Sarà ora di metter qualche soldino in un fonzo azionario?

[alingtonsky]

“We’re not buyers,” said Romain Boscher, head of equities at Groupama Asset Management in Paris, which oversees $120 billion. “If you have a one-year vision, it’s time to buy, but if your vision is one month, it’s too early. Volatility will remain very strong. The market risks reaching lower points.”
Groupama, Semper Constantia Privatbank AG and Swisscanto Asset Management AG are passing up stocks valued at 11.5 times analysts’ forecasts for earnings over the next year, compared with a ratio of 13.2 for the MSCI World Index. About $250 billion was erased from European markets this week as concern Greece’s credit crisis will spread pushed the VStoxx Index of options to protect against losses in the Euro Stoxx 50 Index up as much as 23 percent.
...

“Our models and calculations say we normally should invest at this point,” Musil said. “Valuations are nice and first- quarter earnings have been tremendously good. On the other hand, we have the sovereign debt problem. This problem is too big.”

....

Losses in the last two days offer a chance to invest in companies that are growing the fastest, said Mislav Matejka, head of European equity strategy at JPMorgan Cazenove in London.
“The positive drivers for stocks are still tracking,” he wrote in a May 4 note. “We advise adding to stocks on dips, favoring cyclical sectors, EPS momentum and operating leverage,” he said. Matejka told clients to buy stocks in March 2009, before the biggest rally in seven decades.

....
May 5, 2010 22:24 EDT

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8F6pYQ3fq04&pos=7


http://translate.google.it/

 

[alingtonsky]

May 20, 2010, 3:21 pm

Like it or not, say some market sages, it's the Ben Bernankes of the world who will decide the fate of the stock market -- and for now, signs point to a continued, if often disjointed and occasionally hair-raising, rally.

"The cost of money is going to be near zero for at least another year," said David Kotok, chief investment officer at investment adviser Cumberland Advisors in Vineland, N.J. "Over time that will lift the value of financial assets such as stocks that are sensitive to rates."
This is not an order to drop what you're doing and empty your bank account for the sake of loading up on Sirius (SIRI) and claims on the GM (MTLQQ) estate sale. But it's a reminder that the end of stocks' bizarre run-up may not yet be over.
Kotok, for one, says he expects the S&P 500 index of big company stocks, down 25 in Thursday's selloff at 1090, to hit 1250 -- in line with its level before the September 2008 collapse of Lehman Brothers.
He isn't the only one who expects stocks will be buoyed by the currency printathon going on at the Federal Reserve and the other big central banks. Value investor Jeremy Grantham said in his quarterly note to investors last month that Bernanke, by keeping the Fed's policy rate near zero, "is, in fact, begging us to speculate" on assets like stocks.
Grantham doesn't rule out a stock selloff but calls a continued rally the line of least resistance. And the Fed's current policy, which holds rates low for the sake of propping up asset prices and restoring banks to solvency, isn't the only thing on Grantham's mind.

In October, he notes, we'll enter the third year of the U.S. presidential election cycle, which he characterizes historically as "the year every Fed except, of course, Volcker's, helped the incumbent administrations get re-elected."
While there are still those who believe the Fed will raise rates next year to head off inflation threats, Grantham is not among them. That could support stocks, which some bears say have been in bubble territory for the better part of a year, well into 2011.

"Do not think for a second that a very stimulated market will go down in Year 3 just because it's overpriced … even badly overpriced," he writes. "So far it has had 19 tries to go down since 1932 and has never pulled it off."
That's not to say the ride will be relaxing. Volatility is back, as investors grapple with an ever-evolving set of risks.
Those include, to name just a few, rising taxes, tougher regulations and political turmoil. Take the German bid to limit short-selling. Authorities billed the measure as one that would restrict the role of speculators, but it may instead have had the effect of making all investors more cautious.
"This is an environment where regulation can have a significant impact on market psychology," writes Tullett Prebon economist Lena Komileva, "because for the first time in over a year policy is not having a corrective, stabilizing effect on the markets and small policy actions can add to overall market uncertainty and lack of liquidity."

And don't think for a minute that a continued rise in stocks is an unalloyed good. Indeed, Grantham argues that a drop in the stock market now could be salutary for over-leveraged Western economies, which are already being tested by worries that they won't be able to shoulder the debt burdens they've taken on in bailing out reckless bankers.
A stock rout now, he writes, could "be enough to break the market but still leave the economy limping along. This would be far better than having the market rise through the fall of next year by, say, another 30% to 40%, along with risk trades similarly flourishing and then all breaking."
Were that to happen, he writes, "The developed world's financial and economic structure, already none too impressive, would simply buckle at the knees."
But enough of the apocalyptic talk. For now, Kotok says, the lesson is that "there will be a strong corrective dip, and it will be a buying opportunity."

Could free money reignite stocks? - Street Sweep: Fortune's Wall Street Blog

 

[alingtonsky]

May 21 (Bloomberg) -- The rally in stocks that began 14 months ago is probably intact if history is any guide, Birinyi Associates Inc. said.
The Standard & Poor’s 500 Index had fallen as much as 12 percent from a 19-month high on April 23 as concern grew that Europe’s sovereign debt crisis would snuff out the global economic recovery. Thirteen of 15 comparable drops the Westport, Connecticut-based firm calculated since 1945 have occurred either at bear market bottoms or during lasting advances.
“If we assume the bull market ended on April 23rd, it would be one of the weakest and shortest gains in the last 48 years,” Cleve Rueckert, an analyst at the research and money- management firm founded by Laszlo Birinyi, wrote in a note to clients today. “A more likely scenario is that the current bull market is experiencing its first official correction.”
Investors should buy, Rueckert said. In each of the 13 rallies since 1945, the market bottomed and rose to a new high.

The S&P 500’s low yesterday was 8.6 percent below the 50- day average price, a “rare occurrence,” according to Rueckert. The S&P 500, the Dow Jones Industrial Average and nine of the S&P’s ten industry groups are at their “absolute buy prices,” he said, or farther away from average prices than any time in 18 months.
The S&P 500 gained 1.4 percent to 1,086.60 at 11:48 a.m., reversing a drop of as much as 1.5 percent that dragged it below its weakest level during the May 6 market rout that wiped out $862 billion in 20 minutes.

May 21, 2010 11:53 EDT

Bull Market Since March 2009 Too Young to End Now, Birinyi Says - Bloomberg.com

 

[alingtonsky]

13:05:04 | 26 May 2010

Top US manager Tom Walker thinks the recovery seen in the US this year is only the beginning, as he tips it to continue to drive a global recovery.
The Martin Currie US specialist was outlining his views on the market at RBC Wealth Management’s fund manager debate in London this week.
Despite the challenges facing the US economy, Walker believes it is in an enviable position compared to other developed countries.
‘It offers some of the best-placed companies to benefit from global growth in the decade ahead, many at highly attractive valuations,’ said Walker ...

We believe the improving trend in recent months is just the start as investors reassess the world’s largest market.’
He also pointed out that the current eurozone crisis has strengthened the US dollar's position as the global reserve currency.
The recent inventory replenishment carried out by many US firms and the improving consumer consumption has reinforced the economy, according to Walker. However, these improvements are still in their early stages.
With the increased global presence of top US brands, such as IBM and Cisco Systems, the country’s corporate brands are stronger than ever and remain the first port of call for global investors, he thinks.
...

With concerns over European cohesion and questions around emerging stock market valuations, the US market has had a strong start to the year. Combining dollar strength, the MSCI North America returned 13% in sterling terms in the first four months of 2010.’
Walker is currently overweight in the information technology and consumer discretionary sectors, ...

‘In the last decade, North America has been the weakest region in the world after Japan,’ said Walker. ‘But now the USA is leading the economic recovery in the developed world’
...

US recovery only just beginning, says Martin Currie's Walker | Fund Selector | Citywire

 

[alingtonsky]

Oct 14, 2010 7:54 PM GMT

Abby Joseph Cohen, the Goldman Sachs Group strategist known for predicting the bull market in the 1990s, said that while the fundamental factors for a U.S. stocks rally are in place, greater optimism among investors is needed for an advance to begin.
“The preconditions include very significant amounts of cash on the sidelines and, very importantly, attractive valuation,” Cohen, 58, spoke in a Bloomberg Television interview today on “Surveillance Midday” with Tom Keene. “When investors feel more confident in the economic expansion, equities could perform quite well. The S&P 500, for example, is notably underpriced.”
The Standard & Poor’s 500 Index fell as much as 16 percent since reaching this year’s high in April on concern that U.S. unemployment and widening budget deficits in Europe would derail global growth. The measure is valued at 12.3 times estimated profits for the next year, compared with the 56-year average of about 16.5 times reported earnings, according to data compiled by Bloomberg.
The S&P 500 rose 15 percent from July 2 through yesterday on expectations the Federal Reserve will buy bonds to stimulate the economy, a tactic known as quantitative easing, to inject cash into the economy.
“People who watch this very closely for us on the trading desks and elsewhere are saying they think a good deal of likely ‘QE2’ is already priced in not only in the United States, but in other countries,” she said.
No Recession
Cohen, the top-ranked strategist in Institutional Investor’s surveys in 1998 and 1999, said there are signs of recovery in the housing market and that “the global economy is out of recession and won’t be going back in.”
The number of contracts to purchase previously owned homes in the U.S. has increased two straight months. The National Association of Realtors’ index of pending home resales rose 4.3 percent in August, more than forecast, after a revised 4.5 percent gain the prior month that was less than initially estimated. Compared with the same month a year ago, pending sales were down 18.4 percent.
“Typically, equities will track economic growth,” Cohen said today. “The U.S. economy has been one of the best of the developed economies and we think that will continue. The prospects, that is, the potential growth rate for the United States exceeds that, we believe, of Europe and also Japan.”
The strategist told Bloomberg Radio on Feb. 17 that the S&P 500 was undervalued because the recession had ended and the economy was on the mend. Back then, when the gauge was trading below 1,100, Cohen said that the fair value for the benchmark was between 1,250 and 1,300. It closed at 1,178.10 yesterday.
...

Cohen Says Preconditions in Place for Stocks Rally: Tom Keene - Bloomberg



Bing Translator

 

[alingtonsky]

October 26, 2010

" The only problem with the rally in world equity markets appears to be in getting the crowd to believe in it! Perhaps this is a good problem to have because the more crowd members there are who don't believe in a bull market in equities (albeit have a bearish view) the more potential buyers there are out there! Yes the market works in strange counter-intuitive ways at the best of times.

World equity markets have more or less completely re-cooped all of their losses made since just prior to the "flash-crash" in early May. However, market sentiment appears considerably less bullish than it was at the end of April. Perhaps the flash-crash has affected investors a lot deeper than I ever expected it would.

Whether or not the crash of 2008 marked the start of the next bull market remains to be seen of course. However, from my limited 20 years of experience in the markets (the last 10 as a professional trader) and my studies of stock market history dating from the American Civil War, we may well be in for a period of significant growth in stock prices. I would like to quote the famous economist A.C. Pigou:

"The error of optimism dies in the crisis but in dying it ‘gives birth to an error of pessimism. This new error is born, not an infant, but a giant; for (the) boom has necessarily been a period of strong emotional excitement, and an excited man passes from one form of excitement to another more rapidly than he passes to quiescence."
​

If you don't get the hint from that quote then try the infamous words of John B. Templeton:

"Bull markets are born in pessimism, grow in skepticism, mature in optimism, and die in euphoria".
[I mercati “toro” nascono dal pessimismo, crescono con lo scetticismo, maturano nell'ottimismo e muoiono sull'euforia.]
​

A dead give away for the crowd's pessimism or "weak-form" skepticism is the outflows from equity mutual funds (particularly of the US domestic variety). In spite of the very significant rise in equities over the course of the last two months there continues to be outflows from mutual funds, from recollection I think we are up to 25 consecutive weeks of outflows (as per ICI). Most analysts would take this as being a bearish phenomenon, I take it as being bullish because it suggests there are plenty of marginal buyers out there for equities.

The lack of enthusiasm for equities is reflected in the tone of commentary. Every time the market advances it seems that a growing chorus echoes words to the effect that; "this market is now well due for a significant correction". It is interesting to note that many commentators who are now in the "correction" camp never changed their bearish view in the first place! Furthermore, it seems that the reasons given for the rally in equities, are mere "excuses". How many times have you read words to the effect that "this rally is not real.....it is solely due to the misguided efforts of the Fed.....eventually the rally built on a house of cards will collapse"? Well it goes a little further than that with the Fed and the "QE" thing being often quoted as the primary reason for the latest results in corporate earnings. Once again we are being led to believe by the average pundit that the increase in corporate earnings is "not real" or that they are "fake"!

I have just read Mark Hulbert's latest piece in marketwatch.com. He is one writer whom I highly respect and I urge you to note what he is currently saying. Mark makes reference to Adlai Stevenson's famous quote of some 50 years ago. Mocking opponents' reasoning, this elder statesman and candidate for president in the 1952 and 1956 elections would say "here's the conclusion on which I base my facts." I think that this quote about sums it all up.......most commentary that one reads these days is mere justification for some preconceived idea that in all probability was never the author's idea in the first place!







For those of you who are fearful of equities.....have you stopped to analyze the developments that have occurred over the course of the last two years which can be taken to be bullish for equities? Here are a few:

• massive injections of liquidity into financial markets by central banks,
• the cleaning up of corporate balance sheets brought on by the financial crisis,
• the lowering of corporate cost bases also brought on the collapse in cash flows in the last half of 2008 and early 2009,
• the dramatic come back in corporate earnings over the last 18 months,
• emerging markets that have bounced back to growth levels in excess of those which prevailed in 2008,
• a shift in wealth with emerging markets now accounting for more than half the world's GDP (so much for the term "emerging"),
• equity valuations on many large cap US stocks that can only be described as very cheap relative to treasuries,
• and perhaps above all, sentiment towards large cap US equities that can only be described as something you use to describe toxic waste!

There are probably a whole lot more positive reasons that one could gather to support a bullish argument. In any event, the behavior of the market seems to suggest that something very bullish is in the process of building. The average stock in the US (as per the equally weighted Value Line Index) is only a whisker away from a multi-month high. The more I look at the behavior of equity indices in the US over the last 6 months the more it reminds me of what took place in the first 8 months of 2004!

...

And finally the proverbial canary in the coal mine of world equity markets. Emerging market small caps are making new multi-month highs week in week out. Yes even if you look at their behavior in home currency terms (rather than USD which the ETF reflects).

Yes I know there is great uncertainty over what will ultimately be the end result of the huge stimulus efforts by central banks. But as any seasoned investor knows, if there is no uncertainty there is no wall of worry for equity markets to climb. That is, when everything is certain and the future looks "rosy" then there will only be marginal sellers of equities left!

This Bull Market Will Continue to Surprise -- Seeking Alpha

 

[alingtonsky]

Jan 3, 2011 10:46 AM GMT
Smaller U.S. companies are rallying the most since 2003 relative to the Standard & Poor’s 500 Index, a sign to BlackRock Inc. and JPMorgan Funds that the economy will strengthen and spur a third year of gains for investors.
The Russell 2000 Index, comprised of stocks with a median market value of $528.5 million, rose 25 percent in 2010, beating the S&P 500 by 13 percentage points. The return left the benchmark gauge for American equity at the lowest valuation ever compared with the small-cap measure, according to data compiled by Bloomberg.
Increases in smaller companies that are more dependent on U.S. demand have preceded faster economic growth and the biggest equity rallies of the last two decades, data compiled by Bloomberg show. With the S&P 500 trading at half the price- earnings ratio of the Russell 2000, larger companies are too cheap to pass up, BlackRock’s Kevin Rendino said.
“It’s good news that small companies are doing well,” said Rendino, a money manager at the New York-based firm that oversees $3.45 trillion. “If small companies are doing well, it tells you that the U.S. economy is getting healthier, and that bodes well for the market.”
The S&P 500’s book value, a measure of corporate assets minus liabilities, shows larger stocks are the cheapest on record relative to smaller companies. The S&P 500 was valued at 2.22 times net assets, compared with 2.04 for the Russell 2000 on Dec. 27, the narrowest gap in data tracked by Bloomberg since 1995. The average spread over that period was 1.1 points, the data show.
Profit Multiples
On the basis of profit, shares of larger companies are half as expensive as smaller stocks. The S&P 500 trades for 15.8 times reported income, while the Russell 2000’s multiple is 34.4. The median ratios for the indexes since 1995 are 19 and 29.9, respectively, data compiled by Bloomberg show.
Earnings at smaller firms are a better indicator of economic strength than larger businesses because they get a greater proportion of their sales at home, according to Rendino. The median company in the Russell 2000 takes in all of its revenue from North America, compared with 75 percent in the S&P 500, financial reports compiled by Bloomberg show.
Profits among smaller companies rose five times faster than larger ones last year, and analysts’ predictions show the outperformance will continue. The average company in the Russell 2000 posted a 165 percent gain in income last year, the most since 2003, as S&P 500 profits rose 29 percent, according to data compiled by Bloomberg. More than 19,000 analyst forecasts for 2011 show earnings for the small-cap stock gauge will rise 80 percent, compared with 22 percent for the measure of large- cap stocks.
Bull Markets
The last time the annual gain for the Russell 2000 was this much higher was in 2003. That was first year of a bull market in which the S&P 500 doubled through 2007, data compiled by Bloomberg show.
“The message that the small-cap rally has been giving is that the economy is recovering,” said David Kelly, who helps oversee $445 billion as chief market strategist for JPMorgan Funds in New York. “Large caps look cheaper than small caps, and people, if they are long-term investors, should be a little overweight large caps.”
...

http://www.bloomberg.com/news/2011-...rn-signals-economy-will-drive-2011-rally.html

 

[alingtonsky]

http://forexhound.com/article/Stocks/Stocks/Jeremy_Grantham_GMO_January_2011_Letter_Pavlovs_Bulls/284726http://forexhound.com/article/Stock..._GMO_January_2011_Letter_Pavlovs_Bulls/284726http://forexhound.com/article/Stock..._GMO_January_2011_Letter_Pavlovs_Bulls/284726

http://www.gmo.com/websitecontent/JGLetter_PavlovsBulls_4Q10.pdf

 

[alingtonsky]

Birinyi Buys as Biggest Bull Rally Since `55 Hits Third Year - Bloomberg

 

[alingtonsky]

Apr 04, 2011 at 06:01
Michael Gordon, CIO of equities at BNP Paribas Asset Management, explains six key features that make European equities appealing for this year.

The sovereign debt crisis in 2010 had a strong impact on international investors’ perceptions of Europe. But the relative importance of Europe’s peripheral countries on the region’s overall growth rate is often exaggerated. In fact, there are significant differences between the growth rates of the various countries across Europe.
...

Investing in European companies not only buys you European growth but also exposure to global growth as many European companies are global market leaders. We have identified around 60 European companies that are considered to be global leaders in their markets. These include not only the clichéd German cars or French and Italian luxury stocks, but also companies in sectors such as kidney dialysis, mining, financials, and capital goods. In fact, some 40% of sales by European large cap companies are transacted outside Europe. By investing in European stocks, investors also get exposure to global growth.
...

Six reasons why European stocks look attractive - Citywire