Brief Observations: Distinctions Matter

Brief Observations: Distinctions Matter

  • November 12, 2017

Last week, the uniformity of market internals shifted to an unfavorable condition. During the advancing half-cycle since 2009, zero interest rates encouraged speculation (and maintained favorable market internals) long after extreme overvalued, overbought, overbullish conditions emerged. But distinctions matter. Once the uniformity of market internals - the most reliable measure of speculation itself - is knocked away, those extremes are still likely to matter with a vengeance.

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This Time Is Different, But Not How Investors Imagine It Is Different

This Time Is Different, But Not How Investors Imagine It Is Different

  • November 4, 2017

Encouraged by the novelty of zero-interest rates, not even the most extreme “overvalued, overbought, overbullish” conditions have been enough to derail the speculative inclinations of investors. Yet in every other way, this speculative episode is simply a more extreme variant of others that have come before it.

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Why Market Valuations Are Not Justified By Low Interest Rates

Why Market Valuations are Not Justified By Low Interest Rates

  • October 9, 2017

Current market valuations are consistent with negative expected returns for the S&P 500 over the coming 10-12 years, with a likely market loss of more than -60% in the interim. The proposition that “lower interest rates justify higher valuations” has become a rather dangerous slogan, and is an incomplete statement.

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