What Experts Say about This Past Week--Investment & Finance Thread Jan. 25

Weekly investment & finance thread ^ | Jan. 25, 2015 | Freeper Investors

[expat_panama]

Considering the top headlines were about soft footballs this has to have been an easy no-brainer week for investments.  Maybe; here's what he experts are telling us:                    

[excerpt from Investors Business Daily At Davos, Hypocrites Tell Rest Of Us To Lower Expectations] Former Vice President Al Gore listens to singer Pharrell Williams... [snip] ...talking, of course, about the annual confab at Davos, Switzerland, ... [snip] "The purpose," said former vice president and climate-change entrepreneur Al Gore, standing with hip-hop star Pharrell Williams, "is to have a billion voices with one message, to demand climate action now." OK, so how about you flying commercial, for a start? This year's ration of ridiculousness and hypocrisy is so prominent, even the media have noticed. It's pretty obvious that people who can pay $40,000 to attend Davos and fork over $43 for a hot dog, $47 for a burger or $55 for a Caesar salad — all actual prices at this year's World Economic Forum — would seem to be in a poor position to lecture the rest of us. Even so, Bloomberg highlights remarks by subprime mortgage billionaire Jeffrey Greene that "America's lifestyle expectations are far too high and need to be adjusted so we have less things and a smaller, better existence. We need to reinvent our whole system of life." Greene, according to Bloomberg, "flew his wife, children and two nannies on a private jet plane to Davos for the week." How's that for "less things"? His remarks are more than a little ironic, given one of the main themes of Davos this year: "Income inequality," or getting the rich to pay their "fair share." [snip]		[excerpt from Daily Finance Market Wrap: Stocks Fall on Miners, UPS; Indexes Up for Week] NEW YORK -- U.S. stocks fell modestly Friday, pressured by underwhelming corporate news including guidance from economic activity bellwether UPS and as materials stocks fell after bearish notes. Major indexes, however, rose for the first week in four, boosted in part by the European Central Bank's decision Thursday to further stimulate euro zone growth. Materials shares weighed on the S&P 500, falling 1.6 percent after Goldman Sachs (GS) cut its price target on various miners including a 42 percent downward revision to Freeport McMoRan (FCX) stock to $18. Goldman separately slashed forecasts on commodity prices including aluminum, copper and nickel. UPS (UPS) was among the largest drags on the S&P 500 after a gloomy outlook, alongside Exxon Mobil (XOM). On Friday Credit Suisse (CS) cut Exxon to "underperform." Declines were capped by bullish investor sentiment after Thursday's move from the European Central Bank, which detailed a bigger-than-expected bond-buying program to lift the region's sagging economy and fight deflation. "From where we're sitting, we're sensing continuation [from last year], the trend is still the upside," said Gordon Charlop, a managing director at Rosenblatt Securities in New York. "The corrections and the volatility will be a little more pronounced, a little more dramatic, but the trend remains intact." The Dow Jones industrial average (^DJI) fell 141.38 points, or 0.79 percent, to 17,672.6,the Standard & Poor's 500 index (^GPSC) lost 11.33 points, or 0.55 percent, to 2,051.82 and the Nasdaq composite (^IXIC) added 7.48 points, or 0.16 percent, to 4,757.88. For the week, the Dow rose 0.9 percent, the S&P gained 1.6 percent and the Nasdaq added 2.7 percent. [snip]
Related Threads: Global economy hopes raised after European stimulus The 5 mansions of the billionaire who wants America to live a 'smaller' existence More homeless camps are appearing beyond downtown L.A.'s skid row In Iowa, Cruz imagines ‘reigniting the miracle of America’ In Iowa, Santorum previews ‘blue collar’ pitch for 2016 The United States Is Imploding, On The Eve Of Destruction. Fired US McDonald's workers allege racial discrimination     This is the thread where folks swap ideas on savings and investment --here's a list of popular investing links that freepers have posted here and tomorrow morning we'll go on with our--     Open invitation continues always for idea-input for the thread, this being a joint effort works well.   Keywords: financial, WallStreet, stockmarket, economy.		[excerpt from T.RowePrice Weekly Market Wrap-Ups ]   ...ECB's QE plans drive shift in sentiment... Even as earnings reporting season was in full swing, investor sentiment appeared to be driven in large part by macroeconomic concerns, and not even domestic ones. Reports that the European Central Bank (ECB) might announce a large quantitative easing (QE) program—buying long-term bonds in order to lower borrowing costs and spur growth and inflation—seemed to foster improved sentiment early in the week. U.S. and other global markets rallied on Thursday, when the ECB announced a program that was in fact much larger than what many investors had anticipated. T. Rowe Price's London-based sovereign credit analysts note that while the size of the program is roughly in line with the Fed's recent QE efforts, it should have a larger effect on the European bond market given the smaller amount of bonds available. ...but also drives up dollar, threatening overseas profits for U.S. multinationals T. Rowe Price analysts also expect the program to have a significant effect on the value of the euro relative to the U.S. dollar. Indeed, following the announcement, the dollar reached its highest level against a basket of other currencies since late 2003. While the strong dollar has some positive effects for the U.S. economy, it also threatens the profits of U.S. businesses earning revenues overseas. Earnings down for financial sector, but individual opportunities remain Threats to overseas revenues and declining oil prices have already weighed considerably on earnings expectations. Analytical and database firm FactSet now estimates that overall earnings for the S&P 500 will grow by only 0.25% in the fourth quarter of 2014. Profit expectations have declined significantly for financials firms, along with energy companies. Some better-than-expected bank earnings reported Thursday helped fuel the market's rally, however. [snip]

[expat_panama]

--so nothing happened; will it last?

[proxy_user]

No. As an experienced investor, I predict something will happen.

Now if I knew what was about to happen, then I’d be rich....

[abb]

http://www.wsj.com/articles/is-it-time-to-invest-in-energy-stocks-1422028657

Is It Time to Invest in Energy Stocks?
With Oil Prices at a Six-Year Low, Here Are the Options for Investors—and the Risks

By Dan Strumpf
Jan. 23, 2015 10:57 a.m. ET

The sharp fall in oil prices has wreaked havoc on shares of energy companies, leaving investors to decide whether now is the time to go bargain hunting.

U.S. crude prices have fallen by more than half since June, trading at a six-year low of around $45 a barrel. For motorists filling up their tanks with sub-$2 gasoline, that has been a cause for celebration. But for investors in the energy sector, it has been a calamity.

The S&P 500 Energy index, comprising the industry’s largest companies, lost more than a fifth of its value over the six months through Thursday, the biggest decline of any of the 10 major sectors, according to FactSet. The broader S&P 500, by contrast, rose 4%.

The pain has been worse for shares of smaller producers, many of which took on loads of debt to finance new drilling. A barometer of small energy companies, the S&P SmallCap 600 Energy index, has swooned 47% in the past six months.

Experts warn that the wild swings in energy stocks could continue for some time. While blue-chip names like Exxon Mobil have offered energy investors some insulation from volatile oil prices, producers and service companies are more vulnerable to the tumult—but have more to gain should oil prices stage a rebound.

[Gen.Blather]

What’s the consensus for investing in coal? I think it will resurge after Obama’s gone, if we get a real conservative Congress and a real conservative president. Comments?

[expat_panama]

....something will happen.

We can't count on that merely because nothing happened last week.  [From 12 Cognitive Biases That Endanger Investors Minyanville.com]

Gambler's Fallacy

One of the most famous disclaimers in finance is that past performance is no guarantee of future results. This bias is often referred to as a "glitch" in our thinking in that it extrapolates what happened in the past to construct an idea of what will happen the future. How many of you have played roulette at a casino under the premise that a string of red increases the likelihood of a black outcome? That's flawed thinking; the odds of red (or black, for that matter) or 48% on each independent spin.

[proxy_user]

No, my answer is based on experience. Things have been happening for thousands of years. Quiet periods do not usually last long. The more people there are on earth, the more likely that something will happen.

[expat_panama]

the consensus for investing in coal?

Nobody seems to want to talk about it but the fact is that coal stock piles are down (Coal stockpiles at coal-fired power plants smaller than in recent years) and the price is up (Wholesale power prices increase across the country in 2014). 

I haven't looked at coal stocks but the energy stock sector has not been looking so good lately...

[expat_panama]

Time to Invest in Energy Stocks?

--because they've been down or because something new is happening now?  This is the core of all our head-scratching here....

[MtnClimber]

I have been thinking about coal too. The risk is that the low oil prices could bankrupt many coal producers. I am holding off for now.

[abb]

I may get flamed here, but investing IS NOT, repeat IS NOT gambling.

History has shown that a long-term, buy and hold strategy of buying equity in proven companies is a nearly GUARANTEED way to accumulate wealth.

Day trading? That’s gambling.

Nobody wants to wait. They want it ALL, and they want it NOW.

Human nature, I suppose.

[Wyatt's Torch]

I wonder if oil hasn’t found a floor and will now be in a $45-$55 trading range...

[abb]

IMO, nothing new is happening. Petroleum and the industry that provides it AIN’T going away, not in the next hundred years. The boom and bust cycles are a historical part of the biz, and represent an opportunity to accumulate companies at a bargain price.

[SAJ]

General --

I think that, w/o much effort, you will find that "if", as an investment or trading parameter, is much less likely to yield a profit than a different parameter, to wit, "is likely to".

No personal view on coal, but being long coal (directly or by proxy) has many more imponderables right now than simply straddling crude, or writing puts/stripping calls on natural gas. Coal "should" rally given the insertion of a competent US government after Odildo, but I also prefer "is likely to" over "should". And, the assumption of a competent US goobermint carries with it innumerable other risks.

FReegards to you, and good trading!

[expat_panama]

investing IS NOT, repeat IS NOT gambling.

--although that's a fondly held belief of those that like gambling and are clueless w/ investing.  Sometimes gamblers try their addiction in the financial markets and they may even call themselves 'day traders'.  They're not.  Gambling addict's bottom out and stop --one way or the other.  Real day traders who endure (and there are many) are those that know what they're doing and provide a needed service.

[Zeneta]

It's ALL about the Dollar/Euro/Yen......

Since late 2008 and into 2009 central bankers around the world have been fighting a losing battle against "Deflation".

The only tool they have is the printing press/QE*, which is designed to create "inflation" in order to stop the deflationary cycle. In the short run they are not necessarily wrong since it is really the only thing they can do.

The QE* efforts of the U.S. have sent the U.S. stock market to record highs but the utter lack of real economic growth suggests there are other forces at work.

Deflation is a Bitch.

[expat_panama]

..."if", as an investment or trading parameter, is much less likely to yield a profit than a different parameter, to wit, "is likely to"...

That would make a good sign on the wall of a trading office....

[expat_panama]

...only tool they have is the printing press/QE*, which is designed to create "inflation" in order to stop the deflationary cycle.

--and they did it, it seemed to work for a while, but now they're quitting and we're all watching the world's economy deflate, beginning now with negative interest rates.  The problem (imho) is that w/ all the printing the money supply hasn't made any serious moves.  Money's supposed to be created by econ activity and it's not there.  We especially see it in the fact that money-velocity has gone AWOL

[expat_panama]

Actually that range is close to the historical long term floor, but my thinking is that we really should be open to another plunge before stabilizing.

[RegulatorCountry]

There are some who seem to think they’d benefit from deflation. Perhaps so, assuming no debt, ample savings and cash reserves, and your financial institutions don’t fail. That’s the biggie, failing financial institutions.