Prieur’s readings (December 23, 2009)
This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• Robert Skidelsky (Financial Times): Why market sentiment has no credibility, December 22, 2009.
The same markets that so wounded the banking system that it had to be rescued by the taxpayer are now demanding fiscal consolidation as the price of their continued support for governments whose fiscal troubles they have largely caused.
• Johanna Kassel and Cleve Jones (Financial Times): The decade in markets, December 21, 2009.
Click through for an interactive graphic showing the performance of the world’s markets in the context of the major global events throughout the last 10 years.
• Tadas Viskanta (Abnormal Returns): Ten thoughts on the past decade in equities, December 22, 2009.
As 2009 winds down it is clear that the buy-and-hold for the long term crowd was a big loser this decade as the stock market essentially went nowhere, albeit with some notable volatility. After taking into account inflation domestic equities were a net loser. In short, the theoretical lessons on the riskiness of equities became a reality this past decade.
• Julie Segal (Institutional Investor): The equity culture loses its bloom, December 2009/January 2010.
The equity party is over. After a 25-year bender in which stocks catapulted Wall Street to such dizzying heights that financial firms managed to tip off a worldwide recession, the cult of equities is declining in earnest. The resulting hangover could fundamentally change the game for Wall Street.
• James Altucher (The Wall Street Journal – Financial Adviser): Ten predictions for 2010, December 22, 2010.
• Matthew Lynn (Bloomberg): 8 things for markets to watch out for in 2010, December 22, 2009.
• Paul Farrell (MarketWatch): 8 reasons Gross’s “New Normal” is old news, bad news, December 22, 2009.
New normal? Yes, “New Normal”. No more double-digit returns, says Pimco’s Bill Gross. Cut your “expectations in half”. What’s left? Not much, maybe 5%-6% returns. Ouch. How long? Maybe you’ll never be able to retire? Warning, you’re being misled (again). Big time. We wrote about the same “New Normal” baloney back in 2002. Back then it was Warren Buffett and Jack Bogle: Two big-shot investors, bigger than Gross and Pimco. And yet, if you had relied on Buffett-Bogle’s “New Normal” hype back then you’d have missed the profitable early upswings of the 2003-07 bull market.
• Henny Sender (Financial Times): Top hedge funds bet on big yields rise, December 22, 2009.
The recent rise in long-term US interest rates comes as good news for several leading hedge fund managers, including John Paulson, who have positioned their trading books to benefit from higher yields on US Treasury securities.
• Elizabeth Jones (Wall Street Journal): Holiday cliffhanger: stores pin hopes on last-minute shoppers, December 22, 2009.
The storm that battered the East Coast over the weekend pushed already-delayed holiday shoppers even later, leaving retailers still uncertain about how well the season will end up.
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