November 5, 2019

The market sentiment has changed

Doug Kass via twitter explains an indicator that shows the current investment sentiment.

The CNN Fear/Greed at 86 and 'extreme greed' read and the highest level since late 2017 during the euphoria over the tax reform bill. The index, which ranges between 0-100 was 8 one year ago and 67 just one week ago. The market rallied right into mid January 2018 so don't use this as a timing tool but do realize how much the mood has changed. What separates this index from II and AAII is that it measures what people are actually doing rather than just the emotions of II and AAII.

It encapsulates the put/call ratio, the difference in the 20 day return between stocks and bonds, how extended the S&P 500 is above its 125 day moving average, the McClellan volume summation index, new 52 week highs vs 52 lows, the yield spread between high yield and IG bonds, and lastly the VIX. We'll get the II figure tomorrow and expect a further stretch between Bulls and Bears to around  40.

September 9, 2019

Investment management is not hitting for averages like in baseball -- it's more about your defensive ability.

Doug Kass questions if Moving Averages can be used for Timing the market. If it only were so simple, everyone would be rich. 

Indeed with as much as 80% of the trading derived from the activity of ETFs and machines/algos we are all momentum players now and the market is now one big casino. The all too confident moving monkeys (who believe in the importance and integrity of the moving averages) then pile on the aforementioned products and strategies that shove prices higher. (Memo to those fin TV commentators - if it was so easy every 10 year old would drop out of elementary school and trade against the moving averages).

I prefer to listen to The Oracle who famously stated, "The market in the short term is a voting machine and in the long run it is a weighing machine."

And my scale is currently tipped over to excessive optimism and to elevated stock prices.
In the fullness of time.





- via twitter

August 26, 2019

Most Market forecasters are not very good at making the right calls

There are many traders making bold stock market forecasts on TV but most are unfortunately wrong in their forecasts according to Doug Kass.

A year ago there was unanimity that the ten year US note yield would rise above 3%. Besides myself and Shilling I don't know anyone who was looking for lower rates.
Today there is unanimity that rates will continue to drop.
I take the opposite position.
The bond market is in a bubble of major proportions.
According to my calculus the 10 year is implying real GDP growth of only about +0.25%



-via twitter

August 19, 2019

Doug Kass sells his Gold long position

The recent gold market rally has caused Doug Kass to reduce his Gold longs and he has now sold all his Gold according to his recent post.

"I have reduced my gold position from medium to small-sized. For the second time in several months, we have made out quite well on the GLD long.
I do not worship at the altar of price momentum.
Higher share are my enemy, so I am reducing because of the diminished upside reward vs. downside risk
$GLD was placed on my "Best Ideas List" in mid-April at $120.12. "

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