1/9/09
1/9/09Nearly two-thirds of U.S. millionaires say their investment advisers have failed them during the global recession, according to a recent survey by Spectrem Group.
Only 36% of respondents were pleased with their advisers performance last year. The poll was conducted in November of 750 U.S. households with more than $1 million in net assets.
14% said they’ll increase their use of financial advisers.
U.S. millionaires lost an average 30 percent of their assets last year, with 17 percent of respondents saying their assets declined by 40 percent or more, Spectrem said. The Standard & Poor’s 500 Index dropped 38 percent last year, its worst since 1937, and global stock markets surrendered $28.7 trillion of their value, or 47 percent.
I am no surprise to hear this survey result. I,myself is also kinda financial adviser who also feel frustrated by many so called financial experts,professionals,advisers......etc. Ooops, how and why this could happened?! Yes, it is by nature that almost everyone like to be bullish all the time. In fact, they do not want to believe that economy has its period going up and going down. It is very simple fact that every adult should know(Aren't they supposed to?! Or I may making wrong assumed knowledge here). Let me give a Chinese proverb here:
“He who blames others has a long way to go on his journey. He who blames himself is halfway there. He who blames no one has arrived.”
This is good advise to each investors. Or you have to learn who to avoid and who to listen.
The above chart is telling you and I something,and....
Peter Boockvar writes:
December Payrolls fell by 524k, about in line with estimates and well below the whisper of 600k-700k. But, the prior 2 mo’s were revised lower by 154k. The unemployment rate also rose to 7.2%, .2% higher than expected and is at the highest level since Jan ‘93. This was due to an 806k drop in Household Employment with a 173k drop in the Civilian Labor Force. The Augmented Unemployment rate, which includes those that want a job but have stopped looking, rose to 10.4% from 9.9%. Avg weekly hours fell to 33.3, a touch less than expected to its lowest level dating back to at least ‘64 and is a precursor to more job losses. Construction jobs fell by 101k, mfr’g lost 149k, retail was down by 67k, temp help fell by 81k and leisure/hospitality fell by 22k. Education/health and the always hiring gov’t both added jobs. The Diffusion Index, which measures those industries hiring vs those firing, fell to 25.4 from 27.2, the lowest since the stat began in ‘91.
My comment:There you go. 7.2% unemployment rate. However, the real job loss rate is way above 7.2%. Although unemployment rate is lagging economic indicator. However, it is still worth to analysis and understand what it means.
1/8/09
1/7/09
Over at Marketwatch, Paul Farrell sifts through a book (sitting on my shelf) and pulls out these embarrassing quotes.
15 reminders of how happy talk misled us a decade ago
My comment:Very amazing, isn't it?! Many of those are still broadcasting in TV today and keep commenting kids talk about wall street and their view. Educate yourself and use common sense. Are we in serious crisis than last recession?! If so, how could our economy and stock market will go up double digits for this year 2009?! Only one year correction?! Come on! Be realistic! "Do not make and tell your wish to public!" This is what I comment about those so called experts in Wall Street.
Above we list the 2009 S&P 500 strategist price targets in the final Bloomberg survey of 2008 (on 12/29). The average 2009 year-end S&P 500 estimate of the 11 sell-side strategists that participated is 1,056, or 16.9% above the S&P's year-end price of 903.25. UBS strategist David Bianco is the most bullish of the group with a year-end target of 1,300 (a 43.9% gain). Deutsche Bank's Binky Chadha is the second most bullish with a target of 1,140, followed by Goldman, Strategas, and JP Morgan, who are all looking for a gain of 21.8%. Only one strategist, Barclays' Barry Knapp, believes the S&P 500 will fall in 2009, but only by 3.2%.
The consensus estimate for year-end 2008 was 1,632 at the start of last year, which translated into an expected gain of 11.12%. Let's hope the strategists are a little closer to the mark this year.
My comment: I do not know you as my blog reader how to think of these non-sense price targets in term of what we have in current economic situation. Are they out of mind?! I do not know. I guess so probably. However, I am more bearish than Barclays' estimate. Please review what I posted on 1/1/09.
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Not exactly confidence inspiring when it comes to stock analysts. If you want to understand why we prefer to rely on objective data rather than analysts, this is the precise reason.
On a trailing one-year basis, that puts the Price to Earnings Ratio (P/E) at over 19 as of today. This does not make the market cheap.
And what about 2009? Again, the analysts are in a race to find the bottom.
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The current projections are for $42.26 for 2009. That makes the forward P/E 22. That doesn’t look like value at all, when the historical average is closer to 15.
In 2001, as-reported earnings were $24.67. Operating earnings in 2002 were $27.57. Does anyone think the current recession will be milder than the last one? Or shorter?
My comment: Another solid fact to prove we are long way to hit the economic bottom and stock market index too. Good Luck!
-33.84% The percentage loss in the Dow industrials, worst since 1931, third-worst in history.
-38.49% The percentage loss in the S&P 500, worst since 1937.
-40.54% The percentage loss for the Nasdaq Composite Index, worst in history.
126 The number of up days on the S&P 500 in 2008.
126 The number of down days on the S&P 500 in 2008. (The difference, of course, is that on the down days, the market lost an average of a kajillion points.)
28 The number of Dow industrials components ending lower on the year. The outliers were Wal-Mart Stores and McDonald’s.
15 The number of Standard & Poor’s 500-stock index members that ended the year in positive territory. This is the worst breadth for the S&P going back to 1980; second-worst was 2002, when 131 stocks, or 26% of the issues, rose on the year.
18 The number of daily 5%+ moves on the S&P 500 in 2008.
17 The number of 5%+ moves on the S&P 500 between 1956 and 2007.
280.80 The daily average point range on the Dow Jones Industrial Average.
421.01 The daily average point range on the Dow Jones Industrial Average between Sept. 1 and Dec. 31.
-7.87%. The worst one-day percentage change on the Dow in 2008, which ranks ninth all-time.
-87.14% The performance of General Motors in 2008, making it the worst among Dow components. (There are issues here of survivorship bias — American International Group was removed from the 30-stock average during the year, and that stock lost 97.31% in 2008, making it the worst performer among the members of the S&P 500.)
1.78 The percentage-point decline in the benchmark 10-year Treasury yield, which fell to 2.253% by the end of the year.
6 The number of days in 2008 that rank among the Dow’s top 20 up days and top 20 down days in terms of percentage change. (The leader, with 10 appearances, is 1932.)
-17.7%.The performance of the S&P’s consumer staples sector — the best performer among the S&P’s 10 industry sectors.
24.03% The gain in the Barclays long-term Treasury Index in 2008.
15.66 The difference, in percentage points, between the lowest spread over Treasurys for the Merrill Lynch High Yield Index for the year, and the highest spread over Treasurys. (At its peak, the index was at 20.68 percentage points over comparable Treasurys.)
$61,000 The cost of insuring $10 million in U.S. Treasurys against default for five years. At the beginning of 2008, this cost was $6,000.
Sources: Dow Jones Indexes; Markit; Standard & Poor’s
1/5/09Why did Economists, as a group, miss the warning signs of housing, credit and market crisis?
I don’t mean individuals — several professional Economists got it right; Academics like Nouriel Roubini of NYU and Robert Shiller of Yale, as well as a few Wall Streeters, such as David Rosenberg of Merrill Lynch and Paul Kasriel of Northern Trust. Too many bloggers to name also got it right. Meanwhile, the vast majority of professional economists, strategists and analysts — the “Herd” — totally missed it.
One explanation comes from Dean Baker, who channels Keynes, and says “incentives in the economics profession, just as in finance, strongly encourage a lack of original thinking.” (That’s a variation of Keynes: “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally“). Paul Krugman wondered if it was a fear of going “against bubble denier Alan Greenspan.”
I find all these explanations wanting — and quite frankly, too generous by half.
My explanation is there were systemic failures in economics as a discipline, at least as it is employed in the real world. Note that these are not theoretical critiques (i.e., Keynesians versus Monetarists), but rather, these are broader inquiries as to why so many working economists were so utterly clueless about all of the red flags for so long. The inherent biases of working on Wall Street go along to explain why those economists were so awful — but I have less of an explanation as to why so many academic economists were so blind. Perhaps it is the profession itself.
As far as Central Bankers were concerned, they too missed the warning signs — but there were several notable exceptions to this to, including the Bank of England’s concerns about a credit crunch and a collapse in asset prices.
Ideas? I have a few. Here are my top 10 indictments as to why professional economists missed the crises until it was too late:
1. An inherent upward bias is built into ALL Wall Street research — including economic research;
2. Ideological rigidity prevented creative thinking;
3. Non-critical acceptance of official data from BEA, BLS, Commerce led to only a passing familiarity with reality;
4. Institutional rejection of negative analyses remains endemic;
5. Traditional (non-behavioral) economic analysis seems to have difficulty with human irrationality;
6. Political Bias; (Right wing during GOP Presidencies; Left Wing during DEM Presidencies);
7. Corporate bias — Stock option compensation — skewed views too optimistic;
8. “Timing” is very different from Analysis;
9. Factoring in excessive leverage and liquidity is exceedingly difficult from a traditional economic perspective (Derivatives especially);
10. Herding instinct is powerful;
Economics as a discipline does not seem to be particularly introspective. In my opinion, the sooner the profession develops some self doubt, recognizes its own failings and shortcomings, the faster they will be able to recognize the failing constructs of the profession and fix them. The Efficient Market Hypothesis, homo economicus, the deification of markets, all need an open public review and a good thrashing.
There were many professions that did not distinguish themselves in the lead up to the housing boom and bust, financial bust, the credit crisis, and the recession. Economics is near the very top of that list.
Here is my comment. This is it. The so-called expert in the field. They are not first time to miss this recession call. Too many of them were failed too during last recession. Folks, this is one of the reason why I write this blog and so many other well-known bloggers around the world. Many of the bloggers have no economic education degrees at all, just like me. However, we all able to do our research and analysis that much far more accurate than those called experts. Screw them if you call it. The most important to know finance and investment is educating yourself. One simple way is through studying technical analysis. I will post my analysis on how to find when will be start of Bear Market or Bull Market.
