iShares Russell 2000 Index (IWM)

All Comments on IWM

  • commenter
    Geoff
    Considine
    Sep 06 02:05 PM
    My Website
    More Thoughts on Mohamed El-Erian's 'When Markets Collide' [view article]
    jmorace:

    Thanks for the comments--and it does not hurt my feeling when thoughtful people disagree with me. Please understand: I am not saying that the time is nigh to invest heavily for those with cash--it is beyond my abilities to 'time' this market contraction. That said, this decline is not so bad for those with truly well diversified portfolios. The S&P500 is down a lot, but it has not been hard to build a diversified portfolio that is in far better shape. The decline looks bad for people whith high Beta portfolios and those who have chased the trends--but they were simply taking on extra risk because of a recent low volatility environment (a la Minsky). This has also allowed a lot of hedge funds to lever up to silly levels.

    Geoff     Reply
  • commenter
    jmorace
    Sep 06 12:49 AM
    More Thoughts on Mohamed El-Erian's 'When Markets Collide' [view article]
    "the banks are making it harder for leveraged speculators to speculate." Seems true "This is volatility." I don't think so as there are well capitalized shorts and short selllers can move prices. "This makes assets cheap for investors with available cash and gives them an incentive to inject liquidity back in..." no. not so.....

    Sorry to disagree with you Goeff but there is no incentive to jump back in because these declines feed on themselves. Sales push asset prices down forcing assets to be marked to market forcing more asset sales to meet capitalization requirements.....

    The only possible way out is a Minsky moment.... which seems to be at hand! (RE: Paulson and Freddie and Fannie this weekend.) It is our first this cycle. Minsky moment, that is. May it be the only one we need. We will see if it is enough.

    Check out the literature on Japan and their real estate bubble if you want to see how long this can take when its handeled badly. Of course as a percentage of gdp, this real estate bubble seems to be a bit smaller than monseter the land of the rising sun created, so maybe we'll get out of it sooner.......and can happily return to our inflationary modeling. I hope so.     Reply
  • commenter
    poet1
    Sep 05 11:40 PM
    What's Pushing the Market Up? [view article]
    great article, thanks for taking all that time out to write. Reply
  • commenter
    iThinkBig
    Sep 05 05:37 PM
    My Website
    Charts Gone Wild [view article]
    Big picture, this is a deflation of -20 GDP that began in August of 2007 and will last until 2012-2013. Then I expect a new Bull. 7% of true GDP seems to have come off in 2008, 3% more in 2009 & 2010 (I expect some bear rallies) and the worst of the worst will hit late 2010 and 2011, another 10% GDP lopped off. No it is not the end of the world. It is the end of a 25 year superbubble built on credit. Washington policy this spring or lack-thereof will dictate the true recovery time, so perhaps 2013 is optomistic. So far, I have seen socialism attempted to be repaired by socialism. I should really call what this American government is which is Feudalism. Reply
  • commenter
    Geoff
    Considine
    Sep 05 01:14 PM
    My Website
    More Thoughts on Mohamed El-Erian's 'When Markets Collide' [view article]
    Guys:

    Great comments all! There are a number of good points here. Let's start with the fact that when Mr. El-Erian is talking about an allocation to U.S. equities, for example, its a safe bet he does not mean the S&P500--he states very clearly that he is not a fan of market cap weighting. Portfolio theory also supports specific sector allocations that do not match market cap weights.

    Now, I like the liquidity argument--its a good one. If liquidity is extracted from the market, asset prices will fall---people are taking money out to stash it under their mattresses and the banks are making it harder for leveraged speculators to speculate. This is volatility. This makes assets cheap for investors with available cash and gives them an incentive to inject liquidity back in...there are contractions and periods of deflation and there is no reason to believe they cannot occur---but none of these ideas is inconsistent with a view that markets are, long-term weighing machines. We may see a long-term period of contraction--I for one will not predict one way or the other. If one can make this case, it leads to certain actions. QPP puts a probability on long-term poor performance of even diversified portfolios--see my article on The Lost Decade. Thats as far as QPP goes.     Reply
  • commenter
    jmorace
    Sep 05 12:30 PM
    More Thoughts on Mohamed El-Erian's 'When Markets Collide' [view article]
    dlaw's liquidity comment is interesting. It seems to me all of modern portfolio theory is predicated on the assumption of an ever expanding amount of money which inevitably pushes up the price of something. So, Central banks pump liquidity into the system and a bull market(or bubble) forms. Even when the bubble bursts, the next effect on wealth is that it has increased in the system as a whole. And so a portfolio allocation method like QPP makes intuitive sense. It’s trying to capture the sweet spots where the next expansion will happen.

    But here we are in a situation where 'liquidity' is contracting in spite of central bank action (or error in the case of the ECB.) All the institutions are delevering. El Erian discusses this. Of course it becomes a vicious cycle. And it is a key question for the moment. What happens to the QPP modeler in a deflationary environment when prices of all assets go down? Granted these periods are rare, but that's because the central banks have inflated each and every asset (financial or hard) they can, now there are none left to expand. Maybe they can get them to expand again. But it is just as likely that they will fail in this effort So we must think through the possibility of asset prices deflation on our portfolios.

    Sounds crazy, I know but deflation is not a rare thing. It’s rare just in our lifetimes. The thirties, post panic of 1907, civil war period. There are many other examples. So it can happen, and it is a not a ’black swan’ and how do we model for this possibility now?     Reply
  • commenter
    jmorace
    Sep 05 12:30 PM
    More Thoughts on Mohamed El-Erian's 'When Markets Collide' [view article]
    dlaw's liquidity comment is interesting. It seems to me all of modern portfolio theory is predicated on the assumption of an ever expanding amount of money which inevitably pushes up the price of something. So, Central banks pump liquidity into the system and a bull market(or bubble) forms. Even when the bubble bursts, the next effect on wealth is that it has increased in the system as a whole. And so a portfolio allocation method like QPP makes intuitive sense. It’s trying to capture the sweet spots where the next expansion will happen.

    But here we are in a situation where 'liquidity' is contracting in spite of central bank action (or error in the case of the ECB.) All the institutions are delevering. El Erian discusses this. Of course it becomes a vicious cycle. And it is a key question for the moment. What happens to the QPP modeler in a deflationary environment when prices of all assets go down? Granted these periods are rare, but that's because the central banks have inflated each and every asset (financial or hard) they can, now there are none left to expand. Maybe they can get them to expand again. But it is just as likely that they will fail in this effort So we must think through the possibility of asset prices deflation on our portfolios.

    Sounds crazy, I know but deflation is not a rare thing. It’s rare just in our lifetimes. The thirties, post panic of 1907, civil war period. There are many other examples. So it can happen, and it is a not a ’black swan’ and how do we model for this possibility now?     Reply
  • commenter
    Kayboe
    Sep 05 11:00 AM
    Charts Gone Wild [view article]
    Market is down again today. Trend followers should remain bearish while long-termers should use these panics to pile in! Reply
  • commenter
    User 199792
    Sep 05 09:11 AM
    Charts Gone Wild [view article]
    FREE FALL Reply
  • commenter
    Online
    Trading
    Sep 05 08:26 AM
    My Website
    Global Stock Markets: Going Nowhere Fast [view article]
    Great call. I think the lasy few days have shown that we are still in a nervous period with any bad news causing chaos, but really... a seven hundred point drop in the Dow... is it really that bad.... Look for next week to give back some of these losses. Reply
  • commenter
    buyitcheap
    Sep 04 01:58 PM
    Is the Market Rolling Over? [view article]
    Having a GREAT day today daytrader - hope you are also! Reply
  • commenter
    insideoil
    Sep 04 01:43 AM
    Global Stock Markets: Going Nowhere Fast [view article]
    Any thoughts on why it was the UK market that turned first - maybe the weakest link, or just simply sharper at spotting problems ahead ?
    Another casual observation of course is how long the turn in one market has taken to work its way through to other markets. We may live in a global economy ( linked markets), but it sure has seemed to take awhile for all to realise that.
    Looking around in the GCC at all the crazy activity that has yet to even pause, one cannot help but feel something has yet to crack. But, then again, there is one huge energy bubble that may have to burst first.     Reply
  • commenter
    Jimmy
    Lathrop
    Sep 03 08:53 PM
    My Website
    More Thoughts on Mohamed El-Erian's 'When Markets Collide' [view article]
    Mr. Hart I take umbrage at your facile assumption that eating ice cream every night before going to bed is somehow deleterious to your health. Disclosure: I am long MOO. Reply
  • commenter
    dlaw
    Sep 03 08:15 PM
    My Website
    More Thoughts on Mohamed El-Erian's 'When Markets Collide' [view article]
    The problem with Al-Arian's work and, excuse me, but yours is that you make implicit assumptions about liquidity that are invalid.

    Liquidity is not constant across asset classes, currencies or eras.

    Moreover, while the "reversion trade" mentality usually works in the medium term it fails terribly in the long term. Mr. Al-Arian and his firm are blinkered when it comes to discontinuities.     Reply
  • commenter
    LBill
    Sep 03 06:51 PM
    More Thoughts on Mohamed El-Erian's 'When Markets Collide' [view article]
    Geoff- Valuable piece. I especially take note of your reflections on market-cap weighted index funds (backward looking) as well as the fundamental-weighting alternatives. I've often wondered whether the Fama-French value and small effects on increasing portfolio returns is simply due to the dilution of market-cap weighting that this introduces. Reply
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