The Mess That Greenspan Made - Part 5

Trend Following and Investment Losses

Given the relationship of the two data sets shown in graphic below that depict the fortunes (or lack thereof) of John Hussman’s Strategic Growth Fund (HSGFX) in recent years, the accompanying Wall Street Journal story ($) by Morgan Housel is surprisingly kind.

Of course, the bigger story here is really how investors chase performance and how trend following can lead to investment losses. Another important point is that Hussman is not necessarily wrong to be so bearish over the last six years – he might just be early and, over the long-haul, his approach may end up looking pretty good, as it did a decade ago.

Monday Morning Links

MUST READS
Low wages, high dollar test Fed’s patience – Global Post
Brazil: hundreds of thousands of protesters call for Rouseff impeachment – Guardian
Ukraine’s president says truce not working, urges more Russia sanctions – Reuters
Vladimir Putin just made his first appearance after a mysterious absence – Quartz
U.S. Seeking Billions From Global Banks in Currency Manipulation Settlement – Bloomberg
California has about one year of water left. Will you ration now? – LA Times
Krugman Is Told to Read More, Write Less, by Swedish Riksbanker – Bloomberg
The next bailout will be with student loans – My Budget 360
Dollar Imperialism, 2015 Edition – counterpunch
Extremes in Every Pendulum – Hussman Funds
This Could Be Apple’s Secret Apple Watch Strategy – Time
The Coming Chinese Crackup – WSJ

MARKETS/INVESTING
China stocks jump, other markets await Fed – AP
The Smart Money Is Getting Smarter – Forbes
Stocks are the Most Expensive, Well, Ever – Meb Farber
Your Mutual Funds (Still) Suck – Pragmatic Capitalism
Germany’s DAX 30 just broke above 12,000, but it’s  not too late to buy – MarketWatch
Oil Slumps to Six-Year Low as U.S. Production Seen Filling Tanks – Bloomberg
Junk-Rated Oil & Gas Companies in a “Liquidity Death Spiral” – Wolf Street
How Scary Is the Bond Market? – Shiller, Project Syndicate
Gold above lowest in over three months, eyes on Fed meeting – Reuters
SGE Withdrawals 45t Week 9, YTD 456t – BullionStar

ECONOMY/WORLD/HOUSING/BANKING
Billion Prices Project Predicts Higher Inflation – WSJ
If Economists Were Right, You Would Have a Raise by Now – Bloomberg
Global recovery fragile, India a bright spot – Lagarde – Reuters
Is China’s growth slower than the 7% consensus? – Sober Look
China has become main banker in Latin America – Voltairenet
Why Venezuela is the world’s worst performing economy – Quartz
House asking prices near all-time high as ‘granlords’ size up the market – Guardian
The Federal Housing Administration, the next housing crisis? – The Hill
The End of “Patient” and Questions for Yellen – Fed Watch
Four Central Banks Meet but FOMC is the Key – Marc to Market

 

The Long-Term Dollar Index

The words of wisdom often (mistakenly) attributed to Mark Twain – “History doesn’t repeat itself, but it does rhyme” – come to mind when sizing up the possibilities for another financial crisis sooner-rather-than-later amid all the global hand-wringing about the rapidly rising U.S. dollar, depicted below via this item at Bloomberg.

Note that, despite the recent reversal, the long-term trend is decidedly down, however, the more important point might be that there’s a curve here at all – prior to the end of the Bretton Woods System in the early-1970s, this curve would have been flat for decades.

Of course, that point is routinely overlooked in the financial media as everybody has, over the years, seemed to convince themselves that a world full of freely floating fiat currencies is just the way things work and we have to make the best of it.

Friday Morning Links

MUST READS
Russia cuts rates as crisis eases – BBC
The Strong, Weak Dollar – Bloomberg
Watch this signal for more dollar strength – CNBC
Global finance faces $9 trillion stress test as dollar soars – Telegraph
U.S. economy’s surprise risk: Dollar surge could weaken growth – Washington Post
Greece Complains About Schaeuble in Deepening Conflict – Bloomberg
What Did We Learn From the Dotcom Stock Bubble of 2000? – Time
Eastern, High Arctic regain sea ice during cold winter – UPI
Rumors of Putin’s Illness Run Rife in Russian Media – Russia Insider
Wondering What the Fed’s Statements Mean? Be Patient – NY Times
UBS: Fed Will Open “Pandora’s Box” With Rate Hike – Zero Hedge
What the Fed Will Do and Why – Bloomberg

MARKETS/INVESTING
Global stocks gain as weak retail sales shift Fed thinking – AP
Brent Crude oil slips under $57 as IEA sees bigger glut – Reuters
Japan stocks post first finish above 19,000 in 15 years – MarketWatch
U.S. Index Futures Fall After Rally as Energy Companies Decline – Bloomberg
For active managers, it’s been a brutal 10 years – CNBC
Gold firms after worst losing streak since 1973 – Reuters
Gold demand in Asia picks up due to lower prices – MoneyControl
Not another groundhog year for metals – Wrathall – Mineweb
The Mechanics Of The Chinese Gold Market – BullionStar
Don’t Fret Gold’s Seasonal Decline – Casey Research

ECONOMY/WORLD/HOUSING/BANKING
Retail sales fall for third straight month – USA Today
Good News for Some of Us: Other People Are Quitting Jobs – AP
China’s New Normal Means More Jobs in U.S. – Bloomberg
UK seeks to become member of China-proposed bank – China Daily
China-IMF talks to endorse yuan as global reserve currency – BRICSPost
German consumer prices inch up again in February – BBC
Confidence in U.S. Housing Market On The Rise – PRNewsWire
The entry-level housing market may be on the upswing – US News
What You Tweet Might Tell Janet Yellen It’s Time to Raise Rates – Bloomberg
From Yellen Put To Yellen Massacre – Automatic Earth

 
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