Posted by Larry Doyle on April 23rd, 2009 2:06 PM |
Our Economic All-Star Laszlo Birinyi has recently had some very good calls on the market. His funds are outperforming the major stock market averages by 10-15%. Birinyi is an excellent stock picker but also has an experienced professional’s “feel” for the market.
His weekly Blogger Sentiment Poll provides us an easy snapshot as to current investor attitudes. Recall that when a bullish reading approaches 30%, it is an indication of the market being oversold. Similarly, if a bullish reading approaches 70% it is an indication of the market being overbought.
The market overall has done somewhat better over the last few weeks but has given some of that improvement back in this week’s trading. In investment terms, this price action is known as “running in place,” “range trading,” or “moving sideways.”
Not surprisingly, the readings in Birinyi’s polls indicate a very balanced short term sentiment.
Posted by Larry Doyle on April 1st, 2009 9:55 PM |
A few weeks ago, I wrote a piece on whether the market was oversold. Allow me to re-introduce a few topics . . .
The market valuation of any asset is determined by three factors:
1. Fundamentals: measures items such as cash flow analysis, cost-benefit analysis, earnings before interest, taxes and depreciation (EBITDA)
2. Technicals: measured by regression of price movements to determine overbought and oversold conditions
3. Psychology: measured by unscientific surveys of market participants
And now the update:
1st quarter earnings are due out over the next few weeks. Most analysts and managers I follow believe these earnings will be lower than expectations and that 4th quarter 2008 earnings will be revised lower. Will companies provide guidance going forward? Many companies have refrained given the economic uncertainty. (more…)
Posted by Larry Doyle on March 26th, 2009 8:42 AM |
I always keep a close ear for the market insights of any of our Economic All-Stars. Highly proclaimed NYU professor and economist Nouriel Roubini is decidedly bearish on the state of financial companies, the economy, and the markets. Bloomberg reports, Roubini Says Stocks Will Drop as Banks Go Belly Up.
Laszlo Birinyi is more tempered in his assessment but believes the market has come too far, too fast and is subject to some pullbacks. Please remember that we saw a market bottom in the S&P 500 at the 666 level (pretty scary, eh) on Friday March 6. We have moved up 22% in a very short time frame. Birinyi further offers that this market is less geared for long term investors and more for short term traders focused on picking individual stocks.
Posted by Larry Doyle on January 6th, 2009 10:00 AM |
On the first real day of business after the holidays, I will tip my hat to PEBO and his economic team. Obama opened his press briefing this morning with his take that the economy is “bad and getting worse.” In deft fashion, he then caught almost everybody off guard by leading his proposed economic stimulus plan with focus on a significant level of tax cuts and tax credits. In my opinion, this was a very, very strong first move. Well done, Barack!!
The general outline of these cuts and credits include:
1. tax cuts for those paying taxes or with an earned-income credit. Likely for families earning up to 200k, although that is not yet defined.
2. businesses can retroactively reduce tax bills going back 5 years by writing off losses from 2008 and 2009.
3. offer tax credits to entice firms to plow money back into new investments.
4. provide a one year tax credit for companies that make new hires or forego layoffs.
5. increase write-offs for a wide array of expenditures for small business.