Fee-Only Financial Planning in North Carolina

Contact Us at: (919) 228-6312

Monthly Archives: August 2011

What’s the E ?

The talking heads on TV financial news programs and elsewhere in the media are pounding the table saying that the stock market is trading at a price/earnings (P/E) of 10.  So therefore, this is a screaming buy! To which I say ——  which E ? They’re naturally referring to fantasy E.  Fantasy E is what you get when you: guess at what next year’s […] Read the rest of this entry »

Weekly Short Economic Stories

Yesterday saw the August consumer confidence report from The Conference Board.  Ouch!  It dropped to the lowest level since April 2009. Unless there’s a massive disconnect, we’re likely to see a very weak ISM (US manufacturing) report on Thursday, and an equally bad August employment report on Friday.  All else being equal, this will put downward pressure on stocks, and upward pressure on high […] Read the rest of this entry »

To QE3 or not QE3

Two things…. thing 1:  This morning we got the 2nd read on 2Q GDP from the BEA.  I expected it to drop from +1.3% to +1.0% — and that’s what it did.  The US economy continues to slide towards recession.  As you know, there will be one more estimate on 2Q GDP at the end of next month. I doubt it will change much […] Read the rest of this entry »

Weekly Short Economic Stories

Wall St economists and analysts are busily lowering GDP estimates for the 2nd half of this year, and for 2012. They’re slowly approaching the economic forecast I made last December, but are not there yet — and it is now late August –  well done Wall St!  How quickly that 4% 2011 GDP forecast evaporates. They’re still not close to admitting there’s a big […] Read the rest of this entry »

Abby Joseph Cohen Show August 19 2011 edition

Right on schedule!  Two weeks ago I wrote that Goldman Sachs will soon march their prized analyst out to pump up the troops. They did today. Before I get into the update, here’s the point: if you’re going to be permanently bullish on the stock market (it’s always going higher) then one can understand when you are praised for being right when the stock […] Read the rest of this entry »

Weekly Short Economic Stories

There’s an old joke:   If you can keep your head while those about you are losing theirs, you clearly don’t understand the situation. Last week was one of the most volatile weeks in the history of stock, bond, currency, and commodity markets. We kept a cool head and had an outstanding week until Thursday.  France announced a short selling ban, and Sarkozy announced yet […] Read the rest of this entry »

Which type of history will repeat?

Here’s a chart of the Price: Earnings (P/E) ratio on the S&P500 courtesy of Dr. Robert Shiller.  There’s over 130 years of data here. First, notice how the line is mean-reverting?  It fluctuates like a sine wave rising for 15ish years to distinctly above the mean, then falling 15ish years to distinctly below the mean. If nothing else, this should tell you that what […] Read the rest of this entry »

Weekly Short Economic Stories

It finally happened. The US lost its AAA credit rating (from S&P at least) on Friday evening. It should have long since happened, but here we finally are.  What happened in the US Treasury bond market on Monday ?  Treasury prices rose.   Then on Monday, S&P extended the favor and lowered Fanny & Freddy’s rating. Rightfully so. Last week was a brutal week for […] Read the rest of this entry »

Monday August 8 2011 (morning after S&P downgrade of US debt)

Having been glued to the websites of Reuters and several others this weekend, several tactical plans were developed and disseminated to clients before Asian markets opened last night. Again, these were tactical tweaking, not strategic in nature.  As of late morning, our portfolios were solidly in the green (up nearly 1%) while the Dow flirted with a 400 point drop. No tactical tweaking needed […] Read the rest of this entry »

Latest deficit reduction plan is another sham

On Tuesday the US Congress passed a bill to address the budget deficit. The plan calls for $900B in deficit cuts, and $1.5T in additional cuts to be found by a bi-partisan committee by the end of the year. This is a sham! • As miniscule as this is, most of the cutting is going to happen in the later years. • $25B in […] Read the rest of this entry »