Fear & Greed
- Thread starter trysail
- Start date
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
"Holding assets for long periods of time has the effect of lowering the risk of experiencing a loss in asset value."
Stocks, Bonds, Bills, and Inflation
2006 Yearbook
Ibbotson Associates
Chicago, Illinois
Highs and lows
Range of returns for each asset class, rolling periods, 1926-2008
https://content1.vanguard.info/web/frsh_images/Chart-HighsLows.jpg
ht tps://content1.vanguard.info/web/frsh_images/Chart-HighsLows.jpg
Stock market returns are represented by the Standard & Poor's 500 Index for the period 1926–1970, the Dow Jones Wilshire 5000 Index for 1971–April 22, 2005, and the MSCI US Broad Market Index thereafter. Bonds are represented by the S&P High Grade Corporate Index for 1926–1968, the Citigroup High Grade Index for 1969–1972, the Lehman Brothers U.S. Long Credit AA Index for 1973–1975, and the Barclays Capital U.S. Aggregate Bond Index thereafter. Cash is represented by the Citigroup 3-Month Treasury Bill Index. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index
Last edited:
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=bar&graph_id=34020&category_id=0&&width=800&height=480&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=SP500&transformation=nbd&scale=Left&range=Custom&cosd=1957-01-02&coed=2010-12-20&line_color=%230000FF&link_values=&mark_type=&mw=&line_style=&lw=&vintage_date=2010-12-24&revision_date=2010-12-24&mma=0&nd=1957-08-01&ost=&oet=&fml=a&fq=Annual&fam=eop&fgst=cca
http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=30415&category_id=0&recession_bars=On&width=800&height=480&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=SP500&transformation=lin&scale=Left&range=Custom&cosd=1957-01-02&coed=2010-12-23&line_color=%230000FF&link_values=&mark_type=NONE&mw=4&line_style=Solid&lw=1&vintage_date=2010-12-24&revision_date=2010-12-24&mma=0&nd=1957-08-01&ost=&oet=&fml=a&fq=Daily&fam=eop&fgst=lin
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
GS10-GS1 is the spread ( i.e., the difference ) between the yield-to-maturities of the 10-year U.S. Treasury bond and the 1-year U.S. Treasury note. It is a measure of how "accomodative/easy" or "restrictive" the Federal Reserve's monetary policy is. In theory, the Fed is supposed to act as the adult ( spiking the punch bowl to get the party going but removing it before the partiers begin to behave like drunken idiots ). From 2001-2005, not only did Greenspan leave the damn bowl out— he continued to pour the equivalent of grain alcohol into it.
http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=30394&category_id=0&recession_bars=On&width=800&height=480&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=GS10_GS1&transformation=lin_lin&scale=Left&range=Custom&cosd=1953-04-01&coed=2010-11-01&line_color=%230000FF&link_values=&mark_type=NONE&mw=4&line_style=Solid&lw=1&vintage_date=2010-12-27_2010-12-27&revision_date=2010-12-27_2010-12-27&mma=0&nd=_&ost=&oet=&fml=a-b&fq=Monthly&fam=avg&fgst=lin
http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=30394&category_id=0&recession_bars=On&width=800&height=480&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=GS10_GS1,SP500&transformation=lin_lin,nbd&scale=Left,Right&range=Custom,Custom&cosd=1953-04-01,2001-01-01&coed=2010-11-01,2010-12-23&line_color=%230000FF,%23FF0000&link_values=,&mark_type=NONE,NONE&mw=4,1&line_style=Solid,Solid&lw=1,5&vintage_date=2010-12-27_2010-12-27,2010-12-27&revision_date=2010-12-27_2010-12-27,2010-12-27&mma=0,0&nd=_,2001-03-01&ost=,&oet=,&fml=a-b,a&fq=Monthly,Quarterly&fam=avg,eop&fgst=lin,lin
http://research.stlouisfed.org/fredgraph.png?g=tSV&dbeta=1
http://research.stlouisfed.org/fredgraph.png?g=tSp&dbeta=1
Last edited:
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
The spread ( difference ) between the most creditworthy borrowers and less creditworthy borrowers ( represented by the interest rates paid by borrowers rated "Baa" and those rated "Aaa" by Moody's ) has, in the past, been a good indicator of the current presence and level of "fear" and "greed" in the economy.
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
"Holding assets for long periods of time has the effect of lowering the risk of experiencing a loss in asset value."
Stocks, Bonds, Bills, and Inflation
2006 Yearbook
Ibbotson Associates
Chicago, Illinois
Why would they? CNBC is in the business of trolling for suckers likely to fall for the propaganda of their advertisers and guest/salespersons.
Do you expect that viewers of the NFL's Super Bowl broadcast are likely to see a message advising that new automobiles and trucks lose 30% of their value the moment they're driven off the lot?
Do you expect that viewers of Saturday Night Live will be told that users of i-Phones are being overcharged?
Last edited:
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
http://www.nytimes.com/interactive/...0102-metrics-graphic.html?src=me&ref=business
( The graphic below was included in an article. The article can be read at the above link. No portion of the article is quoted.)
I cannot ( and will not ) vouch for the accuracy of the calculations underlying this graphic as I did not calculate or verify them myself. My guess is that it's roughly right but an attempt to incorporate taxation in a calculation of this sort invariably produces variations in results related to the application of timing and rates.
__________________
In Investing, It’s When You Start And When You Finish
By New York Times
Key to graphic:
( The graphic below was included in an article. The article can be read at the above link. No portion of the article is quoted.)
I cannot ( and will not ) vouch for the accuracy of the calculations underlying this graphic as I did not calculate or verify them myself. My guess is that it's roughly right but an attempt to incorporate taxation in a calculation of this sort invariably produces variations in results related to the application of timing and rates.
__________________
In Investing, It’s When You Start And When You Finish
By New York Times
Key to graphic:
Last edited:
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
Current weighting of the S&P 500 by industry:
http://www.standardandpoors.com/spf/images/indices/Breakdown/SPUSA-500-USDUF--P-US-L--Brk.png
You can tell a lot simply by observing the weightings ( over time ) of various industries in the S&P 500. In the big energy bubble that occurred from 1979-81, energy's weight got all the way up to about 29% in 1981. In the dot-com bubble, "info tech's" ( i.e., technology) weighting got as high as roughly 33% in 1999. The financial sector's weight exceeded 25% in the mid-oughts before the great residential real estate bubble exploded.
Moral Of The Story: If you're part of the herd, you'll eventually run off a cliff with the rest of the herd.
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
.SPEPS:IND SPX EPS (12MO TRAILING CONT OP)
http://noir.bloomberg.com/apps/quote?ticker=.SPEPS:IND
http://noir.bloomberg.com/apps/cbuilder?ticker1=.SPEPS:IND
_____________________
http://noir.bloomberg.com/apps/news?pid=20601110&sid=anEYpXOPW_wE
Return on Equity at 10-Year High
By Whitney Kisling, Lynn Thomasson and Nikolaj Gammeltoft
Last edited:
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
This chart has three lines showing the differences between:
(A) the yield of the constant maturity 20-year U.S. Treasury and the 1-year Treasury note and
(B) the yield of the constant maturity 10-year U.S. Treasury note and the 1-year Treasury note and
(C) the yield of the constant maturity 5-year U.S. Treasury note and the 1-year Treasury note.
The differences between the yield-to-maturities of varying tenors of U.S. Treasury notes and bonds shows the steepness (or not) of the U.S. Treasury yield curve. A steep yield curve ( a comparatively larger difference between longer-dated Treasuries and shorter-maturity Treasuries ) shows an accomodative Federal Reserve while an inverted yield curve ( yields of shorter-maturity Treasuries equal to or exceeding longer-maturity Treasuries ) shows a restrictive Federal Reserve.
The Federal Reserve is still spiking the punch bowl:
http://research.stlouisfed.org/fred2/graph/fredgraph.png?graph_id=34214
The shape of the U.S. Treasury yield curve shows the Federal Reserve's current monetary policy stance at any point in time. An inverted yield curve is a sign that the Federal Reserve wishes to slow economic activity. A steep yield curve shows that the Federal Reserve wishes to encourage economic activity.
http://en.wikipedia.org/wiki/Yield_curve
http://upload.wikimedia.org/wikipedia/commons/thumb/1/18/USD_yield_curve_09_02_2005.JPG/800px-USD_yield_curve_09_02_2005.JPG
Current U.S. Treasury yield curve:
http://www.bloomberg.com/apps/chart?type=c13&cfg=yldCurve_10.xml&x=3m|6m|1y|2y|3y|4y|5y|6y|7y|8y|9y|10y|15y|20y|30y&y1=0.01525|0.04576|0.10683|0.26275|0.46558||1.07331||1.6563|||2.20673|||3.24441&y2=0.01525|0.05084|0.11192|0.26217|0.46041||1.06179||1.6427|||2.18883|||3.21602&y3=6.0e-07|-0.00508|-0.00509|0.0005828|0.00518||0.01152||0.0136|||0.0179|||0.02839&img=png
ht tp://www.bloomberg.com/apps/chart?type=c13&cfg=yldCurve_10.xml&x=3m|6m|1y|2y|3y|4y|5y|6y|7y|8y|9y|10y|15y|20y|30y&y1=0.01525|0.04576|0.10683|0.26275|0.46558||1.07331||1.6563|||2.20673|||3.24441&y2=0.01525|0.05084|0.11192|0.26217|0.46041||1.06179||1.6427|||2.18883|||3.21602&y3=6.0e-07|-0.00508|-0.00509|0.0005828|0.00518||0.01152||0.0136|||0.0179|||0.02839&img=png
Last edited:
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
From now until eternity, it makes absolutely no difference what you paid for a stock. That was yesterday. Buying or selling based on what you paid is the epitome of irrationality. What's truly astonishing is the number of people who behave that way.
It is this irrationality that enables me to anonymously and impersonally reap reward. When I buy something, it is with the intention of holding it forever.
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
For the first time in a number of years, there's a whiff of greed out there. Mind you, it's not enough to necessitate action but it is out there.
This chart has three lines showing the differences between:
(A) the yield of the constant maturity 20-year U.S. Treasury and the 1-year Treasury note and
(B) the yield of the constant maturity 10-year U.S. Treasury note and the 1-year Treasury note and
(C) the yield of the constant maturity 5-year U.S. Treasury note and the 1-year Treasury note.
The differences between the yield-to-maturities of varying tenors of U.S. Treasury notes and bonds shows the steepness (or not) of the U.S. Treasury yield curve. A steep yield curve ( a comparatively larger difference between longer-dated Treasuries and shorter-maturity Treasuries ) shows an accomodative Federal Reserve while an inverted yield curve ( yields of shorter-maturity Treasuries equal to or exceeding longer-maturity Treasuries ) shows a restrictive Federal Reserve.
The Federal Reserve is still spiking the punch bowl:
Last edited:
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
It's a pretty reliable contemporaneous gauge of FEAR and GREED:
Moody's Seasoned Baa Corporate Bond Yield (WBAA)
less
Moody's Seasoned Aaa Corporate Bond Yield (WAAA)
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
Do you have any idea how many knuckleheads are falling all over themselves to buy Apple AFTER it's already gone up by 90× ?
______________________
http://www.bloomberg.com/news/2012-...1990-masked-by-apple-adding-8-to-s-p-500.html
Broadest Rally Since 1990 Masked by Apple
By Whitney Kisling
April 12, 2012
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
The ratio of the market value of U.S. equities to U.S. GDP:
Thefamiliar
Really Experienced
- Joined
- Mar 20, 2012
- Posts
- 141
The only thing to fear is fear itself. - can't be stated enough. Lol
Without the negatives there would be no stories.
Greed is just the fear of inadequacy. I refer to the line above.
What you seek you shall find.
and last but not least fate is a bitch with a wicked sense of humor. She will grant you joy just to rip it away, but she will always grant you joy.
Without the negatives there would be no stories.
Greed is just the fear of inadequacy. I refer to the line above.
What you seek you shall find.
and last but not least fate is a bitch with a wicked sense of humor. She will grant you joy just to rip it away, but she will always grant you joy.
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
Yield spread between Moody's BAA-rated bonds and AAA-rated bonds:
http://research.stlouisfed.org/fredgraph.png?g=aQi
http://research.stlouisfed.org/fredgraph.png?g=aQj
Yield-to-maturity ("YTM") spreads between U.S. Treasury bonds:
____ 20-year YTM less 1-year YTM
____ 10-year YTM less 1-year YTM
____ 5-year YTM less 1-year YTM
http://research.stlouisfed.org/fredgraph.png?g=aQk
The annualized interest rate of Federal funds less the annualized rate of change of the Consumer Price Index ( a negative
number means that the Federal Reserve's short-term interest rates are below the rate of inflation):
http://research.stlouisfed.org/fredgraph.png?g=aQl
The difference between the current yield-to-maturity ("YTM") of the 5-year U.S. Treasury note and the trailing annualized
rate of change of the Consumer Price Index (a negative number means that the YTM of the 5-year U.S. Treasury note is
less than the rate of inflation) :
http://research.stlouisfed.org/fredgraph.png?g=aQm
The ratio of market value of equities to GDP (as of April):
http://research.stlouisfed.org/fredgraph.png?g=oLP
Last edited:
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
They're doing it all over again. Having dramatically underperformed the indexes in 2012, active investment managers and retail investors, alike, are shitting in their pants this year as stock markets rally. They're scared to death of missing this rally, so they're doing exactly what Bernanke is manipulating them into doing— they're throwing caution to the wind.
Everybody in the pool !! We're back to playing musical chairs. It'll all be fine— until the music stops.
Bernanke would be wise to do the same thing Greenspan did— get out of Dodge BEFORE it hits the fan. Another bubble is starting to build. The Fed has painted itself in a corner and cannot orchestrate a soft landing. Smart people are watching the Fed like a hawk. When monetary restraint comes— as it inevitably will (most likely from rising inflation)— a whole lot of people will be trying to get through the exit at the same time.
trysail
Catch Me Who Can
- Joined
- Nov 8, 2005
- Posts
- 25,593
Fear__________________________Greed
^
Here we go (again). They'll overdo it; they always do.
The total stock market has as total return of more than 29% this year while the S&P 500 has produced a total return of ~27%. Even now, there are signs of overvaluation.
The ratio of stock market capitalization to GDP,
as of April 1st (i.e., before another 15% that's occurred since then):
Last edited:
