While markets were obviously down, one piece of good news is that they weren’t chaotic. You may think I’m grasping at straws here for a silver lining, but wild macro events can cause markets to get sloppy and that didn’t happen Friday. Last August, when markets were selling off, the heavy trading volume caused a number of stocks and ETFs to behave erratically in what some people described as a… Read More
I stayed up later than usual last night to see how the vote would turn out and by the time I turned out the lights, it looked like the Leave camp was going to win. Personally, I thought that they would vote to Remain, partly because of the polls, partly because I thought it was in their best economic interests and partly because voters in Scotland and Quebec stayed in their… Read More
We all know that the first quarter was a wild ride as the S&P 500 fell -10.29 percent through February 11th and then rocketed back over the rest of the quarter and finished in the black. When I tallied up the results for the first quarter, I have to admit that I was surprised by the range of returns within the major asset classes, from the -5.4 percent decline in… Read More
Nearly as soon as we sent out yesterday’s Daily Insights where I said that the banking system is far less leveraged today than it was in 2008 (click here for the article), I saw this article in the New York Times: ‘As Worries Mount, European Banks Face Sell-Off More Savage Than 2008’ (click here for the article, though a subscription may be required). The article says that European banks are… Read More
In December of 2008, I went to a new client meeting and made a call: ‘I don’t think we are in a second Great Depression.’ With the benefit of hindsight, that doesn’t seem like much of a prediction, because we know after the fact that gross domestic product (GDP) only fell -4.3 percent during the 2008 global financial crisis, which is small compared to the estimated -15.0 percent decline in… Read More
Yesterday’s insight on drawdowns was quite popular and enough people asked for the same thing, so I thought I would do an immediate update. (Click here for the original post.) The first request was for the full history of the S&P 500 since yesterday’s chart only went back 25 years. I picked 25 years somewhat randomly, but mostly because the other chart that went with it was difficult to read going… Read More
Until I read the book ‘Hedge Hogging’ by Barton Biggs before the 2008 financial crisis, I had never heard the term ‘drawdown,’ which refers to the peak-to-trough decline of an investment or market. A drawdown measures the depth and length of a decline and illustrates how long it takes to earn back money lost from the last peak. It’s a commonly used term in the hedge fund community, partly because… Read More
Yesterday at lunch, when stocks were down more than three percent, I was reading market analysis and one analyst said that investors were disappointed by the ‘lack of policy response.’ That really struck me because markets were off sharply and it hadn’t occurred to me that the Federal Reserve hadn’t said anything material this year that might shore up stocks. Although we are steeped in losses very early in the… Read More
It’s going to be a short Daily Insights today because I went to an event last night featuring nationally known financial analyst James Grant of Grant’s Interest Rate Observer and Chris Varvares of St. Louis based Macro Economic Advisors. Mostly, I just have a snapshot of the intraday trading for the Dow Jones Industrial Average (DJIA). Although the S&P 500 is still my favorite measure for how stocks fared, I… Read More
The widely followed Dow Jones Industrial Average (DJIA) fell -365 points, bringing it perilously close to correction territory, which is generally defined as a decline of -10 percent from the recent peak. The S&P 500 is already in correction territory having not fully recovered from the steep losses last August. The rally in October offset most of the losses, but a new peak was not reached since last May. While… Read More
