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Monthly Archives: February 2016

SPX profit margins rolling over

  Q4 earnings season is all but done. With retailers reporting at the end of the earnings season the results are plummeting.  As-reported profit margin has dropped well into the 6s. Here is a plot of as-reported profit margins (green line) and profit margins based on the bullsh*t CFOs use (and CNBC & Wall St Journal use) – appropriately in brown. Notice the cyclicality?  […] Read the rest of this entry »

Fed intrusion today

The Fed announced it would hold off doing its agency (mortgage) bond buying today at 11:15am. It cited unstable market conditions. Indeed. We certainly would not want lower mortgage rates now would we? Instant reaction.   Yeah, central bank actions don’t matter. Stocks are fairly valued. There is no bubble. It’s always a good time to buy my long only equity fund.  Wink.   […] Read the rest of this entry »

Static trading system warning

If you rely on prices for market timing decisions you are going to be very frustrated over the next month (continue to be).  Price-based systems are prone to being gamed by algo-bots. Your magic numbers are going to draw these bots like moths to a flame.  They’ll  drive through your stops and squeeze you out, then flip over.  You know this sounds familiar.  It’s […] Read the rest of this entry »

Don’t be worried about a 20% drop.

There’s a lot of chatter over concerns the SPX may drop to a level that is 20% below its peak. So 1700-1710 is going to be on a lot of radars.  With respect, this is a misunderstanding of what’s really unfolding this year. Don’t be worried about a 20% drop. Be worried about a 65% drop.      

Client Letter. Don’t panic. Profit.

This morning I sent this letter to my asset management clients…. Hello folks. The next few weeks are going to be unnerving to a lot of investors (not us though).  There are going to be days with very ugly market headlines.  Let me take this opportunity to remind you that we’re up almost 6% year to date and it’s been as exciting as watching […] Read the rest of this entry »

The Dimon Rally

I’m very long the SPX as of yesterday. (and you thought I was always short?  tsk tsk…)  My old friend Jamie Dimon is coming to the rescue with a $26M buy in JPM stock. Thanks Jamie. Beer’s on me….    

2% on the 30yr this year

And you thought I was kidding about seeing 2.0% on the U.S. long bond this year. Futures saw 2.38% this morning.   Let’s zoom out….   Is the trend your friend?