Oppenheimer Holdings Inc. Message Board

The bears and even some bulls say that all this optimism of the markets is an illusion, it is a Fed induced rally and not a fundamental expansion….As we all know this rally is not due to current extraordinary revenue growth, superb margin growth or low price to earnings multiples but to me, it all boils down to the realization by investors that American companies are dominating the world and can easily expand market share if only they put their cash to work more aggressively. We need to see an increasing acceleration in money supply that will trickle down to the real economy.

With that said, I still like the hesitation by these institutions, it is proof that nowadays firms are more rational; many are still reeling financially from the financial crisis a few years back.

The fact that no mid/large cap companies are trading like a 50 cent-on-the-dollar investment, despite the stimulus of quantitative easing, is a very strong sign. Even as earnings and margins might still be on the normal side, the current trends capture the potential of a rising and explosive US investment-based mindset.
Based on the history of global investors to US based companies, we can be fairly certain that a strong rally will come soon enough. I don’t know if the spike in performance will come by month-end or year-end but I believe that we have in no way reached the top. A potential strengthening in the US will be the driving force and lead to a rise of all boats…. global markets will surely follow…

the most likely trend to follow is the strength of the economy….which will anchor a further rise in the stock market….

I guess this is the million dollar question nowadays…..Here is why?

Some like to use the rumors of whether “the Fed will or will not taper” to prove that markets move according to this idea. I too believe that this “whisper” did in fact play its role in price action. But only initially, to me, markets are really good at quickly switching to what should be the most currently relevant/appropriate focus and invest accordingly...

Here is a story that I think might better illustrate my point:

A minister told his congregation, "Next week I plan to preach about the sin of lying. To help you understand my sermon, I want you all to read Mark 17."

The following Sunday, as he prepared to deliver his sermon, the minister asked for a show of hands. He wanted to know how many had read Mark 17. The majority of the hands went up. The minister smiled and said, "Mark has only 16 chapters. I will now proceed with my sermon on the sin of lying."

My point here is not to question the majority of the audience raising their hands when not having “read” the chapter of the book….my point here is that the audience might have been tricked the first time, by the minister’s witty attempt to push his point across, but it’s necessarily doubtful that they will be tricked a second time.

And that’s exactly what occurred last Friday with the strong employment number. The markets did not sell off when asked if they had “read” the chapter. In fact, it had the exact opposite reaction: no one raised their hands! The “minister” thus had a very hard time proceeding with his “sermon” and helping them better understanding it!

Moreover, there are also those who claim that there is a rotation from bonds to equities that’s why markets soared on Friday….they are simply confusing the “affect” vs. the “effect”….as I have been recently writing, to me, stock buying, selling or rotating is affected by the strongest player effect…the markets no longer care if the boy cried “taper”!

pretty powerful move in equity markets, me thinks. but will this out-performance continue?

if you have been reading my past (sometimes cryptic and rich in mystical language) posts, you probably know where my focus lies now. i am no longer fed-focused since i don’t think the fed’s actions have any bearing in the velocity of money. i actually think, my new focus in determining the next directional move in markets is fairly reasoned and simplistic.

while the media has again failed to adapt and capture the reasons for the changing economic circumstances. others, like me, are trying to gauge possible or probable economic outcomes by following the foxy or hedgehog-like actions of these institutions.

to me, they are the strongest players today, not the fed. and again, my belief is that this will become more evident gradually, not instantly…

as always: just my personal opinion

There is a very interesting TV commercial, I think it is that of BMW, where the fighter jet flies over the accelerating car and instead of fueling the car, it "refuels" the driver's coffee cup!

This concept is flawed. I don't care how fuel efficient the car is, acceleration is directly proportional to the fuel used. Eventually the car will run out of fuel or then have to decelerate in order to reach the predetermined distance.

My point is, we are currently refueling the "coffee cup" and the driver seems to be "wide awake" but unless we refuel the vehicle again, the driver will have to resort to other means of transportation.....

The Fed has already refueled the rate of economic development through upward asset prices but in order to sustain it and reach its destination, it needs to "refuel" the value of money!

To me, it is the only way to achieve a S-Shaped Curve and avoid the second derivative straight-line up, down, up, down segments.....

Exactly one year ago I found myself puzzled in my inability to decipher order in stock market trends….and we all shortly thereafter discovered what was moving the indexes so violently….skewing the returns…

Dazed and confused: Today, I find myself wondering again why the equity indexes are moving higher in the past few trading days…

To me, the US dollar should have moved much higher than its current levels and markets would have flattened, if not sold off, in response to this…

Is it perhaps that an entity is buying up so much of this x-currency that y-currencies are not allowed to spike?
And if x currencies are moving higher why doesn't the z-currency move lower?

According to Meredithonomics, banks can operate better by removing luxurious additions and customers will still be willing to pay premium prices…

Basically turn Bank of America to a Fiat but still be offered at a BMW price!

I am not sure what school of economic thought Meredith believes in but that to me sounds absurd….

Best Picture: US Economy
Best Director: Ben Bernanke
Best Actor: US Dollar
Best Supporting Actor: S&P 500 Index

Congratulations to the winners!!

To many this overreaction on the upside does not make much sense. To me, the answer lies on clues from 1996, when Greenspan spoke of the irrational exuberance of the stock market. The never ending paradox was that by asserting irrational exuberance of markets, Greenspan inadvertently offered a normal explanation to the overreaction.

That is, the overreaction on the upside being within the realm of "normal" was when markets became confident. Today the false positive reasoning i.e. the lack of investment alternatives is what drives investors to equities, is what reinforces stability and the continuing overreaction on the upside….

I was contemplating whether to criticize Taleb's new book or Buffett's views expressed in today's interview....I start with Taleb.....

One can be inundated with all the information in Taleb’s book, but there is no point if it cannot be converted into useful knowledge. Different readers of the book, for example, can read the same facts and come up with diametrically opposite and yet equally plausible conclusions. Who is right?

My opinion after reading the book is, investors should recognize that economic outcomes, like investing, is really a game of probabilities. There are not a lot of definite things that will happen in the future but that only depends on the interfragility, not antifragility. To me, investments do not gain from disorder but they gain from order. (Some confuse disorder to price volatility. When I refer to order or stability I am not referring to the VIX….)

To be more clear, Taleb basically claims that decisions like the decision to allow Lehman to fail, was good for the system. But would a different governmental response have generated a less favorable outcome? I don’t think so….

Let me try to illustrate this: Who are the strongest players today? We are all finally agreeing that the stock market is mainly driven by Fed actions…..so why is the Fed the strongest?

After letting Lehman fail, the central banks were under popular pressure to save the world, so obviously they had to apply stimulus in large enough quantities to replace dwindling export demand. The remaining research to be done is then consisted of identifying whether saving Lehman would have avoided the necessity to apply such aggressive stimulus?

to be continued.....

Why some people love to shoot themselves in the foot I will never understand.

I am talking about Meredith’s interview on CNBC, which has forced me to express my strong disagreement here…

She thinks more shareholders will buy financials if they “trim” down and become more “efficient” by letting go of even more employees and paying them even less than what they are now.

Sheer farcical economic-theory!! ( I call it Meredithonomics)

For me, what financials need to focus on is attracting more clients, not more shareholders!! My philosophy is if you attract more clients, revenue goes up, profitability goes up, stock price goes up! This is not the first time I'm saying this, but essentially it is tragic to believe that a company in the services sector, can attract more clients by reducing the offering services…

What is generally agreed, as well is, even if you attract more shareholders, those will not stick around if the company is experiencing a reduced client base.

Based on Meredithonomics, financials will do better if they not diversify among many businesses but rather stick to one basic idea. My question is: what happens if that one aspect of finance the company focuses on deteriorates? Will the company experiencing this downfall be able to survive while in a state of limbo up till the day that that sector rebounds? To me, financials with no synergetic businesses to leverage and cushion a potential fall will result to having nowhere to hide and eventually destroying the long lasting business models they were built on!!

US financials are in the brink of being the de facto leaders of the world once again!! If they don’t offer more services to their clients or at the same quality of service, all the accomplishments made in the past few years will boomerang back on them in the form of a mass client exodus….

Thanks Meredith, you always have a way to make financial professionals feel inferior and disposable!

There is an analogy particularly suitable for what is going on with Financial companies: the ideas of the hedgehog and the fox interpreted by philosopher Isaiah Berlin, which he uses to describe two main schools of thought.

The hedgehog: "relate everything to a single central vision, one system, less or more coherent or articulate, in terms of which they understand, think and feel – a single, universal, organizing principle in terms of which alone all that they are and say has significance"

The fox: "pursue many ends, often unrelated and even contradictory, connected, if at all, only in some de facto way, for some psychological or physiological cause, related to no moral or aesthetic principle; their thought is scattered or diffused, moving on many levels, seizing upon the essence of a vast variety of experiences and objects for what they are in themselves, without, consciously or unconsciously, seeking to fit them into, or exclude them from, any one unchanging, all-embracing, sometimes self-contradictory and incomplete, at times fanatical, unitary inner vision"

To me, those who look at financial companies and see only one main issue, now a days it’s the Fiscal Cliff or more Regulation, are misled. If the executive can operate in such a way that before the event goes mainstream, he thinks like a hedgehog, along "big picture" lines with a single idea that he knows will capture the public’s attention. While subsequent to the event becoming mainstream, change his mental framework to that of a fox, constantly probing, questioning and analyzing, routinely searching for different viewpoints on the evolution of the financial industry, then, he probably would be very successful. "Big picture" issues usually capture huge gains if envisioned timely, while constant post-mainstream awareness they start monitoring along various news fronts provide the best kind of risk management. Somebody I respect once said that the mark of a first-class brain is the ability to entertain two conflicting viewpoints in one's head and function properly with them; the executives who can think like the hedgehog prior and the fox afterwards, would fulfill, this ideal.

The Micro mirrors the Macro environment…you heard it from the CEO today…

This is my response to those who question my economic, monetary & fiscal policies, geopolitical updates on a company specific-stock arena…

The Skeptics are pointing to one direction, the Prophets might seem as if they’re pointing to the opposite direction…but realistically, they are both pointing to the same direction…

You just have to have a holistic approach to things…

After Note: the above is also my response to those who assign a one star rating to my statuses…. sometimes they might be opinionated but mostly they’re just my interpretation of events and an interpretation of my personal experiences…