Comments on: Buy stocks, sell bonds A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: GilBurt Sat, 05 Nov 2011 09:33:29 +0000 Really a very good information that will be so helpful.

By: Tom74 Sun, 04 Sep 2011 16:24:52 +0000 I bought stocks 5 days after the announcement of the credit downgrade and am happy I did. It was just enough to put panic in the market and push stocks much lower than they should have been. I love when panic strikes the market and gives great buying opportunities. I feel safer buying stocks then than at any other time.

By: chasingbeta Fri, 12 Aug 2011 10:43:45 +0000 it will be true that now most are prefer stocks tips for getting more money.

By: y2kurtus Thu, 11 Aug 2011 01:22:44 +0000 Let me tie up one of those loose ends for you Clayton, the senate banking hearings are going to be first postponed and then quietly canceled. If they were actually held they would serve only to highlight the difference between a true AAA soverign credit like Germany and our own goverment. Their debt to GDP is lower, their economy is stronger, their budget is much more structurally sound, and even their multi-party system of goverment acts much more mature than our congress.

Even asking grandstanding accusatory 5 minute questions and cutting off Mr. Beers twenty seconds into his answers it would be crystal clear to the 1% of the population watching that the S&P had the high ground.

No country can afford pepertual war while at the same time providing goods and services to 40% of the total population not productively employed. Anyone who disagrees with one letter of the previous sentence does not understand basic mathmatics and should not be taken seriously.

Our grandparrents live through a depression and two world wars… we’ll get through this mess. Just got to start planning ahead a bit more and making better decisions.

By: ClaytonBurns Tue, 09 Aug 2011 19:11:50 +0000 There are some loose ends here. First of all, if the Senate Banking Committee is going to hold hearings on the specific competence of S&P on sovereign debt, it should carefully consider ABC News video of the David Beers interview in which he failed to give a clear explanation of his notorious mistake.

In fact, Beers snapped that he had to be allowed to finish his explanation, but then, after getting so worked up, went on to other matters. As if there is no coherent explanation. Nor do I believe there is one. Ezra Klein at The Washington Post challenged Beers about the incoherence of the versions of the S&P rationale, and the manifest resulting incoherence of the final product, but could not get a sound response.

S&P is notably unqualified to give political advice. Nor is it, out of its own mouth, always capable of functioning rationally in doing its math. Therefore, this is a case of severe dysfunction that must be ameliorated by hearings at the Senate Banking Committee. If S&P’s business must be crushed, so be it. At least, a sharp downgrade is indicated. (Perhaps Portugal could help).

I am surprised that Felix does not have this story in focus. It is a significant turn in events when Klein reverses himself in tone to this degree.

By: REDruin Tue, 09 Aug 2011 17:29:09 +0000 “In breaking new, the downgrade of the United States Government Debt from AAA to AA has caused a market drop of 600 points. Fortunately, an expert in vowels, Mr. Pat Sajak, has indicated willingness to sell us the missing A for $2 trillion.
We await word from the government on this important offer.”


By: badbisco363 Tue, 09 Aug 2011 15:58:47 +0000 I generally enjoy your posts but this one is pretty poor for you.

The debt ceiling debacle had no direct effect upon yields as default was never going to happen. The US issues debt in its own currency and will always be able to make payments. Instead, this crisis clearly informed everyone that the US government does not have the ability to improve the economy fiscally or to make a collective effort on jobs. That confirmation combined with an Italian balancing act, unrest in the UK, fears of a return to recession, burgeoning TBTF real estate litigation, and a market run up over the last 27 months simply sparked a significant move to safety. That’s why you see yields and the market down.

Lastly, your attempt to provide financial advisor type advice seems to be based upon the idea that the market was at fair value 10 trading days ago rather than at a point where it had run up remarkably over the previous 29 months.

Thanks for all the great posts but this one falls short in my opinion.

By: TFF Tue, 09 Aug 2011 15:45:13 +0000 “I know cheaper the valuation ratios of equities get the better it is for me because the earnings will compound faster… so why do I feal like I got thrown down 5 flights of stairs….”

I know the feeling, y2kurtus. My head is still spinning right now, which is part of why I’m delaying any new purchases. Want to be more confident in my valuations before I decide where to commit the 10% cash I have available.

While I haven’t ever visited a financial advisor, I imagine they generally have planning software to prepare for retirement? Working off current assets, future contributions, as well as estimates for inflation and future returns? I have a spreadsheet that does the same — and which would likely tell me that the last three weeks have pushed my potential retirement back by a year. Yet the reality is that nothing has changed. Any suggestions how to model expected long-term returns to reflect this truth? Doesn’t need to be an accurate model, since I’m not particularly relying on its conclusions. Just something that will offer a counter-cyclic ray of hope.

“What I find interesting in Felix’s analysis is that he uses the top of the market (i.e. S&P 1370) as his baseline to argue that the market is now having a 20% off sale, which is very faulty logic.”

Agreed. A 20%-off sale at Bed Bath & Beyond is pretty typical, not a great deal. I feel the same about this market. It is a better price, not a good price.

By: mfw13 Tue, 09 Aug 2011 14:36:28 +0000 I moved into 80% cash in mid-July when it became clear that we headed for a train wreck and that even if a deal did get done, the cure would be worse than the disease.

What I find interesting in Felix’s analysis is that he uses the top of the market (i.e. S&P 1370) as his baseline to argue that the market is now having a 20% off sale, which is very faulty logic.

Maybe the baseline is even lower than where the market is now and S&P 1370 represents the fact that it has been overvalued for quite a while. Who knows? After all, up until the recent correction, the market was trading HIGHER than where it was on the day that Bear Stearns collapsed, almost as if the financial crisis and 9.1% unemployment never happened.

By: KarlMarx Tue, 09 Aug 2011 13:08:40 +0000 Pretty much nonsense. The only reason to buy stocks would be a non-economic stochastic reason such as a central planning FED buying equity or handing out tax dollars to the croupier to buy equity. Without addressing the fundamental structural issues there is no way we won’t continue this see-saw process until the taxpayer and nation are completely broke.