By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. John Maynard Keynes, The Economic Consequences of the Peace From Nick Colas of Convergex.

Interest rates are still low at 2. But you own stocks for the hope of upside revisions to earnings and a temperate environment for rates. Those factors exist right here, right now. First, volatility remains low. The Shiller PE trailing 10 year was at And that a perfect score on the SAT is Or that New York City Tax Commission is in Room of that huge municipal building downtown. Do people see more ghosts at midnight than other times of the day? Google Trends has the answer: Moreover, Google users i.

Although they do peak slightly after, at about am. To answer that question we need to look at equity valuations, a discipline that admittedly feels about as rigorous as the occult sciences.

Some numbers serve as warnings, others as welcoming agents, and still others mean nothing. So, while valuation numbers might be flashing yellow, earnings growth seems ready to speed through the intersection and push markets further down the road. The second thing to consider is interest rates, which are the foundation for equity market valuations. Remember day 1 of finance class: A few points on interest rates:.

Quadruple Witching

So where are the ghosts and goblins in this outlook? Under the bed, in the closet, and behind the curtains, of course. They always hide until you are just about asleep and only then make themselves plain. Volatility, both expected and actual, is extremely low. The case I have laid out here is extremely well understood and serves as the cornerstone for any positive construct on US equities.

Where the Shiller PE does have some forecasting ability is in long term 10 year forward returns , and that makes good sense. After all, buying when stocks are cheap should yield better long term outcomes. Some people use the Shiller PE as sort of a ghost story, meant to scare. And you can certainly read it that way — bad things often happen when it gets this high.

And they may do so again. Yes, in the past that scenario would pull investors into the fray and make for an artificially overvalued market, and then a fall. But the current crop of investors has been around for 3 notable bubble bursts: Will they really get sucked in again? Most investors really follow the advice of the "professoinals" and don't think for themselves. The one's who got scared or lost last time never participated in this bull market. Some smart investors will cost average out now and then buy back in lower but always have some money working for them in the markets.

Asset allocation models say to take from what is up and put it into what is low. Metals have been beaten down and now are rising.

Witching hour (Investing) - Wikipedia

But your average investor really doesn't know how to time the market. So they will probably get sucked down when we eventually get the harder move lower. Personally, we trade in and out and don't give a hoot. Here is how we did the last week where we caught the bottom in metals pretty well. Gold and miners had a nice run and we booked the profit. Now long JDST for a scalp.

Will get back into miners in a bit but do have a longer term position in USLV and UGLD.

Gold always catches up to a dollar move one way or the other. As far as markets, yeah, overvalued.

But one can go broke shorting what they believe is an overvalued market so the best thing to do is look at SVXY and if it is up, buy it. UVXY has been a fools game and never recommend holding it overnight and for that matter we don't hold leveraged ETFs for more than a short time because of decay. But we did have fun with UVXY today.

Investing doesn't have to be difficult but we were never taught how to invest and leave it in the hands of these professionals who are fed the same buy and hold mentaltiy that caught them all by surprise the last downturn.

What makes anyone think that mentality has changed? One of my favorite MP scenes. And it fits the current moment exactly Eventually this whole shitshow is going to blow sky high. In the meantime, doesn't hurt to have a few laughs along the way. I would observe the rigged markets and commodities will continue to survive until margin calls on derivatives reach extremes.

Most people are involved through their k, they dont have an active role in their investment strategy. I dont have a k and I have ZERO stock market exposure. I see no reason at this time to own stocks. The downside way outweighs any upside, even in the most optimistic outlook. Fed Fuckers USA , Fed Fuckers USA, print mo money!

BuY the fucking dip! ITS FED FUCKING DELICIOUS! THIS REALLY WORKS FOR THE FED FUCKER BANKERS! If its not GAAP its crap! GAAP SP earnings are at the same level that they were at when SP was around before. Here's our Cookie Policy.

How to report offensive comments. Home Contributors Newsletter Donate More Store ZH-TShirt Glossary Archive Manifesto RSS. CNN's Jim Acosta Throws Dramatic Tantrum Over Sean Spicer's Silent Press Briefing by ZeroPointNow - Jun 19, Inflation is no longer in stealth mode by GoldCore - Jun 20, 5: May 17, 1: Until they do… A few points to kick things off: FactSet also shows that earnings expectations have risen by 2.

This is primarily due to Q1 earnings pushing numbers higher. A month ago analysts expected a 9. The bounce in Q1 results has allowed analysts to cut back on their Q2 expectations, which are now looking like 5.

This is one of the less-discussed pieces of how analysts game their earnings expectations, and does not indicate a big pothole coming for earnings. For the year as a whole, analysts expect earnings growth of 5. If that sounds like a disconnect, it should. Marginal revenues always come through at faster levels of earnings growth since fixed costs are already covered by base revenues.

A few points on interest rates: The yield on 10 Year Treasuries is a very equity-friendly 2. That will keep long rates low and equities relatively high.

See here for more, and a chart: The Shiller PE is a controversial tool for analyzing long term trends in valuation. It takes a year look-back at earnings and averages them, rather than the one year look forward most investors use as their central tool. It ignores changes in accounting standards and interest rates. The current Shiller PE multiple is The all time high readings were 30x ahead of the crash and 44x just before the dot com bubble burst December While the Shiller PE clearly shows stocks are expensive, it has little forecasting power over a three year forward look.

See here for a clever analysis on that point: We started with a Shiller PE of A history of the Shiller PE here: Or have they had enough scares to know better? New York City PE Multiple Federal Reserve Volatility Paul Tudor Jones Market Cycles fixed Google.

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