Going up or going down? Cramer says there are “headwinds” in autos, housing, aerospace, oil, banks, trucks/engines, farm equip makers, transports (e.g. UPS). He sounds semi-gloomy.
Bryon Wien of Blackstone says the S&P is going to 2300 — 17% higher. Ingredients for Wien’s calculations: 3% economic growth, 7% earnings growth, and continued stock buybacks. One of the problems limiting investor enthusiasm may be valuation. If the S&P 500 earns $115 in 2014, it is selling at 17.1x earnings. Market peaks have occurred historically at 25x-30x times earnings. On that basis, the market is fairly valued but not exceedingly expensive. The average trailing 12-month price-earnings ratio when the inflation rate is 0%-4% is 17.
You can read his July 28 commentary called Challenges to the Positive Outlook on Blackstone’s site. Click here.
Jeremy Grantham says we’re not in a bubble yet — for that, the S&P has to rise 14% to 2250. From Grantham:
1 Bubbles Again: Setting Up for a Deal Frenzy Despite a shocking 2.9% setback in first quarter GDP (quarterly decline at annualized rate), the extent of which was forecast by no one, and despite a substantial decline in NIPA corporate earnings, the market has climbed slowly but steadily in recent months. Market volatility has declined to very low levels despite these setbacks and despite Middle Eastern problems. (The negative January Rule this year has, for that matter, also been ineffective so far.) So, all is apparently well, as we have arrived within three months of the dreaded (by bears) Presidential third year. Accordingly, my recent forecast of a fully-fledged bubble, our definition of which requires at least 2250 on the S&P, remains in effect.
You can read the rest of Grantham here: GMO_QtlyLetter_2Q14
The economy grew at 4% in the second quarter. Nice rebound from the first quarter’s miserable winter shrink of 2.1%. Consumer confidence is high. But oodles of consumer debt is in default.
Here’s the S&P for the last year.
But it’s looked a bit skittish in the last ten days — the dog days of summer?
Personally, I’m hanging in, watching the news and my 8% stop loss rule. My ailment is that when I panic and sell, the stocks I sold always go up.
The telephone is key. Online is deceptively comfortable. You need to negotiate:
1. Prices on bonds you’re buying or selling. There’s no pubic market, like the stock market. Bonds are bought and sold by “traders” who want to earn large bonuses, not give you the best price.
2. Prices on converting money to or from foreign currencies. What you read on Bloomberg or Yahoo Finance is a beginning point. You can do better by negotiating on the phone. Again these guys get bonuses.
How to evade a paywall.
Newsweek and others will only let you read a handful of articles each month. Solution: Search for the article on Google and then click through Google. Don’t go to Newsweek’s site. Let Google take you. Interesting Newsweek piece on why Jews are leaving Europe. Click here.
It must be true.
+ Kidnapping Europeans for ransom has become a global business for Al Qaeda, bankrolling its operations across the globe. While European governments deny paying ransoms, an investigation by The New York Times found that Al Qaeda and its direct affiliates have earned at least $125 million in revenue from kidnappings since 2008, of which $66 million was paid just in the past year. In various news releases and statements, the United States Treasury Department has cited ransom amounts that, taken together, put the total at around $165 million over the same period. These payments were made almost exclusively by European governments, who funnel the money through a network of proxies, sometimes masking it as development aid, according to interviews conducted for this article with former hostages, negotiators, diplomats and government officials in 10 countries in Europe, Africa and the Middle East.
+ RICHMOND, Va. – Former Gov. Bob McDonnell of Virginia and his wife, Maureen, on trial for conspiring to use his office for personal enrichment, outlined an unexpected defense on Tuesday: Their marriage was so broken that they did not communicate enough to conspire about anything.
How dumb can you be? From the New York Times:
WASHINGTON — Democrats were thrilled when John Walsh of Montana was appointed to the United States Senate in February. A decorated veteran of the Iraq war and former adjutant general of his state’s National Guard, Mr. Walsh offered the Democratic Party something it frequently lacks: a seasoned military man.
On the campaign trail this year, Mr. Walsh, 53, has made his military service a main selling point. Still wearing his hair close-cropped, he notes he was targeted for killing by Iraqi militants and says his time in uniform informs his views on a range of issues.
But one of the highest-profile credentials of Mr. Walsh’s 33-year military career appears to have been improperly attained. An examination of the final paper required for Mr. Walsh’s master’s degree from the United States Army War College indicates the senator appropriated at least a quarter of his thesis on American Middle East policy from other authors’ works, with no attribution.
Read more here.
Fix your ears.
Hey Harry,
Thought I’d share my own earwax experience with you.
Decades ago I had very itchy ears, saw a doctor, put in the drops, blah blah blah. Didn’t help. Then I heard that swabbing your ears out with white vinegar (Heinz has an excellent white vinegar) was effective, so I tried it AND IT WORKED!! The next time I saw a doctor he checked my ears and commented that they were the healthiest cleanest ears he had seen. When I told him what I did he said I shouldn’t be doing it, but then I reminded him that he just saw the results and was dazzled. So much for modern medicine.
The danger of cotton swabs is that you put them too far into your ear and hit the eardrum. DO NOT DO THAT! Instead, try dipping a swab into the white vinegar, gently working from the outside of the ear canal back (i.e. do not insert very far) to the outside of the ear. If SuzyQ likes kissing your ears, you will taste like salad! Do this a couple of times a week. The rest of the time, use a DRY SWAB to dry your ear after showering, every time; this eliminates most of the soap that might still be stuck in your ear from shampooing, and soap (alkaline) is not as good for the ear as vinegar (acid).
Bottom line: decades of no itchy ear and no earwax.
Just in case you might want to try something other than a doctor digging earwax out of your ears…
Regards, Mark
Maybe these could help our hearing? I bet they work, too. Would the family have dinner with me wearing these things?
Directional sound finders used to detect incoming enemy planes in 1917.
Great Scottish pub signs.
Harry Newton who’s busy chasing mortgages, filling in paperwork, and catching up on stuff that gives boredom a whole new meaning. But the weather is fine. And I reward myself with daily tennis. Today I get the stitches out of my latest implant misery. Maybe we’ll figure a way to keep implant in. Last time it fell out. And since then I’ve been looking like Homeless Harry. “Harry, you don’t have much luck with your teeth,” says Olga my sweet Ukrainian hygienist.
More about evading media paywalls:
I’ve read the Wall Street Journal since I was in college. There were eras when I read it for free in libraries, or bought it on newsstands, or had it delivered. More recently, I’ve read the paper online, typically before 4 a.m.
My first subscription probably cost me about $29 for a year. That price was an easily justifiable and certainly deductible business expense, as well as a reasonable extravagance for a media junkie like me. Over the years the price has increased and is now about $350.
I am no longer as wealthy as I once was and can neither afford nor justify paying the huge subscription fee. Fortunately, some of the online Journal is easily readable without paying a penny. Some content is
available only to subscribers.
I recently devised a simple workaround (a/k/a “hack” or “kludge”) that enables me to read almost all
of the protected information for free. Because it was easy to figure this out, I have to assume that the Murdoch clan really doesn’t care if the WSJ is readable for free, but simply wants freeloading to be a bit less convenient than reading for nearly a dollar a day online (or $2 on the newsstand). Even freeloaders are exposed to advertisements, and ads make money for media.
Here’s how to freeload:
1. As you go through the paper, you’ll encounter links for stories with and without key icons. Stories without keys are free for all.
2. If you click on a link with a key icon, you’ll be taken to a page with the title of the story and the opportunity to log-in with your subscription info, or buy a subscription at a bargain rate for a brief period (a very good deal, actually).
3. If you want to freeload, you have to be creative, but not very creative. Go to a search engine screen and type in some key words from the story, maybe “Mexico Chrysler” plus “WSJ.”
4. BINGO! You should then see one or more links that will take you to a freebie page.
5. Read, learn and savor.
A similar strategy should work with the New York Times if you are not a paid subscriber or have used up your monthly freebie allotment.
Go to a search engine and type something like: “NY Times voting Alabama.”
— From my new bestseller, “Do As I Say, Not As I Did: Learn from my lifetime of mistakes.” http://www.amazon.com/dp/0981661769/
Harry, do you negotiate with your municipal bond guru, Todd, over bond prices?