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Jason Zweig says this time it is different
Old 08-05-2017, 01:19 PM   #1
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Jason Zweig says this time it is different

https://blogs.wsj.com/moneybeat/2017...ent-this-time/

Jason says that wide acceptance of target date funds and asset allocation espoused and carried out by commonly employed FAs cancels old pattern of retail money as dumb money.

Interesting idea, and if it remains true will make markets behave quite differently at least in the near term.

What I am wondering- if retail buying is not pushing equities up, and insider buying is not pushing equities up (it is not), what is responsible? I guess corporate buying, like purchases to balance shares given as compensation, and also equity capitalization shrinkage.

What might end this? One possibility might be higher interest rates, or even relative decrease in available credit.

Comments?

Ha
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Old 08-05-2017, 01:33 PM   #2
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Article seems to require WSJ subscription.
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Old 08-05-2017, 01:53 PM   #3
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All that stimulus money has to go somewhere, and lots wound up in stocks. As the stimulus is unwound the cost of borrowing will increase and bond rates will rise. Once the 10 year Treasury gets high enough (4% to 5%) more money will rotate to bonds at the expense of stocks.
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Old 08-05-2017, 02:01 PM   #4
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Originally Posted by GrayHare View Post
All that stimulus money has to go somewhere, and lots wound up in stocks. As the stimulus is unwound the cost of borrowing will increase and bond rates will rise. Once the 10 year Treasury gets high enough (4% to 5%) more money will rotate to bonds at the expense of stocks.
Maybe so, but who is creating the excess equity demand?
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Old 08-05-2017, 02:05 PM   #5
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Maybe so, but who is creating the excess equity demand?
People looking for more than the pitiful return on CDs and many bonds.
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Old 08-05-2017, 02:20 PM   #6
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Quote:
Originally Posted by haha View Post
https://blogs.wsj.com/moneybeat/2017...ent-this-time/

Jason says that wide acceptance of target date funds and asset allocation espoused and carried out by commonly employed FAs cancels old pattern of retail money as dumb money.

Interesting idea, and if it remains true will make markets behave quite differently at least in the near term.

What I am wondering- if retail buying is not pushing equities up, and insider buying is not pushing equities up (it is not), what is responsible? I guess corporate buying, like purchases to balance shares given as compensation, and also equity capitalization shrinkage.

What might end this? One possibility might be higher interest rates, or even relative decrease in available credit.

Comments?

Ha
I know you are a fan of Jeremy Grantham, who was just interviewed by Charlie Rose, and said much the same thing as Zweig. https://charlierose.com/videos/30816 He attributes this to corporate use of cash to buy back their own stock instead of investing it to grow. The GMO quarterly letter was just published and makes a similar case.

As long as corporations don't need the cash for anything else and can borrow as much as they want, this can continue. It changes direction when corporation margins decline, cash generation falls, and they have to invest, or their debt / equity ratios get too high.
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Old 08-05-2017, 10:28 PM   #7
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I googled Market is really different this time and was surprised by the number of links saying the same thing
https://www.google.com/search?q=the+...rent+this+time
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Old 08-05-2017, 10:51 PM   #8
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Originally Posted by haha View Post
What I am wondering- if retail buying is not pushing equities up, and insider buying is not pushing equities up (it is not), what is responsible? I guess corporate buying, like purchases to balance shares given as compensation, and also equity capitalization shrinkage.

What might end this? One possibility might be higher interest rates, or even relative decrease in available credit.

Comments?

Ha
More people buying than selling. More people employed, means more 401K investments and less distributions to pay mortgages and less 401K loans to stay afloat.
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Old 08-06-2017, 05:19 AM   #9
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I particularly like Jason's book "Your Money and Your Brain".
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Old 08-09-2017, 01:07 PM   #10
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I googled Market is really different this time and was surprised by the number of links saying the same thing
https://www.google.com/search?q=the+...rent+this+time


Yes, as long as markets have existed there have been "experts" saying "it's different this time." Hasn't turned out to be true.
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Old 08-09-2017, 01:40 PM   #11
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Yes, as long as markets have existed there have been "experts" saying "it's different this time." Hasn't turned out to be true.
You must be kidding, Every time is different. While some instances follow a common script, many do not.

I believe that markets will move toward the mean, it is not possible to know for sure, or when.

Ha
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Old 08-09-2017, 02:28 PM   #12
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More people buying than selling. ...
Actually, the number of shares sold is always exactly equal to the number of shares bought.
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Old 08-09-2017, 03:12 PM   #13
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I think the trend in long term interest rates is a factor -

https://obamawhitehouse.archives.gov...interest-rates

Also technology gains going to more to the stock owner class rather than the labor classes, which ties in with the increases in wealth inequality. Those two are are my best guesses.
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Old 08-09-2017, 03:43 PM   #14
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Article seems to require WSJ subscription.
Cut and paste the article title into a Google search window. Then you will be able to follow that link to the readable article.
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Old 08-09-2017, 03:47 PM   #15
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This thread caused me to go back to my plot of the ICI funds data and update it. Here is the plot through June 2017:



Yes, the US fund inflows are down but the total equity 6 month moving average is high. I'm following ICI's lead in plotting the 6 month moving average. Probably a result of funds (mutual funds + ETFs) inflow into international stocks.
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Old 08-09-2017, 08:36 PM   #16
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Cut and paste the article title into a Google search window. Then you will be able to follow that link to the readable article.
WSJ closed that backdoor earlier this year.

Sometimes the author posts the article up on their blog after a bit of time though. You can google the author to find their blog

Here is Jason's blog with the article

http://jasonzweig.com/the-market-rea...ent-this-time/
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Old 08-09-2017, 08:52 PM   #17
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That backdoor still works for this article
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Old 08-09-2017, 09:10 PM   #18
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That backdoor still works for this article
Huh...I tried 2 different browsers and got locked out. Probably my cookies
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Old 08-09-2017, 09:21 PM   #19
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Huh...I tried 2 different browsers and got locked out. Probably my cookies
Worked in Firefox & Safari.
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Old 08-10-2017, 04:35 AM   #20
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The Market Really Is Different This Time | Jason Zweig

That catch phrase is usually used in a pejorative sense in the financial world, to mean something akin to "and trees grow to the sky." Of course, trees fall down for various reasons.

However, in his article, Jason Zweig is using the phrase to describe investors moving towards more balanced investments. This behavior is different than what was seen before recent recessions.
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