As we ponder 2014’s headwinds and reminisce about the bubble/not bubble in stocks, there is one more factor to add to my note from yesterday about the time value of assets. For simplicity’s sake I kept all the calculations as nominal; no need to introduce complexity when the elegance of simple math made the point very nicely. Despite record highs [...]
While it appears the refi boom that began in early 2011, rising sharply throughout 2012, has tapered fully, the mortgage activity surrounding home purchases is also on the verge of joining that retrenchment. Year-over-year, mortgage applications for purchases are nearly flat and are receding to early 2012 levels. The big banks have begun reducing staff counts, a very convincing signal [...]
I have plotted a chart of the S&P 500 (taken from the research of Robert Shiller) for a particular period in time. It shows the sometimes tenuous relationship between stock prices and underlying earnings. Prices and earnings largely behave as you would expect in the first half of the chart above – prices anticipating changes in the earnings environment (economy) [...]
From Fed Governor Sarah Bloom Raskin's recent speech titled Beyond Capital: The Case for a Harmonized Response to Asset Bubbles: Here is one way a bubble might start. And, to approximate current economic conditions, we'll assume an environment of interest rates that have been low, and continue to be low, for a long time. To start, retail investors may become dissatisfied [...]
When I mentioned that Greenspan’s market has persisted long after his words fell from memory, that extended to overextended stock investors as well. By almost any measure, Ben Bernanke has outdone the “record” of his predecessor, yet he has so few quotable lines outside of those really bad predictions during the runup to the 2008 panic. Greenspan will be forever [...]
Stay In Touch