a distraction from the existential problems facing the field. Other questions are far more urgent to restoring society’s faith and hope in science. What is scientists’ responsibility for current anti-elite resentments? Does science contribute to inequality by providing evidence only to those who can pay for it? How do we fix the present crisis in research reproducibility? So is the march a good idea? To answer this question, we must turn to the scientist and philosopher Micheal Polanyi, whose concept of science as a body politic underpins the logic of the protest. Body politic Both the appeal and the danger of the March for Science lie in its demand that scientists present themselves as a single collective just as Polanyi did in his Cold War classic, The Republic of Science: Its Political and Economic Theory. In it, Polanyi defended the importance of scientific contributions to improving Western society in contrast to the Soviet Union’s model of government-controlled research. Polanyi was a polymath, that rare combination of natural and social scientist. He passionately defended science from central planning and political interests, including by insisting that science depends on personal, tacit, elusive and unpredictable judgements – that is, on the individual’s decision on whether to accept or reject a scientific claim. Polanyi was so radically dedicated to academic freedom that he feared undermining it would make scientific truth impossible and lead to totalitarianism. The scientists’ march on Washington inevitably invokes Polanyi. It is inspired by his belief in an open society – one characterised by a flexible structure, freedom of belief and the wide spread of information. A market for good and services But does Polanyi’s case make sense in the current era? Polanyi recognised that Western science is, ultimately, a capitalist system. Like any market of goods and services, science comprises individual agents operating independently to achieve a collective good, guided by an invisible hand. Scientists thus undertake research not to further human knowledge but to satisfy their own urges and curiosity, just as in Adam Smith’s example the baker makes the bread not out of sympathy for the hunger of mankind but to make a living. In both cases this results in a common good. There is a difference between bakers and scientists, though. For Polanyi: It appears, at first sight, that I have assimilated the pursuit of science to the market. But the emphasis should be in the opposite direction. The self coordination of independent scientists embodies a higher principle, a principle which is reduced to the mechanism of the market when applied to the production and distribution of material goods. Gone the ‘Republic of Science’ Polanyi was aligning science with the economic model of the 1960s. But today his assumptions, both about the market and about science itself, are problematic. And so, too, is the scientists’ march on the US capital, for adopting the same vision of a highly principled science. Does the market actually work as Adam Smith said? That’s questionable in the current times: economists George Akerlof and Robert Shiller have argued that the principle of the invisible hand now needs revisiting. To survive in our consumerist society, every player must exploit the market by any possible means, including by taking advantage of consumer weaknesses. To wit, companies market food with unhealthy ingredients because they attract consumers; selling a healthy version would drive them out of the market. As one scientist remarked to The Economist, “There is no cost to getting things wrong. The cost is not getting them published”. It is doubtful that Polanyi would have upheld the present dystopic neo-liberal paradigm as a worthy inspiration for scientific discovery. Polymath Michael Polanyi. Author unknown/Wikimedia Polanyi also believed in a “Republic of Science” in which astronomers, physicists, biologists, and the like constituted a “Society of Explorers”. In their quest for their own intellectual satisfaction, scientists help society to achieve the goal of “self-improvement”. That vision is difficult to recognise now. Evidence is used to promote political agendas and raise profits. More worryingly, the entire evidence-based policy paradigm is flawed by a power asymmetry: those with the deepest pockets command the largest and most advertised evidence. I’ve seen no serious attempt to rebalance this unequal context. A third victim of present times is the idea – central to Polanyi’s argument for a Republic of Science – that scientists are capable of keeping their house in order. In the 1960s, scientists still worked in interconnected communities of practice; they knew each other personally. For Polanyi, the overlap among different scientific fields allowed scientists to “exercise a sound critical judgement between disciplines”, ensuring self-governance and accountability. Today, science is driven by fierce competition and complex technologies. Who can read or even begin to understand the two million scientific articles published each year? Elijah Millgram calls this phenomenon the “New Endarkment” (the opposite of enlightenment), in which scientists have been transformed into veritable “methodological aliens” to one another. One illustration of Millgram’s fears is the P-test imbroglio, in which a statistical methodology essential to the conduit of science was misused and abused for decades. How could a well-run Republic let this happen? The classic vision of science providing society with truth, power and legitimacy is a master narrative whose time has expired. The Washington March for Science organisers have failed to account for the fact that science has devolved intowhat Polanyi feared: it’s an engine for growth and profit. A march suggests that the biggest problem facing science today is a post-truth White House. But that is an easy let off. Science’s true predicaments existed before January 2 2017, and they will outlive this administration. Our activism would be better inspired by the radical 1970s-era movements that sought to change the world by changing first science itself. They sought to provide scientific knowledge and technical expertise to local populations and minority communities while giving those same groups a chance to shape the questions asked of science. These movements fizzled out in the 1990s but echos of their programmatic stance can be found in a recent editorial in Nature. What we see instead is denial toward science’s real problems. Take for instance the scourge of predatory publishers, who charge authors hefty fees to publish papers with little or no peer review. The lone librarian who fought this battle has now been silenced, to no noticeable reaction from the scientific community. Trump is not science’s main problem today – science is. Andrea Saltelli, Adjunct Professor Centre for the Study of the Sciences and the Humanities, University of Bergen, University of Bergen This article was originally published on The Conversation. Read the original article. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

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08 марта, 00:26

Of Sock Puppets And Vomiting Ghosts

Via Tim Price of SovereignMan.com, It was at the height of the dot-com bubble in 1999 that The Onion famously satirized the epically irrational stock market: “Anabaena, a photosynthesizing, nitrogen-fixing algae with 1999 revenues estimated at $0 billion, will offer 200 million shares on the NASDAQ exchange next Wednesday under the stock symbol ALG. The shares are expected to open in the $47-$49 range.” At the time, given how many unprofitable companies were going public, it could have just as easily been an article in the Wall Street Journal. But memories in finance are short. As economist John Kenneth Galbraith wrote, “There can be few fields of human endeavour in which history counts for so little as in the world of finance.   Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.” Short memories indeed. It seems that enough investors have got together to give Snapchat a market valuation of $27.5 billion. Bear in mind, “Snap” is a deeply unprofitable company which offers shareholders zero voting rights, and whose corporate logo is a vomiting ghost. Perhaps Stanley Weiser was right when he suggested that a fool and his money are lucky enough to get together in the first place. One can hardly blame Wall Street for giving irrational investors what they want: if the ducks are quacking, feed them. But Snap is far from being the only US company that’s irrationally overvalued. As we have observed on numerous occasions recently, US stock markets are not cheap. Robert Shiller’s cyclically adjusted P/E ratio for the S&P 500 (CAPE) now stands at 29 times: See if you can spot the last time that the market peaked at this valuation. Clue: it was Black Tuesday, 1929. As the chart shows, there has been only one time in US financial history that the Shiller P/E ratio has been higher than it is today. Unfortunately, the period in question sets an ominous precedent. Because the only time that the Shiller P/E rose above today’s level was during the dot-com bubble that the Onion satirized back in 1999. That bubble was marked by its own absurdities, including the sock puppet mascot of Pets.com, a company which went from IPO to bust in 268 days. (The dot-com bubble burst just three months after the Onion’s piece.) None of which is meant to suggest that the US stock market is about to crash. The 1990s experience of the Shiller P/E shows conclusively that valuations can remain elevated for some considerable time – at demonstrably higher levels than today’s. But it is meant to suggest that investor expectations today are unhealthily unrealistic. One rational response to apparent overvaluation today would be to short the market instead, i.e. to bet on the market falling. But shorting the market is a dangerous game to play, leaving open the potential of unlimited losses and the perils of market timing. A more moderate response would simply be to look elsewhere instead in pursuit of attractive returns. There is one developed market in the world where there are innumerable undervalued stocks still available. In fact, over 40% of companies listed in the stock market are trading below book value. It is a market where the biggest companies, the central bank, and the government’s own pension fund are all aggressively buying stock. It is a market where dividends are relentlessly on the rise. It is a market which is an oasis of calm in a world of political uncertainty. Investments in this market form the single biggest allocation in our fund. The market I’m talking about is Japan. And it may be one of the most undervalued mass opportunities in the world right now. Do you have a Plan B?

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06 марта, 16:23

The World's Most Deceptive Chart

Via Lance Roberts of RealInvestmentAdvice.com, I received an email last week which I thought was worth discussing. “I just found your site and began reading the backlog of posts on the importance of managing risk and avoiding draw downs. However, the following chart would seem to counter that argument. In the long-term, bear markets seem harmless (and relatively small) as this literature would indicate?” This same chart has been floating around the “inter-web,” in a couple of different forms for the last couple of months. Of course, if you study it at “face value” it certainly would appear that staying invested all the time certainly seems to be the optimal strategy. The problem is the entire chart is deceptive. More importantly, for those saving and investing for their retirement, it’s dangerous. Here is why. The first problem is the most obvious, and a topic I have addressed many times in past missives, you must worry about corrections. “The problem is you DIED long before ever achieving that 5% annualized long-term return.   Let’s look at this realistically.   The average American faces a real dilemma heading into retirement. Unfortunately, individuals only have a finite investing time horizon until they retire.   Therefore, as opposed to studies discussing “long term investing” without defining what the “long term” actually is – it is “TIME” that we should be focusing on.   Think about it for a moment. Most investors don’t start seriously saving for retirement until they are in their mid-40’s. This is because by the time they graduate college, land a job, get married, have kids and send them off to college, a real push toward saving for retirement is tough to do as incomes, while growing, haven’t reached their peak. This leaves most individuals with just 20 to 25 productive work years before retirement age to achieve investment goals.   This is where the problem is. There are periods in history, where returns over a 20-year period have been close to zero or even negative.” Like now. It’s The Math Outside of your personal longevity issue, it’s the “math” that is the primary problem. The chart uses percentage returns which is extremely deceptive if you don’t examine the issue beyond a cursory glance. Let’s take a look at a quick example. Let’s assume that an index goes from 1000 to 8000. 1000 to 2000 = 100% return 1000 to 3000 = 200% return 1000 to 4000 = 300% return … 1000 to 8000 = 700% return Great, an investor bought the index and generated a 700% return on their money. See, why worry about a 50% correction in the market when you just gained 700%.  Right? Here is the problem with percentages. A 50% correction does NOT leave you with a 650% gain. A 50% correction is a subtraction of 4000 points which reduces your 700% gain to just 300%. Then the problem now becomes the issue of having to regain those 4000 lost points just to break even. It’s Not A Nominal Issue The bull/bear chart first presented above is also a nominal chart, or rather, not adjusted for inflation or dividends. (Dividends have accounted for about 40% of total returns since 1900.) So, I have rebuilt the analysis presented above using inflation-adjusted, total return numbers using Dr. Robert Shiller’s monthly data. The first chart shows the S&P 500 from 1900 to present and I have drawn my measurement lines for the bull and bear market periods. The table to the right is the most critical. The table shows the actual point gain and point loss for each period. As you will note, there are periods when the entire previous point gains have been either entirely, or almost entirely, destroyed.  The next two charts are a rebuild of the first chart above in both percentage and point movements. Again, even on an inflation-adjusted, total return, basis when viewing the bull/bear periods in terms of percentage gains and losses, it would seem as if bear markets were not worth worrying about. However, when reconstructed on a point gain/loss basis, the ugly truth is revealed. It’s A “Time” Problem.  If you have discovered the secret to eternal life, then stop reading now. For the rest of us mere mortals, time matters. If you are near to, or entering, retirement, there is a strong argument to be made for seriously rethinking the amount of equity risk currently being undertaken in portfolios. If you are a Millennial, as I pointed out recently, there is also a strong case for accumulating a large amount of cash and waiting for the next great investing opportunity. Unfortunately, most investors remain woefully behind their promised financial plans. Given current valuations, and the ongoing impact of “emotional decision making,” the outcome is not likely going to improve over the next decade. For investors, understanding potential returns from any given valuation point is crucial when considering putting their “savings” at risk. Risk is an important concept as it is a function of “loss”. The more risk that is taken within a portfolio, the greater the destruction of capital will be when reversions occur. Many individuals have been led believe that investing in the financial markets is their only option for retiring. Unfortunately, they have fallen into the same trap as most pension funds which is believing market performance will make up for a “savings” shortfall. However, the real world damage that market declines inflict on investors, and pension funds, hoping to garner annualized 8% returns to make up for the lack of savings is all too real and virtually impossible to recover from. When investors lose money in the market it is possible to regain the lost principal given enough time, however, what can never be recovered is the lost “time” between today and retirement.  “Time” is extremely finite and the most precious commodity that investors have. In the end – yes, market corrections are indeed very bad for your portfolio in the long run. However, before sticking your head in the sand, and ignoring market risk based on an article touting “long-term investing always wins,” ask yourself who really benefits? This time is “not different.” The only difference will be what triggers the next valuation reversion when it occurs. If the last two bear markets haven’t taught you this by now, I am not sure what will. Maybe the third time will be the “charm.”

02 марта, 00:51

Second To None: A Look At Valuations Vs. Fundamentals

Via Michael Lebowitz of RealInvestmentAdvice.com, “Today’s equity market valuations have only been eclipsed by those of 1929, and 1999.” Given the continuing equity market rally and multiple expansion, the quote above from prior articles, had to be modified slightly but meaningfully. As of today, the S&P 500 Cyclically Adjusted Price to Earnings ratio (CAPE) is on par with 1929. It has only been surpassed in the late 1990’s tech boom. A simple comparison of P/E or other valuation metrics from one period to another is not necessarily reasonable as discussed in Great Expectations. That approach is too one-dimensional.   This article elaborates on that concept and is used to compare current valuations and those of 1999 to their respective fundamental factors.  The approach highlights that, even though current valuation measures are not as extreme as in 1999, today’s economic underpinnings are not as robust as they were then. Such perspective allows for a unique quantification, a comparison of valuations and economic activity, to show that today’s P/E ratio might be more overvalued than those observed in 1999. Secular GDP Trends Equity valuations are a mathematical reflection of a claim on the future cash flows of a corporation. When one evaluates a stock, earnings potential is compared to the price at which the stock is offered. In most cases, investors are willing to pay a multiple of a company’s future earnings stream. When the prospects for earnings growth are high, the multiple tends to be larger than when growth prospects are diminished. To forecast earnings growth for a company, one needs to do an in-depth analysis of the corporation, the economy and the markets in which it operates. However, evaluating earnings growth for an index comprising many companies, such as the S&P 500, is a relatively straight-forward task. Corporate earnings are a byproduct of economic activity. Earnings growth can differ from economic growth for periods of time, but in the long run aggregate earnings growth and GDP growth are highly correlated.  The two graphs below offer an illustration of the durability of this relationship. The graph on the left plots three-year average GDP growth and its trend since 1952, while the graph on the right highlights the correlation of GDP to corporate profits. Data Courtesy: St. Louis Federal Reserve (FRED), Bureau of Economic Analysis (BEA) and Bloomberg Given the declining trend of GDP and the correlation of earnings to GDP, it is fair to deduce that GDP and earnings growth trends were healthier in the late 1990’s than they are today. More specifically, the following table details key economic and financial data comparing the two periods. Data Courtesy: St. Louis Federal Reserve (FRED), and Robert Shiller http://www.econ.yale.edu/~shiller/data.htm As shown, economic growth in the late 1990’s was more than double that of today, and the expected trend for economic growth was also more encouraging than today. Trailing three- five- and ten-year annual earnings growth rates contrast the current stagnant economic growth versus the robust growth of the 90’s. Additionally, various measures of debt have ballooned to levels that are constricting economic growth and productivity. Historically low interest rates are reflective of the current state of economic stagnation. The graph below charts price-to-earnings (CAPE) divided by the secular GDP growth (ten-year average), allowing for a proper comparison of valuations to fundamentals. Data Courtesy: Robert Shiller http://www.econ.yale.edu/~shiller/data.htm The current ratio of CAPE to GDP growth of 19.77 has far surpassed the 1999 peak and all points back to at least 1950. At the current level, it is over three times the average for the last 66 years.  Further, based on data going back to 1900, the only time today’s ratio was eclipsed was in 1933. Due to the Great Depression, GDP at that time for the preceding ten years was close to zero. So, despite a significantly deflated P/E multiple, the ratio of CAPE to GDP was extreme. Looking forward, if we assume a generous 3% GDP growth rate, CAPE needs to fall to 18.71 or 35% from current levels to reach its long term average versus GDP growth. Summary Equity valuations of 1999, as proven after the fact, were grossly elevated. However, when considered against a backdrop of economic factors, those valuations seem relatively tame versus today. Some will likely argue with this analysis and claim that Donald Trump’s pro-growth agenda will invigorate the outlook for the economy and corporate earnings. While that is a possibility, that argument is highly speculative as such policies face numerous headwinds along the path to implementation. Economic, demographic and productivity trends all portend stagnation. The amount of debt that needs to be serviced stands at overwhelming levels and is growing by the day. Policies that rely on more debt to fuel economic growth are likely not the answer. Until the disciplines of the Virtuous Cycle are understood and followed, we hold little hope that substantial economic growth can be sustained for any meaningful period. Given such a stagnant economic outlook, there is little justification for paying such a historically steep premium for what could likely be feeble earnings growth for years to come.

01 марта, 16:22

По следам нобелевской премии по экономики 2013 года (1)

Нобелевская премия 2013 . Несколько интересных предложений от одного из получивших премию Yale Professor Robert Shiller:«This year the Nobel committee awarded this prize, simultaneously to two people who totally disagree.»И для тех кто руками бьёт себя в грудь и знает куда пойдёт тот или иной инструмент: «I'm thinking that this crisis will likely be resolved. We won't see a default. Even if we do it will be for one day, or something like that and even if it's longer I think it's not- it's not the end of the world and the markets might drop 7% on some day and then come back up. I should add, however, I do not know the future and I could be wrong.»Говорит человек, который получил премию за «за эмпирический анализ цен на активы».  Эмпири́зм, эмпирици́зм (от др.-греч. έμπειρία — опыт) — направление в теории познания, признающее чувственный опыт источником знания и предполагающее, что содержание знания может быть либо представлено как описание этого опыта, либо сведено к нему.

24 февраля, 01:35

Valuations Matter – Even For Millennial Investors

Submitted by Lance Roberts via RealInvestmentAdvice.com, A friend reached out to me today and asked me a simple question: “If the average person gets a $3000 tax refund every year and then invests the refund into the S&P 500, what would their end result look like?”  No problem. All we need to do is make a few quick assumptions. Historically, going back to 1900, using Robert Shiller’s historical data, the market has averaged, more or less, 10% annually on a total return basis. Of that 10%, roughly 6% came from capital appreciation and 4% from dividends. (This is important and we will return to this later.) Given the lack of ability, and or desire, to save in younger years most people begin to get serious about saving money around 35 years of age on average. We will assume a retirement age of 65 which puts our saving and investing time frame at 30-years. As I stated, this is a relatively easy calculation which you can find regularly espoused throughout the majority of the financial media, blogosphere, and Wall Street as the promise of “passive indexing” persists. Not bad. The $3000 per year savings plan grows to a nice lump sum of $500,000. This clearly supports the long-held belief that if you have 30-years to retirement, just dollar-cost average into some index funds and you will be fine.  You can stop reading now. But What If The Entire Premise Is Flawed?  If, as a millennial investor, you really want to save and invest for retirement you need to understand how markets really work. Markets are highly volatile over the long-term investment period. During any time horizon the biggest detractors from the achievement of financial goals come from five factors: Lack of capital to invest. Psychological and behavioral factors. (i.e. buy high/sell low) Variable rates of return. Time horizons, and; Beginning valuation levels  I have addressed the first two at length in Dalbar 2016, Why You Still Suck At Investing but the important points are these: Despite your best intentions to “buy and hold” over the long-term, the reality is that you will unlikely achieve those promised returns. While the inability to participate in the financial markets is certainly a major issue, the biggest reason for underperformance by investors who do participate in the financial markets over time is psychology. Behavioral biases that lead to poor investment decision-making is the single largest contributor to underperformance over time. Dalbar defined nine of the irrational investment behavior biases specifically: Loss Aversion – The fear of loss leads to a withdrawal of capital at the worst possible time.  Also known as “panic selling.” Narrow Framing – Making decisions about on part of the portfolio without considering the effects on the total. Anchoring – The process of remaining focused on what happened previously and not adapting to a changing market. Mental Accounting – Separating performance of investments mentally to justify success and failure. Lack of Diversification – Believing a portfolio is diversified when in fact it is a highly correlated pool of assets. Herding– Following what everyone else is doing. Leads to “buy high/sell low.” Regret – Not performing a necessary action due to the regret of a previous failure. Media Response – The media has a bias to optimism to sell products from advertisers and attract view/readership. Optimism – Overly optimistic assumptions tend to lead to rather dramatic reversions when met with reality. The biggest of these problems for individuals is the “herding effect” and “loss aversion.” These two behaviors tend to function together compounding the issues of investor mistakes over time. As markets are rising, individuals are lead to believe that the current price trend will continue to last for an indefinite period. The longer the rising trend last, the more ingrained the belief becomes until the last of “holdouts” finally “buys in” as the financial markets evolve into a “euphoric state.” As the markets decline, there is a slow realization that “this decline” is something more than a “buy the dip” opportunity.  As losses mount, the anxiety of loss begins to mount until individuals seek to “avert further loss” by selling. This is the basis of the “Buy High / Sell Low” syndrome that plagues investors over the long-term. However, without understanding what drives market returns over the long term, you can’t understand the impact the market has on psychology and investor behavior. Over any 30-year period the beginning valuation levels, the price your pay for your investments has a spectacular impact on future returns. I have highlighted return levels at 7-12x earnings and 18-22x earnings. We will use the average of 10x and 20x earnings for our savings analysis. As you will notice, 30-year forward returns are significantly higher on average when investing at 10x earnings as opposed to 20x earnings or where we are currently near 25x. For the purpose of this exercise, I went back through history and pulled the 4-periods where valuations were either above 20x earnings or below 10x earnings. I then ran a $1000 investment going forward for 30-years on a total-return, inflation adjusted, basis. At 10x earnings, the worst performing period started in 1918 and only saw $1000 grow to a bit more than $6000. The best performing period was not the screaming bull market that started in 1980 because the last 10-years of that particular cycle caught the “dot.com” crash. It was the post-WWII bull market than ran from 1942 through 1972 that was the winner. Of course, the crash of 1974, just two years later, extracted a good bit of those returns. Conversely, at 20x earnings, the best performing period started in 1900 which caught the rise of the market to its peak in 1929. Unfortunately, the next 4-years wiped out roughly 85% of those gains. However, outside of that one period, all of the other periods fared worse than investing at lower valuations. (Note: 1993 is still currently running as its 30-year period will end in 2023.) The point to be made here is simple and was precisely summed up by Warren Buffett: “Price is what you pay. Value is what you get.”  This is shown in the chart below. I have averaged each of the 4-periods above into a single total return, inflation adjusted, index, Clearly, investing at 10x earnings yields substantially better results. So, with this understanding let me return once again to the young, Millennial saver, who is going to endeavor at saving their annual tax refund of $3000. The chart below shows $3000 invested annually into the S&P 500 inflation-adjusted, total return index at 10% compounded annually and both 10x and 20x valuation starting levels. I have also shown $3000 saved annually in a mattress. The red line is 10% compounded annually. You won’t get that but it is there so you can compare it to the real returns received over the 30-year investment horizon starting at 10x and 20x valuation levels. The short fall between the promised 10% annual rates of return and actual returns are shown by in two shaded areas. In other words, if our young saver was banking on some advisors promise of 10% annual returns for retirement, he isn’t going to make it. I want you to take note of the point made that when investing your money when markets are above 20x earnings, it was 22-years before it grew more than money stuffed in a mattress. Why 22 years?  Take a look at the chart below. Historically, it has generally taken roughly 22-years to resolve a period of over-valuation. Given the last major over-valuation period started in 1999, history suggests another major market downturn will mean revert valuations by 2021. The point here is obvious, but difficult to grasp from a mainstream media that is continually enticing young Millennial investors to mistakenly invest their savings into an overvalued market. Saving your money, and waiting for a valuation based opportunity to invest those savings in the market, is the best, safest way, to invest for your financial future.  Of course, Wall Street won’t like this much because they can’t charge you a fee if you are sitting on a mountain of cash awaiting the opportunity to “buy” their next misfortune. But isn’t that what Baron Rothschild meant when quipped: “The time to buy is when there’s blood in the streets.” 7-Steps To Long-Term Investment Success With the market currently trading at the third-highest valuation level in history, only surpassed currently by the peaks in 1929 and 1999, you can only surmise what the outcome for our young saver will likely be. The analysis reveals the important points young investors should consider given current valuation levels and the reality of investing over the long-term: Expectations for future returns should be downwardly adjusted. The potential for front-loaded returns going forward is unlikely. Control investment behaviors and emotions that detract from portfolio returns is critical. Future inflation expectations must be carefully considered. Understand risk and control drawdowns in portfolios during market declines. Save money regularly, invest when reward outweighs the risk.  Expectations for compounded annual rates of returns should be dismissed  Robo-advisors, passive indexing, etc. do not address these issues and will impair the ability of young investors to achieve their long-term goals. Investing is not a competition. There are no awards for beating the market, but there are severe and lasting consequences for chasing markets where others fear to tread. You are fine as long as there is a “greater fool” to eventually sell to. Just make sure that “fool” is not you.

07 октября 2015, 11:41

Фондовый рынок теряет триллионы: кризис уже близко

Мировой фондовый рынок потерял в III квартале 2015 г. $11 трлн. Падение во всех крупных мировых экономиках сильно ударило по "бумажному богатству", и это был худший квартал для фондового рынка с 2011 г.

03 сентября 2015, 17:12

Роберт Шиллер: «справедливая» стоимость S&P 500 составляет 1300 пунктов

«Сейчас очень опасное время», - отметил в интервью CNBC нобелевский лауреат Роберт Шиллер. – «Типичное соотношение P/E (прим. ProFinance.ru: цена акции/доход на акцию), на которое обычно смотрит большинство инвесторов, на самом деле вводит в заблуждение. В то же время соотношение CAPE (Cyclically Adjusted Price-Earnings, разработанное господином Шиллером) указывает на «спра… читать далее…

23 октября 2013, 21:27

Пузыри на рынкax недвижимости?

Не могу уже вспомнить, когда мне тут объясняли, почему не надо было ждать роста цен на недвижимость в Германии...Как бы то ни было, Бундесбанк уже разглядел возможные пузыри на рынке недвижимости в крупных городах страны :). Логика прежних рассуждений о недвижимости в Германии была простой. Валюта в Германии казалась недооцененной из-за большущего профицита по счету текущих операций, поэтому цены должны были расти.  Процентные ставки ЕЦБ были слишком низкими для Германии, что обязано было стимулировать рост цен на недвижимость. Понимающие это инвесторы должны были ускорить рост цен... Сегодня трудно найти читающего человека, который еще не слышал о свежеиспеченном лауреате Нобелевской премии Роберте Шиллере. Многие сразу же нарисуют его знаменитую картинку американского пузыря на рынке жилья. Но еще больше вокруг уверенных в том, что они видят пузырь на рынке недвижимости, будь то в Австралии, Канаде, Великобритании, Китае, России...Нельзя за такое осуждать. Раз уж жилье доминирует наше и их богатство, то очень хочется знать, пора ли купить квартирку или же лучше вовремя соскочить с обреченного поезда. Вдобавок к мыслям о Москве, Лондоне, Париже, Берлине, Таллине, Риге, Юрмале и Малаге, не лишне еще раз вспомнить о Гонконге. Ведь это Гонконг был правильной подсказкой к пониманию кризиса в Латвии и еврозоне. На рисунке из мартовского доклада цб Гонконга о финансовой стабильности показаны цены на жилье. Виден пузырь 1997 года, падение цен к 2004 году, в течение 6 лет, как заказывали Рейнхарт и Рогофф, и последующий волшебный взлет к сегодняшнему счастью (или горю?).  После лопнувшего пузыря в 1997 году правители Гонконга уже прекрасно понимали, чем рискуют, как понимают сейчас специалисты Бундесбанка, насмотревшись на страдания Ирландии и Испании.  Поэтому они внимательно следили за ростом цен на недвижимость и изо всех сил старались защитить экономику от будущих потрясений. О перспективах Гонконга в период "необычной" политики ФРС давно уже записывал здесь и здесь.  Там же сохранил параграф Позена о трудностях определения пузырей, не говоря уже об их предотвращении оружием денежно-кредитной политики. Со времени тех записей, несмотря на 6 раундов (!) затягивания гаек в Гонконге и настойчивые публичные предупреждения цб, цены на жилье продолжали расти...Уже много лет не стихают споры о пузыре на рынке недвижимости Гонконга.

22 октября 2013, 20:18

Олег Григорьев о лауреатах премии им. Нобеля

Колонка опубликована в журнале "Профиль" от 20 октября 2013 года (N833) Присуждение Нобелевской премии 2013 года по экономике еще раз подтвердило, что современная экономическая теория — это не наука и с научными критериями подходить к ней глупо В этом году решение о присуждении Нобелевской премии в области экономики выглядело донельзя скандальным. Два из трех лауреатов — Юджин Фама и Роберт Шиллер — не только радикально расходятся в своих концепциях по одному и тому же вопросу, но еще и крайне неодобрительно отзываются друг о друге. Кстати, последнюю из известных мне колкостей в адрес своего оппонента Шиллер опубликовал совсем недавно, в конце июля этого года. Ситуация, конечно, абсурдная. Один (Фама) говорит, что финансовых пузырей нет и быть не может, потому что никто не знает, что это такое. Другой (Шиллер) утверждает, что пузыри возможны и он знает, что они собой представляют. Он же предсказал кризис 2007—2008 годов. Фама же уверяет, что такого рода предсказания ничего не стоят, поскольку раз в сто лет и палка стреляет, и если постоянно одно событие предсказывать, то рано или поздно повезет. Третий лауреат, Ларс Хансен, теорией не занимается и своей концепции не имеет. Он разрабатывает методы количественного анализа явлений финансового рынка. И полученные им результаты опровергают теоретические построения обоих его коллег. Впрочем, чтобы опровергнуть разработанную Фамой концепцию эффективных рынков, никаких сложных расчетов и не требуется. События 2007—2008 годов наглядно показали ее ценность. Любопытно, что Фама был одним из претендентов на Нобелевскую премию еще в 2009 году, но тогда ему ее постеснялись дать. Как будто с тех пор что-то изменилось! Один из наших отечественных либералов, защищая решение Нобелевского комитета, заявил, что «на самом деле в гипотезе эффективных рынков нет ничего такого, что можно опровергнуть эмпирически». Ну да, и в гипотезе всемирного заговора тоже нет ничего такого, что можно опровергнуть эмпирически. Невозможность эмпирического опровержения — это, согласно общепринятому критерию Карла Поппера, как раз явный признак ненаучности теории. Любой человек, претендующий на то, чтобы называться ученым, кто бы он ни был, должен это понимать. Но ни тем, кто вручает премию, ни нашим либералам Поппер не указ, хоть именно он и разработал любезную сердцу и тех, и других концепцию открытого общества. Так какую мысль хотели донести до нас таким экстравагантным способом? Еще раз подтвердилось то, о чем многие догадывались, но не решались говорить вслух. То, что называется современной экономической теорией, — это вовсе не наука, и с научными критериями подходить к ней глупо. Это религия, организованная как бюрократическая структура. В таких структурах вознаграждается не реальный результат, а правильное поведение. Что сегодня является правильным и одобряемым поведением? Прежде всего это доходящая до абсурда верность букве и духу первоисточников религии. Это качество в полной мере присуще Юджину Фаме. Он из трех лауреатов самый титулованный, обладатель множества других премий. Его теория эффективных рынков — это теория о божественной сущности финансовых рынков, то есть теория ни о чем. Другой нобелевский лауреат, Пол Кругман, в свое время иронизировал по этому поводу, что рынки правильно оценивают, что пол-литра кетчупа должны стоить ровно в два раза дешевле одного литра, но ничего не могут сказать о том, почему и литр, и пол-литра стоят столько, сколько они стоят. Присуждение премии Роберту Шиллеру сигнализирует, что в рамках религиозной доктрины допустима некоторая доза безобидной и не сильно противоречащей догматам ереси. После кризиса такой допустимой ересью были признаны исследования в области так называемой поведенческой экономики. Здесь идея заключается в том, что сам рынок устроен идеально, но сомнению подвергается способность простых людей правильно пользоваться ниспосланным им инструментом. В тех сложных условиях, в которые попала ортодоксальная экономическая наука, когда противоречия между ее утверждениями и реальным положением дел бросаются в глаза всем, хорошим поведением считается «просто возделывать свой сад» и стараться не задумываться о высоких материях. Упорный труд есть лучшее средство справиться с обуревающими человека сомнениями. Этот образец поведения демонстрирует Ларс Хансен — и поделом награда. В общем, последнее решение о присуждении Нобелевской премии по экономике показало, что она не имеет никакого отношения к поиску истины, а есть лишь способ контроля и управления научным сообществом. http://www.profile.ru/article/ekonomika-kak-religiya-77602. От ред. so-l.ru - в смысле религиозности науки показательны слова самого Шиллера в которых он это прямо и признает, см. интервью: