Monday, April 09, 2007

Investors Need Not Be Bearish to Hedge Risk / hussman


While the S&P 500 has gained just 4% from its March lows on a weekly closing basis, it is clear that investors and market analysts now view the recent market correction as ancient history. The Investment Intelligence figures on advisory sentiment have shifted clearly to the bullish camp, with 50.6% of advisors bullish and 26.3% bearish.....

As earnings pre-announcements begin this week, continue to listen for comments relating to profit margins. Analysts are already slashing expectations for earnings growth. As the New York Times noted last week, analyst expectations at the beginning of 2007 were for first-quarter earnings to post year-over-year growth of 8.7%. Current estimates have been cut to an expectation of just 3.3% growth.

thanks to and barry ritholtz

Second quarter growth is now projected to be just 3.5% year-over-year, with full-year growth estimates down to 6.3% (effectively building rapid growth expectations into the second half to compensate). If investors no longer have hopes for a near-term easing from the Fed, nor hopes for rapid earnings growth, the only remaining notion is the belief that stocks are appropriately priced on the basis of “forward operating earnings.” As I've emphasized in recent comments, this belief is fiction

>this is for sure the contrary of the animal spirit in the asset markets these days......

>dies spiegelt sicher das gegenteil der treibens an den asset märkten wieder.....

i´m your spirit animal

In all, investors continue to look for hopeful signs on which to base a speculative outlook.

more on this topic also from barry

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Blogger Flagg707 said...

Great point that is often missed - hedging should be a natural part of any investing strategy. Risk has been ingnored for so long that it now seems like a radical comment to suggest it, at least to the general investing public.

Thanks for the link.

5:12 AM  
Anonymous Anonymous said...

very funny cartoon... tierisch witzig!!

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