Using Historical Averages Can Make Money in Stocks
August 25, 2008
Tyler McKinna submits:
A concept that I’ve explored lately in this recent volatile market is reversion to the mean, which suggests that prices have a tendency of eventually moving back towards their long-term historic averages.
A good example of this could be the price of oil. After rising 47% in the first half 2008 and hitting a record high of $147 per barrel on July 11, the price of oil has dropped more than 20% in less than eight weeks as supply-demand dynamics adjusted (Not including the speculative bounce last week). Albeit $120 oil can still be considered high by historical standards, the point is that dramatic increases over short periods of time represent imbalances that are likely to self-correct.
Using Historical Averages Can Make Money in Stocks
The Inverse Fannie/Freddie Correlation Indicator
August 25, 2008
Paul Kedrosky submits:
If you picked today to get back from holidays and re-commence messing about in the capital markets, I’m guessing you wish you hadn’t. The indices all tanked, with everything from oil to the financials doing a Fearless Freep dive into nothingness.
Then again, there were some bright lights out there. Matter of fact, two stocks (indicated by white arrow below) that have lost billions in market capitalization, that are the subject of non-stop news chatter, that are rumored to be set to take down Western Capitalism (sic.), were up big today. Fannie Mae and Freddie Mac were up 10.4% and 18.2%, respectively.
The Inverse Fannie/Freddie Correlation Indicator
Don’t Confuse the Stock with the Company, or the Market with the Economy
August 25, 2008
Timothy Lutts submits:
Last week I received the following email.
"Dear Mr. Lutts, My name is Joe C. I am 25 years old and come from Cork in Ireland. I am currently studying and have one year left in my business degree. I find your optimism in these "depressing" financial times refreshing. Would you agree that the most lucrative time for an astute investor may be in times of recession? I understand you are a very busy man and probably will not have time to reply to this email. To finish I am a believer that the international community can talk themselves into recession with only doom and gloom on the horizon. To see a company like yours giving sound, astute investment advice is great."
Don’t Confuse the Stock with the Company, or the Market with the Economy
Update on Low Market Volume
August 25, 2008
David I. Templeton submits:
Home Sales & True Inventory: No Good News
August 25, 2008
The headline sounds like good news–"Home Sales Up"–but there is no joy in Mudville.
The "increase" was really a blip (in technical jargon). In reality, sales are still low.
The "inventory" was said to have risen, but remember that the number of existing (not new) homes for sale is not the inventory. The true inventory is the stock of vacant housing units. There are over six million housing units vacant but not on the market as for rent or for sale. In truth, we have many, many more housing units "in inventory" than we need. Solution? Ultimately, we need more families to absorb the housing units. What happens while we wait for population growth? Price will continue to fall.
Home Sales & True Inventory: No Good News
The Real Deal on July’s Housing Numbers
August 25, 2008
Markham Lee submits:
In a trend that is started to become annoying the media is once again misreporting housing data:
(From the NY Times):"Home sales perked up in July, a respite for the housing slump, as falling prices appeared to lure more buyers into the market.
The Real Deal on July’s Housing Numbers
25 Aug 2008 16:00:00 - Top 5 Stocks up on Unusual Volume
August 25, 2008
| Intraday Unusual Volume - Top 5 Up |
| Symbol | Volume % Change |
Price % Change |
News | |
| KNSY | 220% |  37.70% |
news | |
| FEED | 172% | 12.32% |
news | |
| AMLN | 55% | 27.77% |
news | |
| SPIR | 46% | 10.72% |
news | |
| THOR | 36% | 25.37% |
news | |
|
||||
25 Aug 2008 16:00:00 - Top 5 Stocks up on Unusual Volume
VIX Futures: Worth the Premium?
August 25, 2008
Bill Luby submits:
Friday’s post, VIX Slips Below 19, appears to have raised some interest in VIX futures premiums (or “premia” for the more scholarly inclined).
Looking three months out, the VIX November 2008 futures contract [VIX/X8] has been open since November 2007 and reached a settlement high of 26.25 on March 14, 2008, just before the bottom of the equities market. By contrast, the all-time settlement low for the VIX November futures contract was 21.35 on May 2, 2008, a month and a half after the markets moved off of the March bottom and about two weeks before the markets topped. These VIX futures peaks and valleys just happened to precede important intermediate-term market tops and bottoms and may have hinted that a reversal was coming soon, in a manner similar to that of the VIX:VXV ratio.
VIX Futures: Worth the Premium?
A New Stream for Hedge Fund Investors?
August 25, 2008
Cam Hui submits:
The news of the demise of former CNBC anchor Ron Insana’s venture has been a catalyst for more questions about the hedge fund business model. Are these project returns persistent (also here)? Are there cheaper alternatives?
Looking for uncorrelated pure alphas
I have a modest proposal for hedge fund investors in light of these difficulties. The story of hedge fund investing has been to look for a pure alpha stream, however you want to define it, that is uncorrelated with the return pattern of existing asset classes.
A New Stream for Hedge Fund Investors?
Standard Pacific Corporation Q2 2008 Earnings Call Transcript
August 25, 2008
Standard Pacific Corporation (SPF)
Q2 2008 Earnings Call
Standard Pacific Corporation Q2 2008 Earnings Call Transcript
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