The Madness Of Mr. Market

Capital markets have been full of flummery over the last several years. This has included an enthusiastic chorus of analysts and experts that repeatedly shower investors with flattering tales of sustained economic growth and promises of a new era of prolonged prosperity in the wake of the financial crisis that erupted so many years ago now. But like Mr. Fox and many others investors that are more skeptical about the current state of the global economy and its capital markets, I am much more inclined toward a good balance sheet at the sovereign, corporate and household level. I am also inclined toward things that make rational sense. And after searching throughout history, I have yet to discover an example of a major society that defeated a financial crisis caused from too much debt by undertaking even more debt and debauching their currency. But such is the environment in which we are operating today. And it has resulted in some nonsensical disconnects that have the potential to resolve in a very painful way for some investors once reality finally returns.

Please click on the link to read more of my article on Seeking Alpha.

A Case For Attractive Stock Valuations

This article is not a bullish case for buying stocks today. In fact, I have deep and genuine concerns about the outlook for U.S. stocks and capital markets over the coming years. Thanks to an untested, extraordinary and relentlessly aggressive monetary policy experiment, assets worldwide including stocks have been catapulted to record highs at a time when the global economy remains sluggish, structurally imbalanced and burdened by excessive debt that has been accumulated over the course of several decades. In the process, stocks are now trading at a sizeable premium to historical norms. We have no idea how this ongoing situation will end. Hopefully it will resolve itself in an orderly way, but risks are high that it may all end badly with significant paper losses sustained in the process. And exactly when any such outcome might begin to unfold remains unknown. With all of this being said and despite having tripled in value over the last six years, a case can still be made that stocks are still attractively valued today. And it is this case among others that may help explain why stocks could continue to surge higher, perhaps meaningfully so, in the short term to intermediate term before finally entering into a meaningful descent once a new bear market finally awakens.

Please click on the link to read more of my article on Seeking Alpha.

U.S. Stocks: Timber!

The stock market has seen yet another asset class partner fall by the wayside. Since the outbreak of the financial crisis in the summer of 2007 and also in the years since the market bottom in early 2009, stocks and lumber have moved in complete tandem with one another. But since the beginning of last year, these two asset classes began parting ways. And so far in 2015, the divergence has widened dramatically. What, if anything, does this dramatic parting of ways mean for stock prices going forward?

Please click on the link to read more of my article on Seeking Alpha.

The Naked Truth

A steady barrage of economic and market news clogs both our airwaves and our minds on a continuous basis. This information is dissected and examined in a variety of different ways with no shortage of expert opinions about what is taking place today in investment markets and what is likely to happen next come tomorrow. As a result, it can become very easy for even the most expert market participant to become so twisted around in the details of their own views and biases that they lose sight of the more basic bigger picture. For it is these simple naked truths that remain most important in recognizing what has brought us to this point as well as what is likely to come.

Please click on the link to read more of my article on Seeking Alpha.

The Incredible Shrinking Earnings Forecast

It is the reason that investors should proceed with caution when relying on forward earnings to determine stock valuations. Not very long ago, at the start of the New Year, corporate earnings were forecasted to increase on a year-over-year basis by more than 20% in 2015. But only a few weeks later, this robust earnings outlook has not only completely evaporated, but projections are now for earnings growth to turn negative starting in the second quarter. And given the fact that these earnings forecasts continue to shrink further with each passing week, it is likely that the actual results may end up much worse than where the already significantly downward revised forecasts stand today. If history is any guide, this developing and deteriorating outlook for corporate earnings bodes ill for the stock market in the months ahead.

Please click on the link to read more of my article on Seeking Alpha.


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