Two looks at investor sentiment and market timing.

This recent graph below for the US tells you what investors are thinking.  Active funds underperform and investors flee to passive (read: indexed, ETF etc).

This one below, from a much earlier period, makes a different case for investor’s timing abilities.



Retail reactions

The squeeze in retailers got me out of Sears, except for 1 contract. Look at them all fly, Target, Ross, Abercrombie, Dollar Tree, even WMT on not so stellar news, but the game was always to set the bar too low and then to pretend to “beat” expectations.  And I see JCP up 13% after hours. With this kind of reaction, it is prudent to get back in after the dust settles.  Meanwhile profit taking emerges in other names,  as indexes flirts with new highs making one wonder if this is some sort of sector rotation.

For once, CNBC puts out a story that I want you to be aware of to reinforce some of the things I have been saying in class. According to it, some no-taper trades were made milliseconds before the news release last week (here). If nothing else Nanex, the company that informed the SEC has some cool graphs that are in various places on the site. And the news flow turns just as quickly to the next straw man–debt ceiling catastrophies.

A third non-event.

NYT has this comparison of the July and Septemenber Fed statements. Look at the  differences to see what the drama was all about.  In years past, very few in the world paid attention to macro pronouncements.  At least partly promoted by CNBC  parsing of statements has now gone global.  Their used to be a “briefcase “indicator where video cameras would track the size of Mr. Greenspan’s briefcase for clues on what the Fed statement would say., This is how media can create news,

Once planted, the idea mutates into multiple straw men, with both bulls and bears creating distorted versions.  Bears will say, “see the economy is not recovering,” bulls will say “easy money continues, pedal to the metal”  All the FED HEAD SAID was “we will wait and see,”  So, bonds went up, the dollar plunged, gold soared along with stocks. Now can we get back to earnings please!





Notes are up.

For the next couple of weeks, we should be fine. Markets deserve a comment. All of September went bullish so far because of a war that did not happen and a guy that did not get a job.   Now that you have seen a short squeeze in operation, ask me about it this week.

Twitter excitement

News of the twitter ipo sends many hearts fluttering (twittering). What I can gather so far are:

a) it is some time in 2014.

b) it is under the JOBS act, so many financials will remain confidential.

c) While you think about whether you can get in, check out GSVCapital, a venture capital firm that owns a piece of twitter. Savvy traders who knew this and had bought GSVC in anticipation of the twitter IPO news, are probably getting OUT after it popped on the news.

Financial Crisis-5 years later

From the Atlantic here, comes this piece that recaps what lessons if any were learned from this period.  It talks about not requiring banks to have skin in the securitization game, about technology risk and generally echoes some of what I have said in class.

And moving on up is SDSU, now 14th in the US news ranking of up and coming schools (here). Among the things influencing the ranking improvement is:  a) the amount of private donations has increased; b) high retention and graduation rates; c)  students graduate with the least amount of debt; d) ethnic diversity.   The last one is a feature of our fair state is it not. And surely, going to college for an education is about more than graduating without debt?