Valuation or Volatility
Real valuation analysis seems to be part of history in the last year. Technical market analysis, incredibly technology enhanced trading systems, and an ignorance of how to really value stocks has made this year's daily and monthly market moves almost impossible to predict. Go Vanguard and Pimco and a few other anti-volatility indexers, I guess, you're in your sweet spot, but not every month or even each year it seems in any meaningful way.
What has really grabbed my attention is the sector that I know best. "Once upon a time", a banking concern with multiple business lines could expect a lower p/e on more volatile businesses and a higher p/e on more consistent ones. When I look at JPM this quarter I saw a highly predictable shortfall in its more volatile trading and investment banking businesses(lower volumes, regulatory harassment)) but an improvement in its more predictable, once supposedly higher p/e, businesses like retail, operating services(back office financial) services for corresponding banks all over the world, asset management, and a modest increase in commercial loan growth. What happens, the stock got hit by 6% on the day it reported.
"Once upon a time" a blowout quarter in trading or private equity could have been met by only a 1%increase in stock price despite the addition that they were making to the firm's overall capital account. Now a short fall crushes the stock.
If this type of analysis is endemic to firms in multiple sectors, then no real aggregate of analysis is possible for retail of even mid-sized funds. It's all in the hands of the hedge funds betters, manipulators, and the high speed traders.
Maybe a quarter or more of securities analysis has already been outsourced to Excel spreaders in India or elsewhere to be reported here by small U.S. firms who were anointed by Spitzer and Sarbanes Olxey, another quarter possibly to fulfill mandates to equality and not experience anointed by Congress, and the big firms now are rarely quoted and quite remote due to their fear of getting sued for any miscues.
So who knows what will happen tomorrow or in the last two months of the year? My guess is market up over the next four months, through February that is, barring some economic catastrophe in some other part of the world or some geo-political event that supercedes economic valuation. Is my intuition right, or just a hope.
Enough of this. It's just hope based on the performance of many corporations around the world with sound balance sheets and a focus on expense management. It's also my bet on some small caps in the U.S., tech, materials, and transportation, that could go completely wrong, but TMT. You got nothing on me Mr. 999.
Jim Beam announced tonight that it is inviting an attractive $11.2 billion takeover and at least two firms are interested. Is that good news or bad news for my four month thought - depends on your point of view.
What has really grabbed my attention is the sector that I know best. "Once upon a time", a banking concern with multiple business lines could expect a lower p/e on more volatile businesses and a higher p/e on more consistent ones. When I look at JPM this quarter I saw a highly predictable shortfall in its more volatile trading and investment banking businesses(lower volumes, regulatory harassment)) but an improvement in its more predictable, once supposedly higher p/e, businesses like retail, operating services(back office financial) services for corresponding banks all over the world, asset management, and a modest increase in commercial loan growth. What happens, the stock got hit by 6% on the day it reported.
"Once upon a time" a blowout quarter in trading or private equity could have been met by only a 1%increase in stock price despite the addition that they were making to the firm's overall capital account. Now a short fall crushes the stock.
If this type of analysis is endemic to firms in multiple sectors, then no real aggregate of analysis is possible for retail of even mid-sized funds. It's all in the hands of the hedge funds betters, manipulators, and the high speed traders.
Maybe a quarter or more of securities analysis has already been outsourced to Excel spreaders in India or elsewhere to be reported here by small U.S. firms who were anointed by Spitzer and Sarbanes Olxey, another quarter possibly to fulfill mandates to equality and not experience anointed by Congress, and the big firms now are rarely quoted and quite remote due to their fear of getting sued for any miscues.
So who knows what will happen tomorrow or in the last two months of the year? My guess is market up over the next four months, through February that is, barring some economic catastrophe in some other part of the world or some geo-political event that supercedes economic valuation. Is my intuition right, or just a hope.
Enough of this. It's just hope based on the performance of many corporations around the world with sound balance sheets and a focus on expense management. It's also my bet on some small caps in the U.S., tech, materials, and transportation, that could go completely wrong, but TMT. You got nothing on me Mr. 999.
Jim Beam announced tonight that it is inviting an attractive $11.2 billion takeover and at least two firms are interested. Is that good news or bad news for my four month thought - depends on your point of view.
posted by John Borden at 4:03 PM
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