Monday, August 24, 2015

Relax, have a glass of wine




Recession or Renaissance?


  • Lower commodity prices, which translates into lower input costs;
  • Better operating margins from lower material costs and restrained labor costs


Addressing a possible EM crisis








Sit down, relax and have a glass of wine.

What can accelerate the downside?





Relax, have a glass of wine.

One technical note





Anonymous said...


You obviously have a lot of market insight.
Many people are making eerie predictions. Lots of market crashes are predicted. Lots of resemblances to the market crashes of 2000 and 2007 are portrayed.
And you provide an antithesis. By telling why their predictions are unsubstantiated in this market.
Clearly the market is no black box. But I also understand that in order to exclude the possibility of the market being a black box, one must be able to exclude all the possibilities by which the market could be a black box. And that can be a hard call to make. Many people are clearly guessing.
So I'd like to pose this question to a knowledgeable person as yourself:
Can there really no way by which you could see this market become really bearish at this point in time?
I understand that there can always arise unlikely circumstances which cannot be predicted. But can you exclude the possibility of a market crash at this point in time which would have been predictable?
I understand that answering this question is way above my head. But I would have regretted it if I would not have asked you to ponder about this question.

Cam Hui said...

There are three main reasons why a stock market enters a bear market (not a correction):

1) Recession
2) Overly aggressive Fed tightening
3) A war where the political structure country is destroyed (e.g. Russian revolution, WW II)

Do you see any of those events on the horizon?

Anonymous said...

No. Thank you.

thus- said...

Thank you for the post. I appreciate your perspective.

One of your assertions raised questions for me, however. You acknowledge that excessive debt can be a factor in accelerating a selloff, but state that "Unlike past crises, however, there is little excess leverage to unwind and, in fact, the world has been deleveraging and eschewing debt in favor of cash." I've been hearing the exact opposite, that debt (both margin debt and corporate debt) are at record highs:

Can you clarify on what data you base your conclusion that leverage is not a concern?

Cam Hui said...

I was referring to the level of overall debt in the system. The Lehman Crisis downturn was exacerbated by too much mortgage debt, Asia Crisis too much external USD debt that when Asian currencies devalued, borrowers got in way over their heads.

Today we don't have the same kinds of problems. Even Chinese debt is RMB denominated and therefore local debt. That problem will get resolved in a different way because the banks are not allowed to go bankrupt.

WimpyInvestor said...

Retest SPY $183 or No Retest, That is the Question?

I think by now, all of the "extreme oversold" charts and indicators (I have gathered 20+ of them since July) have been "priced into" SPY. Assuming the markets are somewhat efficient, then perhaps hedge funds, high frequency traders, pension managers, mutual fund managers, etc, have all seen these charts (including your Trifecta OS model).

Some suggest V shape bottom, but most suggest re-test of SPY $183 low (and maybe go a bit lower), then 10%, 15%, 20%, or ever higher rebound depending on the "extreme oversold" indicator.

What do you think?

V or W?


Peter Bryans said...

Fantastic post. Learned a lot from this.

P.Binder said...

Well a month has gone past and we are again in crises mode - or not ? High Yield bonds and everything that has to do with take overs or leveraged buyouts or related businesses are under attack and even such great companies such as BX and PYPL are taken to the cleaners - clearly we had a bull market since 2009 one of the longest in our history - and all things come to an end some time - I do agree with this blog - and like it very much