Wednesday, February 03, 2016

That excellent measurement of investor confidence, the volatility index, has been a big help in timing the stock market during the last twelve months. These two data series are mirror images of each other.  As it says in my book, TIMING THE MARKET (published by Wiley & Sons) sell stocks as the VIX rises and repurchase them as it falls.

Tuesday, February 03, 2015

Historically low Treasury yields will force investors into the equity market. With the S&P delivering 1.87% dividend yield and Treasuries at just 1.78%, many investors will choose the former.

Note the peak Treasury yield of 16% in 1982. We have had a 33-year decline in those yields that could presage a long period of rising yields. Since rising bond yields depress bond prices, investors will prefer equities. (Graph courtesy

Wednesday, December 17, 2014

The stock market finally realized that lower energy costs are good for consumer spending. The VIX is down as tension eases, and equities are up on the good news of the lowest CPI in six years.

Investors may want to add to equities during this dip.

Thursday, November 20, 2014

The consensus is often wrong. That may be the case now among those who think we are still in a bond market rally. Investors have lost sight of the fact that the yield on the ten-year note hit bottom in May 2013. (This graph is courtesy of

Cash is flowing out of fixed-income and into equities. While there will be volatility in both markets, we may be reversing the 30-year rise in bond prices; that could support a long bull market in equities.

Friday, October 17, 2014

Consumers and businesses are still expanding according to the Federal Reserve Bank of St. Louis. Improved employment is driven this economic growth.

This market hiccup has no basis in fundamental economics. This swoon will pass; in the meantime, this is a good time to add equities to your portfolio.

Saturday, October 11, 2014

The Family Office in Bahrain sent these bright and attractive trainees to the NY Institute of Finance. To request a few of the slides from their presentation, post your email on the comment page.

These young people have a different view of the declining price of oil. It may be more than just the lower expectations for global GDP. It may have political ramifications.

Thursday, October 09, 2014

Small investors sometimes get into and out of the market at the worst possible time. Consider this contrarian indicator: odd-lot short positions.
Odd-lotters are increasing their short positions during this minor stock market adjustment:
Not only are these short positions out of the normal range  of 7,000 to 20,000, but the American consumer is poised to spend. More americans are working now than in the last few years, and their spending will drive the global economy. It always does. 

Wednesday, September 24, 2014

The other odd thing about yesterday's market was that the only member of the Dow 30 with increasing prices was Goldman Sachs (GS). Investors bought this brokerage house on the assumption that the market would go up on a day when the market continued its decline.

GS appeared to provide a beacon of hope at the end of a market rout.

Tuesday, September 23, 2014

Is the stock market overly concerned with possible Fed rate hikes? Has the market forgotten that it sometimes goes up when the Fed decides that the economy is strong enough to tolerate higher rates?

Goldman Sachs (GS) is the only stock that is higher today. Such a broad sell-off is usually a buying opportunity. Today may be one of them.

Wednesday, September 03, 2014

Few people pay attention to a critical measure of the health of our financial system - the federal funds rate.

This is the rate that banks pay each other to borrow/lend their excess reserves at the Fed and is an early warning sign of trouble. It identified problems in every economic cycle and gave investors time to reduce the risk in their portfolios.

You can see the spike in this rate as banks fought for funds before each crisis: 1980, 1987, 2000 and 2008. This rate was the best indicator of the 1987 stock market crash. There is a chapter in my book Timing the Market (Wiley & Sons) devoted to the fed funds rate because it helped me prepare for Black Monday in 1987.

The good news is that the fed funds rate has stayed low all year and dropped to an extremely low level at the beginning of September. The financial system is liquid and secure.

The stock market can take comfort in that news.