Financial Pundits And Their Four Strongest Worries

Financial Pundits And Their Four Strongest Worries



The popular financial pundits have been pontificating on their four strongest worries, all certain that the world is about to collapse.  They are wrong and my answers, backed up by charts, are below.

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Mohnish PabraiIn August, Mohnish Pabrai took part in Brown University's Value Investing Speaker Series, answering a series of questions from students. Q3 2021 hedge fund letters, conferences and more One of the topics he covered was the issue of finding cheap equities, a process the value investor has plenty of experience with. Cheap Stocks In the Read More

1)  THEY say that we are experiencing deflation.  MarketCycle says that, as of the first of 2016, we are experiencing inflation and that investors should now be holding “inflation assets.”   This proprietary chart, using a trend line to smooth economic data, clearly shows the U.S. inflation DIRECTION… inflation is rising:

blog inflation


2)  THEY say that the yield curve is currently inverted (flat).  The yield curve normally inverts months before a recession begins, but MarketCycle says that the yield curve has NOT inverted and this is easily shown on our chart below where the red (warning) area shows inversion (as in 2007, just before the big drop) and the black dashed line shows the S&P-500.  We are currently at the “80” mark below and still a long way from inversion (and the yield curve could even become steeper in the near-term as the market becomes stronger):

blog yield curve


3)  THEY say that the Advance/Decline line is breaking down (this normally occurs before a recession).  MarketCycle watches this daily and it is not difficult to see that the line is moving up and not down… leading the market higher VERY SOON.  The Advance/Decline moved to RECORD highs on July 6, 2016 and the A/D line normally LEADS the market:

blog ad line


4)  THEY say that risk is increasing.  Below are some of the Risk Indicators that MarketCycle watches (and updates) daily.  Risk is clearly low at the current time as shown by the “field ofGREEN” below (the most recent bullish change was the 200 SMA direction).  Risk is not the same thing as “investor emotional turmoil and worry”… actually it is the opposite!

Robert... sample of MarketCycle's daily risk assessment #1

Robert #2


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