Matt Rothman of Barclays released a piece on Equity Quantitative Strategies of the United States. The piece highlighted that the pain trend quants are getting down day by day. The overall market condition seems to be a bit too low in trend. Investors are all worried and are finding themsleves in proged pressure of the market condition. If you are amongst those thousands of investors who are looking for way to invest for good return just read out what Tyler Durden writes.
The most noticeable things to be remembered in the report are as follows:
The ROQS quantitatively derived long-only risk controlled portfolio underperformed this month. This caused the ROQS to trail its Russell 1000 benchmark by 82 basis points.
This month our ROQS long/short market neutral portfolio returned -17.1%. All through the year, it generated an absolute return of -4.26%.
Although the valuation markedly outweighed by + 14.4% this month, yet the even such strong performance wasn't actually enough to offset the poor run of the market sentiment. All together, the overall Quality had slightly underperformed by -1.4%, although there was a notable decoupling witnessed among the factors. Read here to know if the market dispersion really collapsed
Tid bits About The Market Dipression
Best Amongst The Stock Market Commentaries - Inflection Points Fast Approaching
Experienced stock market analyst says that Inflection points fast Approaching. Many of the stock market commentaries have talked about the same issue. Recession germs have spread all around the world, afflicting the entire world economy! Now that the critical turning point (point of inflection) appears to be approaching in the US Stock Market, things are going to be a bit different, I think. This is going to affect the US Dollar, Gold and to a lesser extent, 30-Year Bonds too!
During the fag end of 2007, there was a drastic upthrust sell signal, whose minimum target was met when the S&P had stepped in to the Primary Buy Zone 894 to 798. But the moment the S&P dipped to 666 and bounced, we could see a possibility of buy signal.
Ray Barros said “If the buy signal is triggered, the minimum target is the Primary Sell Zone 1576 to 1461. And, there would be a strong probability that the market would exceed 1576 but remain under the Maximum Extension 1078.
The question then becomes, what do we need to see:
• to confirm the bullish scenario or
• to reject the bullish scenario?
Before I examine that, let me make it clear that I do not rate the buy signal as auguring a high probability for a new bull market. Does the possibility exist? Of course. The market can and often does anything. But based on my studies the probability of a new long-term bull market is remote. Let's have a look at the reasons for this belief.”
Click here to read more about what Barros analyzed.
Epic Opportunity to Buy Gold Stocks
Well now this particular post is all about the Opportunity to Buy Gold Stocks! I am sure you guys might be interested in this. Remember the crash that was witnessed August 2008? This post is a brief extract of Adam Hamilton's most valuable piece "Epic Opportunity to Buy Gold Stocks"
The precious-metals stocks, according to Hamilton, not take kindly to gold’s steep selloff during the second week of August, 2008. During that time the flagship HUI gold-stock index plunged 6.0% at the climax of what can only be described as a crash opinionated Hamilton. In this event’s final 3 days, the HUI bled 13.1% of its value. In less than a month, it had plummeted 33.1% by the time the dust settled!
Although the HUI has a well-deserved reputation for extreme volatility, this selloff was still exceptional. Typically, sharp HUI declines emerge after major uplegs from high levels. But as you’ll see in these charts, the HUI wasn’t high technically when this heavy selling started battering it as August dawned. In fact it was already pretty beaten-up pre-crash, under both its summer support and 200-day moving average.
Distribution of stock returns
"Distribution of stock returns" is one most significant factor when it comes to stock market analysis and information. There have been tons of research works carried out to examine the fit of three different statistical distributions to returns of the S&P 500 Index from 1950 to 2005. While the normal distribution is a poor fit to daily percentage returns of the S&P 500, the lognormal distribution, on the other hand, is a poor fit to single period continuously compounded returns for the S&P 500, which implies that future prices are not lognormally distributed.
One very interesting point raised by a guy named Eddy Elfenbein on his Crossing Wall Street blog about the distribution of stock returns. The takeaway is that most individual stocks don’t do much. As a matter of fact the post said that only one in five stocks is a “significant winner.”
The argument being made was that too much diversification might have an adverse effect like what the economists call "Diminishing Returns". But this can to explained in a bit different way! There are many around the world who manage accounts that have 40-45 holdings when fully invested. Many of those, around 75%, are stocks, while the rest are ETFs. The discussion is all about the the equity portion of the portfolio.
Many people around me tend to build up portfolios from the top down going sector by sector. Prior to stocks being selected, people tend to make decisions regarding over weighting or under weighting of the sectors. Following this people decides on what countries to buy.
According to the "Top Down Theory", the stock selection is the least important part of the process the idea being that if you figure out, for example, that you want to own a Norwegian oil stock and get Norway right and get the sector right that the few stocks you would choose from will all correlate closely and to the actual stock chosen becomes a shade of gray.
The above piece has been extracted from the article "Is Diversification A Bad Thing?" written by Roger Nusbaum. Roger has talked about diversified topic on related to stock Market conditions... the worth mentioning of which is "How Broken Is The Financial Services Industry?"
Global Stock Market News : Stock Market News : Financial Market News
Inflation Will Make its Presence Known
By Michael Pento
One of the universal laws of economics is: when a government increases the supply of a currency by fiat, that currency's purchasing power diminishes. An absolute consequence of that action is that the nominal monetary value of most assets will tend to increase in price over time. That simple rule is the reason why I believe a short-term bottom either has likely been, or will very soon be reached in the major averages and a major secular bottom has been reached in most commodities. Why do I believe commodities have or will put in a long term bottom near today's levels? Because commodity supplies by their nature are limited and cannot be increased by decree nor can they display inflation rates commensurate with that of most currencies.
Most bears correctly believe that the policies being employed by our government will lead to an economy marked by accelerating inflation and weakening G.D.P. growth. However, the one aspect of that scenario they tend not to realize is that inflation boosts most asset classes and that includes even equities. Looking back into the history of past inflationary economies as well as those of today, you will find that the nominal value of their major indexes increased. It should be no different here in the
Whereas I firmly believe the efforts by our government will be pernicious for the economy in the long term, investors should not believe that global equities and commodities will perpetually be caught in a deflationary spiral. Fiat currencies rule the world and most central bankers are working overtime trying to inflate their economies into prosperity. Sadly, our Federal Reserve is a leader in that regard.
There can be little doubt that American consumers' balance sheets are under duress. Their $14 trillion in debt has now reached about 100% of annual G.D.P., record territory and far above its multi-decade average. The argument has been raised by many respected economist that since the consumer is unable to expand his balance sheet, the economy must suffer through a protracted period of deleveraging. Of course such a deleveraging process would be the only path to take in order to engender a sustainable economic recovery. But that is not the direction our government has chosen to take and they will not allow that necessary deleveraging process to run its course. Thus, it would be foolish to ignore what the Treasury Department and Federal Reserve are in the process of doing; because of their actions, our battle with deflation will only be cyclical in nature.
The reason why a deflationary depression will not occur at this time is because the consumer's balance sheet is being supplanted by the balance sheet of the government, and the government's balance sheet is unlimited. Currently, consumers may not want or be able to take on more debt. That would normally, if left to market forces, allow a deflationary environment to persist. However, the Treasury has expanded its issuance of debt, which is being bought by financial institutions. That money goes into the economy and is eventually re-deposited into the banks. The Treasury bonds purchased by the banks are then monetized by the Fed and the money supply grows. This cycle repeats and money supply skyrockets. In fact, the government has succeeded in sending the monetary base to a year-over-year increase of 28.4% and is currently growing at an annual rate of 341%! Do you really believe commodities can remain in a bear market under these monetary conditions?
The government's actions amount to an end run around the consumer. An end run can be defined as a maneuver that is used to avoid impediments, often by trickery or deceit. Unfortunately, as the government tries to "trick" the free market and the consumer, all it will end up accomplishing is engendering intractable inflation while expanding its control over the economy. However, inflation has many different manifestations and investors would be wise to show caution if believing that deflation in most asset prices (including equities) can persist much longer.
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