Oct

3

"Business Insider: The Stock Market Looks Like 1967 All Over Again"

A chart overlay showing similarities between the S&P in 1993 and this year appears below in this article. I have seen other overlays by the bespoke group showing almost exactitude with this market and I believe 1926 or some such. Harry Roberts, where are you, with your proof that random charts look just like stock market charts. What are the chances that such idempotent overlays would occur by chance if you could pick out the closes match over the last 93 years or so.

Rocky Humbert adds: 

And 1954 too. From that link:

U.S. stocks are trading virtually in lockstep with 1954, the best year for American equity and the time when shares finally recovered all their losses from the Great Depression.

The Standard & Poor's 500 Index's returns in 2013 are tracking day-to-day price moves in 1954 almost identically, according to data compiled by Bespoke Investment Group and Bloomberg.

In no other year are the trading patterns more similar to 2013 since data on the index began 86 years ago. The correlation coefficient between this year and 1954, when the benchmark gauge rose 45 percent, is 0.95 out of a maximum of 1.

Kim Zussman writes in: 

Using SP500 weekly returns for 2013 (Jan - Sept), checked correlation of these 39 weekly returns with weekly returns of prior 39 week periods back to 1950.

Here are the 10 most correlated:

Date          Correl     Month

09/30/13     1.000     9

01/05/70    0.506      1

04/11/55    0.506      4

02/19/80    0.482      2

07/26/65    0.479      7

11/12/12    0.476      11

07/21/97    0.450      7

06/21/04    0.448      6

09/21/64    0.436      9

04/08/85    0.431      4

The current 39 week period correlates perfectly with the current 39 week period.

Next closest correlation was the period ending January 1970.

The most correlated Jan-Sept period ended Sept 1964, which along with $7.95 will buy a cup of coffee.

Oct

3

There is a second derivative of deception on tomorrow's employment data. Not only don't we know the number, we don't know when they plan to release the unknown number. And since all is closed, we don't know when they will even announce when they will announce the unknown numbers. The markets, the great discounters of all information, will have to work extra hard.

Oct

2

From the front page of The Arizona Republican, Phoenix, Arizona, May 19th, 1890:

WORK OF CONGRESS. Silver Legislation Has the Right of Way. Discussion of the Tariff to be Livelier. The River and Harbor Bill. Washington, May 18. - Silver will be the principal topic discussed in the senate again this week. The addresses in memorium of the late Representative Kelly, of Pennsylvania, will be delivered on Tuesday afternoon and Saturday will be devoted to the calendar. These are the only probably interruptions of the silver debate. The fist three days of the week in the House will witness the closing scenes of the tariff debate, which promises to become much more animated than heretofore. The river and harbor people are anxiously waiting for the first opportunity to call up their bill.

A TALK BY BISMARCK. Significant Remarks by the Old Soldier. Germany Will Never Attack France Unprovoked. The Empire Understands That The Czar Would Interfere In Behalf of France. PARIS, May 18. - Le Matin publishes an interview had with the French journalist, Des Soux, who was recently entertained by Bismarck. Bismarck referred to his resignation as a first class funeral, but added he was quite alive still. He declared, among other things, that Germany would never attack France or provoke France to attack her. Germany well understands that Russia would intervene to protect France, if attacked, just as Germany would aid Austria if Russia attacked her.

CUNNING SECRETAN. How the Frenchman bulled the Copper Market. Paris, May 18. - At the trial of the copper syndicate men it has been proved that Secretan, as director of the Societe des Metaux, distributed fictitious profits for 1887, and used improper means to bull copper, raising the price from 1000 francs per ton to over 2000 francs, and clearing within two months 10,000,000 francs. The defence is that the article of the penal code on the which the charge is based does not apply to this particular case. Hentsch, on being examined, admitted that while he was chairman of the Comptair Escompte he knew nothing of the dealings of that institution with the Societe des Metaux. He also testified that the board rarely listened to the manager's reports, simply letting things slide.

CHINAMAN BAPTIZED. He Sacrifices His Queue and Adopts the Christian Faith. Traver, Cal., May 18. - Yuen Lung, a Chinaman of more than ordinary intelligence, had his queue shaved off some time since, and to-day was baptized in the Christian faith by Rev. Mr. Hawkins. He has adopted the name of Charley Delzante. He conducts the dining room of the Delzante Hotel at this place.

WARLIKE ATTITUDE. The Czar Talks Business to the Porte. Constantinople, May 18. - The Porte has not yet replied to Russia's claim for the payment of the arrears of the war indemnity. The Russian Ambassador, in an urgent note to the Porte, demands the payment of arrears from the loan, otherwise, he adds, Russia will reserve the right to take further measures.

AN OCEAN RACE. Three Great Atlantic Steamers Struggling For Supremacy. London, May 18. - The Anchor Line steamer City of Rome sailed from Queenstown at 12:30 to-day. The Guion Line steamer Alaska sailed at 12:30 and the the Cunard steamer Aurania at 2 p.m. All went ahead on full steam directly after they cleared Queenstown harbor. There is heavy betting on the result of the race.

Oct

2

It's funny that the jobs report is not compiled yet. The Labor Dept. must have the data they use, as that report consists of happenings through 9/12. We use Dept. of Treasury as our source and we have that information through 9/27. The Treasury data is generated electronically and we might get the 9/30 report later today unless they intervene.

Bottom Line: The YOY growth in payroll tax receipts (seasonally adjusted), which is our substitute for employment, is at the lowest level of the year, whether you mean calendar year or adjusted fiscal year. But of course, you might never see that report.

Let's say you were in charge of the Administration of a country in a similar circumstance. If you knew the jobs data was fantastic, would you release it? A good economic report might be taken to mean that the country was not as fragile as previously thought, and could therefore withstand a shutdown for a while. On the other hand, if the jobs data were bad, it might mean the country was very fragile, and that the Administration should compromise quickly, effectively forcing your hand. And of course in the latter scenario you should be embarrassed by the fact that nothing you had done economically for 5 years had been successful. Your best option might be to wait until you needed a trump card, and then pull it out of the hat. Plus (if you wanted) you would have additional time to massage the data.

Oct

2

We're all well accustomed to the closing of the National Parks, the Smithsonian, the Statue of Liberty and similar government attractions, in order to maximize the hardship of the government shutdown on schoolchildren and other innocents.

But suspending the Navy v. Air Force game seems a new height in ridiculousness. Surely the costs of the football programs have already been incurred and the ticket and other revenue from the game would have been a major financial plus to these government schools.

I see at least some game tickets were previously selling online in the $100 range. Assuming an average price less than half of this would yield a couple of million dollars from ticket revenue alone. Plus food and other concession revenues. Plus the largest of all, the schools' share of TV and other broadcast revenues.

But what better way to bring home to citizens the terrible consequences of interfering with the government's normal modus operandi?

Oct

2

Right before the mortgage craze, we were dazzled by the alphabet soup: CDOs, COOs…Now the excitement is in structured notes based on stocks performance as an example.

Now here comes the Money question. Guess which stock had the largest issue in 2012?

And the answer is…. Makes you wonder…

Anonymous writes:

Here is a way to sell options to retail clients with a few advantages for banks:

1. no options paperwork since it's structured as a note

2. by focusing on attractive features "yield of x", "principle protection of y", they don't disclose implied vol/vig

3. illiquid so fee opportunity for early termination

Oct

1

One thing I have been considering lately from an investor's perspective is the power of consumer brands.

What is the value of a well known brand? My inquiry is motivated by a few different angles, but I think what has most stimulated the question is my study of a a "prestigious" company that has been growing by purchasing OTC medicine-type brands from the major consumer goods and drug companies.

At face value it seems like a great strategy. The shorter term economics look favorable. Yet, when I look in my families medicine cabinet, I notice my wife buys almost exclusively store brands when it comes to things like cold medicine, etc. It only takes choosing the low cost option one time to realize that the store brands (Costco, Walgreens, Roundy's etc) work just as well as the higher cost name brands.

Will the familiarity of an old brand have staying power that can allow for an above average roe over time, or are they wasting assets? How long can reputation last when the underlying reality is not particularly distinguished?

A family relation of mine owns a fashion design/women's retail business. One discovery this person made in the manufacturing process (working with contract manufacturers) is that the big names in mainstream "luxury" goods often have completely average quality or only slightly above average quality in terms of material and construction. The desirability factor is almost 100% psychological - what other people will think, a giffin good type effect. This might seem reasonable with regards to items people use to create their public persona or to establish a sense of status. But what about consumer staples? It seems like a much tougher sell. I know that when I go to Costco, I instinctively grab the store brand and am very rarely disappointed. When presented with two very similar, low risk options, even a 50 cent difference can feel significant at the moment when one must reach for an item off the shelf (or maybe I am particularly cheap?)

So the question is, how to evaluate brands in a competitive, relatively uniform (in terms of quality) market. When are they worth investing in over time (in terms of long-term roe?) I see two big things:

1. Need for reliability/high trust in product (condoms vs. hand soap)

2. Items that signify status (LV logo vs. generic)

To bring things to a specific context, I am presently evaluating if the company Prestige brand's (PBH) strategy of buying "known" but relatively mundane brands will have staying power over time (say next 15-20 years). The short term economics look good, but what about staying power in these competitive markets where stores have an incentive to sell their proprietary brands?

Any thoughts are welcome.

Russ Herrold writes:

Historically Sears also historically perfected the 'Good, Better, Best' model of offering several lines at varying price points.

That brand has huge value, at least out here in Flyover Country.

Jim Wildman adds: 

Good, Better, Best has been adopted by John Deere as to their lawn equipment as well. 1xx series are cheapos, designed to compete at the low end with the Craftsmen and MTD's. 2xx are better, but still not what one thinks of with a Deere. For those you need the 3xx series, which are what I grew up with as a kid.

Easy to tell the difference once you know where to look as well (pressed metal vs cast pieces, bolted vs welded, etc, etc)

Oct

1

Newspapers can influence elections, and that makes them very valuable to politicians. The economics of buying a newspaper is easy to understand when you remember that politicians spend millions of dollars to get hired for their job that pays a few hundred thousand dollars per year.

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