Monthly Archives: December 2010

The Best and Worst of the S&P 500 in 2010

As an investor with contrarian tendencies I am always scanning sectors and stocks that may have underperformed in the past looking for solid values. With this in mind I present the best and worst of the S&P 500 from 2010. Read more of this post

Sentiment Update: Pullback in Bullish Sentiment but Confidence Remains Elevated

Both investor sentiment surveys I follow showed a pullback in bullish sentiment for the week. The NAAIM (active money managers) survey for this week showed a minor decrease of 1.6% in bullish sentiment while the AAII (individual investors) survey showed a more robust 11.6% decrease. The AAII bullish sentiment reading of 51.6% is still more than one standard deviation above average however down from last week’s +2 standard deviation reading.

This week, Read more of this post

Sweden’s Central Bank is Still Ahead of the Curve

In the early 1990’s Sweden had a financial crisis not unlike the U.S. financial crisis of 2008/2009. With its banking system effectively insolvent Swedish officials pursued a different strategy than the U.S. bailout model. The equity holders in Swedish banks were for the most part wiped out and troubled assets were written down to current value. Only then did the government step in. Essentially the Swedish plan called for banks to take their lumps all at once and set the stage for future growth. Contrast this to the way Japan and the U.S. have handled their respective asset price inflation induced financial crises. Under these plans the government does assume some of the troubled assets but full writedowns were not taken in the hope that the banks earn their way out of danger over time. As can be seen from Japan’s experience this does not set the table for a robust recovery.

Now, according to Bloomberg, Sweden’s central bank is thinking about how to prevent the next asset price bubble. Instead of setting policy strictly based on traditional inflation measures they are beginning to incorporate asset prices and lending growth into the decisions.  Read more of this post

QE2 Creates Oppurtunities for Contrarian Value Investing

As always, John Hussman’s weekly market comment is a must read. In it he discusses what he sees as the driver of returns since QE2 was announced (essentially a transient psychological effect), the asset classes that have benefited and current valuation levels. All three areas are worthy of reading and further introspection but I will focus on the second. Read more of this post

Sentiment Update: Everyone is Bullish…Really Bullish

Bullish sentiment increased by a significant amount this week from already elevated levels. The NAAIM (active money managers) survey for this week showed a 7% increase in bullish sentiment while the AAII (individual investors) survey showed a 13% increase in bullish sentiment. The AAII bullish sentiment reading of 63.3% is the highest since November of 2004 and is the 18th highest reading since the survey started in 1987. There have been 1,222 weekly surveys putting the 63.3% bullish reading in the top 1.5% of all readings. See the following table for detail on all 18 instances.

 

 

 

 

 

 

 

 

 

 

 

  Read more of this post