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Archive for December, 2011

Goodbye to Mr. Hitchens

December 19, 2011 Leave a comment

 

Love him or hate him, there are few better intersections, in my mind, between political satire, intellectually demanding discourse, and entertaining prose than the work of Chris Hitchens, who recently died of cancer.  He will unnerve you, enrage you, and force you to reconsider much – it’s never a waste to have spent some time with his work.

 

Trial of the Will– Christopher Hitchens

 

 

 

Categories: Uncategorized

Derman’s Latest

December 15, 2011 Leave a comment

There are things to quibble with, but I’m generally an Emanuel Derman fan. He’s one of the original physicists who became a “quant” for Goldman Sachs, and now has turned commentator about the virtues and perils of modeling. Specifically, he’s very good at explaining the role of math in forecasting capital markets.

Derman’s new book is pithy and well wrought—an easy one to knock out during the holidays.

I find folks in the finance field tend to treat data as “facts” sans the caveat that numbers are a kind of semiotics—representations; a step removed from reality and not reality as such. It’s one of the reasons, among many, I think it’s worth occasionally taking a look at current thinking in physics—which really starkly reveals what mathematics can and can’t do in terms of explaining the world. Physics is a place where imagination and creative thinking intersect with the rigid logic of math—it’s a style of thought much better suited to how to think about capital markets as opposed to rote statistics and engineering.

Said differently, how many times this year (or any year, really) have we seen some bulge bracket firm tell us how the world is going to work based on some ironclad multifactor regression model…only to see the world simply do something else? There’s a chasm of difference between math’s ability to quantify and categorize the world in order to better understand it, and the ability for math to say what happens next. One of the great next debates in financial theory will be about the prevalent illusion of validity tied to faith in numbers.

Don’t Forget. Markets Don’t.

December 9, 2011 Leave a comment

If you haven’t yet perused Ken Fisher and Lara Hoffmans’ new book, Markets Never Forget, it’s a must read for any serious-minded stock investor (all their books are). So what if I’m biased (I work with both). Their work offers views you won’t read elsewhere, and no library of investing knowledge is complete without them.

Check it out here: www.marketsneverforget.com

 

Markets Never Forger But People Do by Ken Fisher with Lara Hoffmans

Markets Never Forget But People Do by Ken Fisher with Lara Hoffmans

Et Tu, Santa?

December 6, 2011 Leave a comment

The week ending December 2nd wound up being one of the best for the global stock market in years—and that’s saying something considering the rocket-ship takeoff in stocks back in ’09.

What’s amazing is, after a few bad weeks in November, there were all sorts of headlines declaring no chance of the fabled “Santa Rally.” Really? With all this volatility and a whole month to go?

Whether we get a nice rally to end the year or not, this is just another example in what’s been a year of manic, myopic sentiment—taking a few weeks (or even a few trading sessions) and extrapolating that trend out further into the future.

Despite all the teeth gnashing this year, global stocks are down a few percent on a total return basis, and the S&P 500 is up a little. It’s a year that’s confounded both bulls and bears.

The Deceleration Myth

December 5, 2011 Leave a comment

A significant deceleration in the annualized GDP growth rate of the US or global GDP does not necessarily imply a recession.  More often than not, decelerations prove to be temporary slowdowns within an expansion.

US:

US GDP Growth presented by Fisher Investments

US GDP Growth presented by Fisher Investments

Global GDP:

Global GDP Growth presented by Fisher Investments

Global GDP Growth presented by Fisher Investments

 

 

Who Says Consumers Are Dead?

December 2, 2011 Leave a comment

Initial Black Friday weekend sales reached historic highs. Are shoppers pulling forward some purchases to take advantage of the “doorbuster” deals? Sure. But the numbers are too big to ignore. Both traffic and spending were up significantly for shoppers online and in stores as total weekend spend reached a record $52B (+16.4% Y/Y).

  • Surveys estimated that 226 million shoppers (+6.6% Y/Y) visited stores and websites over the Black Friday Weekend.
  • The average shopper spent approximately $398.62 (+9% Y/Y).
  • Online spending rose an estimated 26% to $19.8B.

It’s just another in a long line of strikes against reductive macroeconomic “logic” that mostly says this should never happen given high unemployment and stagnant real wage increases among middle and lower classes.

Source: National Retail Federation

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