I just gave kudos to how useful the first half hour of Asian Squawk Box on Sunday is. Except for yesterday.
They spend that half hour dissecting the US markets with a depth that I never see on US television. Yesterday was no different but the quality of the analysis was particularly empty. The guest was Stephen Gollop from Bridgewater. I've written about Mr. Gollop's outlook before. His pessimism rivals Marc Faber on the scale of gloom and doom. He usually makes a compelling and articulate case that makes me uneasy.
He has lost a little impact because according to him from a year ago, gold should be above $500 by now and every American asset type should be worth a lot less than it is now. This week he talked about liking gold, silver and oil but could not talk about what commodities he would avoid. Mark Laudi tried to call him out on that "don't you have to know what to avoid to pick the winners?" Nothing.
I think there may be a couple of ways to interpret this type of sputtering. I lean to a feeling that his firm may be implementing some sort of tactical change and he was not willing to share any details.
One other catalyst for a little snap back rally might be options expiration. We ended up with a negative expiration, often the week after expiration unwinds the expiration (Austin Powers might say "one too many expirations, baby").
Lastly, I recently posted an article that addressed option premiums for REIT ETFs where I wondered if the large premiums were indicative of a large move. I invited Kaushik from Galatime to weigh in. He said the IV was inline with the last few months and because of that he did not expect a big move. After a little more thought, I have to say I disagree. In the last six months the these ETFs are up huge. If the volatility is about the same as it was during that huge move I would take that to mean big moves are still possible.
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1 comments:
Roger:
Whenever someone gives specific timeframes for events I become suspect. For the very short term it is possible, like predicting this weeks weather and for "climatic" claims such as the dollar will fall or stocks are over valued or asia will become richer or energy will increase in value ... there can be some validity.
But in the space between the mucro and macro predictions everything we know about complex systems indicates a great deal of unpredictability. This isn't a Newtonian universe, mathematically it's unpredictable, so one is stuck with hunches and guesses involving variable, a number that can be quantified in even the fuzziest of logics and others not even thought of.
One is left with a few real tools, intuitions, some of which are good because they involve years of unconscious processing of data, but the success of the best is only statistical and for the best these aren't particularly confidence inspiring.
One rule of thimb from past evens is that they tend to go beyond what seems "logically" viable, like software writing, the time it takes is what you predict and a whole lot more.
Clearly the safest bet for the next six months or year is that things will be as they have been with perhaps some moderate shifting. The most important predictions, eg. those that claim a major shift are nearly impossible to accurately place in that kind of time frame.
Of course this is exactly the sort of model investors want. Indeed big institutions need it to move resources from one area to another, but to my mind when it is offered without a long list of qualifications and significant variations in how rapidly things might occur then the source is suspect.
It seems to me that they have ignored one basic and observable quality of this kind of analysis.
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