The Pitfalls of Speculation by Thomas Gibson, 1906.

The question at once asks itself: “How may the top of the market be discerned, and the dangers of the eleventh hour be avoided?” The answer is more or less complex.

It is, of course, necessary above all things to revert to the estimated and fixed value of the stocks traded in and to find out how much above this normal point the securities are selling. This done, common sense, plus prudence, and minus piggishness, may determine the question and dictate the time for liquidation. This action, however, once decided upon must be adhered to with great rigidity, for thousands of traders who thus take time by the forelock have been dissatisfied afterwards by seeing a still greater advance in which they had no interests, and through greed and impatience have re-entered the lists at a most inopportune time.

The trader who realizes his profits, and sees a further advance following his own withdrawal from the market, may console himself with the fact that he has made and secured a profit; that trying to guess the exact extreme of a cycle is hazardous, and that the advance which followed his withdrawal is unsound, being founded on speculation rather than valuation.

But this is a digression from the technical phase of the matter.  So far as it is possible to judge the culmination of the speculative campaign by extraneous appearances, it may be said that a long period of backing and filling, a swinging back and forth of prices at the approximate high level marks the beginning of the end. (more…)

Germany suspends use of AstraZeneca covid-19 vaccine

Not a great sign

Not a great sign
AstraZeneca was out with a statement on Sunday saying there were no safety problems with its vaccine. Evidently, the Germans aren’t convinced or want more time to review the data and they’ve will stop using the vaccine, at least temporarily.
At this point, there’s been some major reputational damage for this particular vaccine. It’s also the least-effective at preventing infections.
The FX implication here is euro-negative because the eurozone’s best shot at getting the vaccine sooner is via this vaccine. It also potentially extends the timeline globally.
Ultimately, I think it gets approved but this certainly isn’t good news.

Some things never change.

Accepting losses is the most important single investment device to insure safety of capital.  It is also the action that most people know the least about and that they are least liable to execute.  I’ve been studying investments, giving investment advice and actually investing since 1921.  I haven’t found the real key yet and don’t ever expect to, as no one has found it before me, but I have learned a great many things.  The most important single thing I learned is that accepting losses promptly is the first key to success.

Is there a stock market bubble and will it crash soon?

What are the signs saying?

Worried about a stock market crash? Are stocks overheated? When will the bubble pop? Suddenly you see your portfolio crashing down as a series of economic events and malinvestments build up and get realized into simple price action. A bubble builds up with hype and euphoria feeding its growth up until the time comes when the bubble bursts and the crash materializes. Despite the burden of a crash, a bunch of professional investors wait for such opportunities to cease above average returns. They have enough discipline and foresight to look ahead and anticipate that after a crash, a perfect timing to buy does exist, giving their portfolio a skewed return on investment.

When the pandemic first hit the world last year, financial markets and most asset classes took a huge hit, triggering a short-lived bear market. The stock market fell by an approximate 20% and a global economic recession followed. However, after the sharp nosedive in March of 2020, the market began a subtle recovery. All indices rose again, euphoria took a seat again, and by December 31, the stock market had regained all its lost ground.

Germany reports 6,604 new coronavirus cases, 47 deaths in latest update today

Germany on the verge of a third virus wave?

Putting the Monday figures above aside, the situation in Germany hasn’t been looking great as of late. As of yesterday, total active cases climbed to above 137,000 – the highest it has been since 15 February.
Meanwhile, the 7-day incidence rate continues to climb and is seen at 82.9 today. As a reminder, the key threshold there is 50.0 – where the government allows for states/regions to relax restrictions further. Hence, the latest trend is rather discouraging.
Are we on the cusp of another virus wave in Germany, similar to that of Italy?
That is a key risk to look out for if tighter restrictions are called upon once again in Q2.


In terms of healthcare capacity, there were 2,775 (+54) virus patients requiring intensive care as of yesterday with there being 4,155 (17%) intensive care beds still available.

Welcome to Fed week

everything this week hinges on the upcoming FOMC meeting

There will be a couple of light distractions in the run up to Wednesday’s FOMC meeting but trading this week is going to revolve around the Fed, all things considered.
The language with regards to the bond market will be one to watch but the Fed will also be releasing its latest economic projections and dot plots are back in focus as well.
Imagine how would the market react if one rate hike was penciled in for 2023?
In case you need a reminder, here’s how the previous (latest) projection from the Fed:
But as you can see, the market is well expecting a rate hike much earlier by the end of 2022 – with OIS pricing even indicating more than one hike by 2023.
Essentially, that’s part and parcel of the story in what is contributing to the rise in yields too (it’s not just an inflation story). So, will the Fed feel that its credibility is being undermined? Or is this all still acceptable for the time being? Or will they eventually cave?
That question is going to hold the key for Treasuries as yields are on the verge of an extended break higher as it holds at the February highs to start the week.


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