The Independent Market Observer

Midyear Update: Economy Strengthening, Markets Rangebound

May 30, 2014

My initial outlook for 2014 was based on an improving economy across the board. As we approach the middle of the year, that forecast is playing out.

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5/29/14 – GDP Report: The Last Blast of Winter

May 29, 2014

If you haven’t already seen the news online, you’ll no doubt see it on tomorrow’s front pages: first-quarter economic growth was revised down from an anemic 0.1-percent gain to a much worse 1-percent loss.

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5/29/14 – Interview on Bloomberg Radio’s The Hays Advantage

May 29, 2014

Check out Brad’s interview on Bloomberg Radio’s The Hays Advantage with Kathleen Hays and Vonnie Quinn, where he offers his general outlook on the markets.


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5/28/14 – The Real Problem with FATCA

May 28, 2014

My post the other day about the Foreign Account Tax Compliance Act (FATCA) generated a lot of interest among readers, both in the U.S. and abroad. In concluding that FATCA wouldn’t have a material effect on the value of the dollar or the U.S. economy, I was addressing a fairly restricted set of circumstances. Given the depth of interest in this topic, and the fact that the law does have serious implications—just not for the dollar—let’s dig in a bit more.

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5/27/14 – Taxes Are Going Up, Inch by Inch

May 27, 2014

I ended last week on a note of shared sacrifice. This week, let’s talk about some of the forms that sacrifice will likely take.

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Mark Your Calendars and Update Your Bookmarks: My Blog Is Moving, June 2, 2014

May 27, 2014

In order to take advantage of some new capabilities and streamlined efficiencies here at Commonwealth, my friends in the Marketing department tell me that my blog will be moving to a new address,, effective June 2, 2014.

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5/23/14 – Memorial Day Reflections

May 23, 2014

One of the joys of being a father is explaining to Jackson things that I, as an adult, take for granted. Today, we’ve been talking about Memorial Day—not as the start of summer but as a time to remember those who have died so we can live in freedom.

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5/22/14 – Using Benchmarks to Meet Your Investment Goals

May 22, 2014

I’m at the J.P. Morgan Research Summit today. Yesterday’s sessions were excellent, and one discussion seemed particularly applicable in light of my recent posts on moving averages.

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5/21/14 – How Moving Averages Can Fail

May 21, 2014

For the past two days, I’ve focused on moving averages—specifically, how investors can use them as warning signals and how they work to manage risk. Today, we’ll talk about their potential costs and drawbacks, which are common to any type of risk management program.

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5/20/14 – Avoiding Drawdowns: How Moving Averages Actually Work

May 20, 2014

On the topic of using moving averages to avoid risk, one question I often get is, What actually would have happened over the past couple of decades? Everyone has an interest in avoiding a 2000 or 2008, but everyone also knows that market timing doesn’t work.

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5/20/14 – Interview on CNBC’s Worldwide Exchange

May 20, 2014

Check out Brad’s May 20 interview on CNBC’s Worldwide Exchange, where he offers his thoughts on recent U.S. equity market growth and Treasuries.

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5/19/14 – How to Use Moving Averages to Avoid Stock Market Losses

May 19, 2014

One of the major causes of stock market losses is unforeseen declines that make people sell out—often at the worst time. This is one of the reasons I’ve focused much of my recent research on using drawdown (instead of return variance) as a measure of risk. In my opinion, it provides a better metric for real-world investment performance.

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5/9/14 – How to Turn P/E Data into P/E Information

May 19, 2014

The first question you might have, upon seeing that headline, is what’s the difference? Data is simply facts, without meaning or context. Information can be used as a basis to make decisions; it can be acted on.

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5/16/14 – What Can Cycles Tell Us About Investing?

May 16, 2014

If you ever want to be amused, get a cat to watch an ink-jet printer while it’s at work. I now have a laser printer at home, which still seems to fascinate the cat, but there’s no comparison to the ink-jet. Something about the print head scurrying back and forth under the cover must remind them of a mouse . . .

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5/15/14 – Is FATCA Bad News for the U.S. Dollar?

May 15, 2014

Recently, several readers have written in with questions about House Bill 2847—specifically, the Foreign Account Tax Compliance Act (FATCA) section, which takes effect in July.

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5/14/14 – Back to the Old Normal

May 14, 2014

There are no blockbuster news stories today, but several items play into the theme of how “old normal” things have become.

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5/13/14 – The Federal Deficit Continues to Improve

May 13, 2014

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5/12/14 – Markets Probably Headed Even Higher

May 12, 2014

As I write this Monday morning, stocks are up quite a bit on the day, with the S&P 500 pushing even closer to a new all-time high. The headline on Google Finance reads “U.S. Stocks Advance Amid Deals on Optimism Over Economy,” and all seems right with the world.

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5/8/14 – Southeast Asia Heats Up as Ukraine Cools Down

May 8, 2014

The markets seem to be rallying as the Russians dial down the Ukraine confrontation. After a couple of dips, it looks like we’re edging back into a risk-on mode, with Putin apparently deciding that he has what he needs and it’s time to back off.

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5/7/14 – Alibaba Votes with Its Wallet—for the U.S.

May 7, 2014

We’ve seen a lot of the usual hand-wringing about U.S. markets over the past several months—Flash Boys and high-frequency trading, breakdowns in the Nasdaq, various insider trading scandals. It hasn’t been a great time to be in the financial market press-relations departments.

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5/6/14 – Why the Weather Hit the Economy So Hard

May 6, 2014

Last week, Ken Carl wrote in with a question: “Am I the only one who is pretty amazed at the effect that the weather had on our economy? I admit that we had a hard winter, but it wouldn’t be unreasonable for the same thing to happen again. Would our economy be hit once again if it did?”

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Market Thoughts for May 2014 Video

May 6, 2014 

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5/5/14 – Uncertainty and Investing

May 5, 2014

This will be a short post, as I arrived home at 7:30 this morning after flying and laying over for the past 18 hours or so, so I am a little tired. That said, it was all worthwhile when Jackson came running out of the house to hug me as I pulled up in a cab, then tried to drag my bag—which weighed more than he does—into the house. We did it together—teamwork!

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5/2/14 – Employment Report Points to More Strength in the Economy

May 2, 2014

More evidence for the “snowdown” thesis is in. The unexpectedly strong April employment report, with a gain of 288,000 jobs, surprised pretty much everyone, and shows that hiring has come back in a big way after the weak first quarter. Even more encouraging are the upward revisions to first-quarter job growth, with 36,000 more jobs created than were initially reported.

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5/1/14 – Gratitudes for the Day

May 1, 2014

Thinking about my recent post on how normal everything has become, I realize that I should be more grateful for just that. Sitting here on my balcony in Kauai at the Commonwealth President’s Club conference, I certainly have other things to be grateful for as well.

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