Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter;  a forum for us to use our meager abilities to make the world of specinvestments a better place.

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Long-term market analysis from us, our researchers and a distinguished group of trader/contributors.

• 04/12/2004 "The Bull That Will Not Die": Ross Miller of Miller Risk Advisors <http://www.millerrisk.com>, one of the smartest economists we know, sees a resurgence in inflationary psychology leading to a boom in stocks, especially growth companies involved in emerging technologies.

• 03/25/2004 Last year, we said stocks were wildly undervalued, based on the relation between predicted 2004 earnings, the 10-year price and the 10-year note rate -- a ratio widely known as the Fed Model. We asked researcher Tom Downing to run the numbers for 2004. His reading: a return of 20.5%.  See Tom's calculations

• 03/02/2004 One very good thing to always remember is that the Fed does not often change direction in its qualitative rates, the discount rate, the margin rate, the reserve requirements, and now the fed funds rate. As  I wrote in EdSpec, the runs of raising or lowering rates averaged three years from 1913 to Jan. 30, 1996, and involved about seven consecutive easings or tightenings. Since EdSpec's publication in 1997, there have been only four changes in direction. I looked at old newspapers from 1910 to get exact announcement dates for all these, a very good exercise for these long runs and all other events and experiments. When Dr. Greenspan said rates "would have to be higher eventually..."  it became inevitable that someday, the fed funds rate will be increased. When that happens it will not be a trivial move. 

• 02/17/2004  What's Not to Like About Equities?' Paul DeRosa's Outlook

• 03/01/2004  A Savvy Trader's Tip on TIPs: TIPS are the mostly highly over-hyped investment at the moment, and retail investors are being led to slaughter as usual, courtesy of Pimco with their 4.5% load fees, and excessive yearly fees in these funds.
  TIPS will go DOWN when inflation returns, and the Fed tightens, and real rates rise. TIPS do not increase in real value when inflation develops. They merely go up or down in real value when real interest rates change. People should not buy what they don't understand. Pimco understands, but recommended and started these funds in 2002, when levels and opportunity were there. TIPS are in their late NASDAQ phase right now because they have become the flavor of the week because of their now historical out-performance (past, not future). Same goes for REIT stocks.

• 03/28/2004 The Next 100-Baggers in Retail: A Speculative discussion.

• 02/5/2004  'Market Neutral' Funds: A Spec reflects on claims that market-neutral funds can tame volatility and generate alpha, and suspects either self-deception or hubris. (2/5/4)

• 03/9/2004 Are Japanese REITs a good investment? Views from Japanese Spec-Salaryman Shui Mitsuda.

• 03/18/2004 Gann Analyses of significant events are always good for a working hypothesis of an extreme. And now that we have 9-11 and 3-11, one can hypothesize that those days will be extremely bullish in the future. -- Victor Niederhoffer

• 03/18/2004 A Reason for Hope and Intermediate Bullishness above and beyond the much improved earnings yield relative to 10-year: The three most enjoyable trade shows I've ever been to were the barbershop quartet show, the square dancing show, and now very recently the European auto show in mid March which has 1 million visitors and 5,000 press. One sees there the fruits of 130 years of evolution from the two original branches of the evolutionary tree, or bicycles, and horses and wagons. Over 90 separate manufactures competed and displayed in over a million square feet to display cars of every variety, with diesels, hydrogens and electrics showing outcroppings among all the major categories we see. The cars ranged from the smallest sports cars all of whom got to 100 miles an hour in 5 seconds, to the largest six-seater Bentley limousines. The maximum price seemed to be 500,000 and the lowest 10,000 in most categories. The Japanese manufactures and the Italians seemed to employ sex as the principle accoutrement to marketing, while the others seemed to rely mainly on bars which took up as much space as the cars. One comes away in awe at the ingenuity of manufacturing around the world, the vigor of competition among the various makers, and the benefits that flow to pitiless consumers who reap the fruits of millions of innovations and survival tests packed in the end result of 130 years of this heroic battle that has liberated so many. --Victor Niederhoffer