Factoid

After analyzing 70,000 corporate earnings reports dating back ten years, Bespoke Investment Group found that the overall beat rate of consensus analyst estimates was 62%, according to its own release. The beat rates for the major sectors were as follows: 69% (Technology); 63% (Consumer Discretionary); 63% (Health Care); 63% (Industrials); 61% (Consumer Staples); 59% (Financials); 59% (Energy); 56% (Materials); 55% (Utilities); and Telecommunications (49%).

Here's when you can stop signing your emails with 'best'

ou know how it goes. You begin the email to your boss, colleague, client, or HR director with a proper greeting. You cross your Ts and dot your Is, and you conclude the message with a formal signature such as “Best” or “Sincerely.” The email recipient responds with the same formality, addressing you in a standard greeting, and then writing out a couple of grammatically sound paragraphs before wrapping up the note with a similar signature; maybe it’s “Regards,” or the more casual, “Cheers.” Since that message requires a response from you, you continue to play along with what you think is the professional way — typing out the full greeting (again), composing the body of the message, and then concluding with “All the best, [Your Name].” You continue to do this after multiple back and forths even though it eventually seems totally pointless and even a little bit awkward. You’ve got to get good with ditching the formal speak Unless you work in a super stiff corporate office, where even exclamation points are frowned upon, you’ve got to get good with ditching the formal speak, particularly if communicating with your boss or colleagues throughout the workday is a frequent occurrence. As soon as it feels natural to scrap the “Hello, [Name of Person]” pleasantries and the redundant “Thanks, [Your Name]” goodbyes, do it. And to help you actually feel OK about doing this (and not like an etiquette monster), I’ve come up with a few guidelines. 1. Feel free to follow suit While it can be tempting to formalize all exchanges if it’s what you’re accustomed to or because it’s how you were taught, a lot of the time, it’s just not necessary. Pay attention to your workplace cues, or you’ll just end up sticking out. If your boss forwards you an email with nothing more than a note about taking a look to see if it’s of interest, and you reply with a formal message, I promise you, you’re not winning any brownie points — you’re only clogging up his or her inbox and ignoring how your team handles casual correspondence. Or, if your colleagues start communicating with you in a casual way (without addressing you by name or including an official sign-off), accept that as your sign to respond in kind. 2. Switch it up (depending on who you're talking to) Just because you reach a point where you drop the "best" with your manager doesn’t mean you should abolish the word from your vocabulary altogether. It doesn’t matter if your last boss made it clear that adopting an informal tone was intolerable; you’re not working for her anymore. Though, a word of caution, just because you reach a point where you drop the "best" with your manager doesn’t mean you should abolish the word from your vocabulary altogether. If you’re regularly speaking with someone you’ve never met and your relationship is more formal than not, don’t be so quick to sign off without including a proper closing, especially if you're on the fence about how to proceed. Erring on the side of caution will always be sound advice. Know this: Switching it up doesn’t just apply to different people. Even if a correspondence with one person starts out formally, you’re allowed to jump into the meat of the topic when you’re discussing an item across a long email thread — rather than bother with any greetings or sign-offs. 3. Consider timing If you go on vacation for a week and return to the office with a list of questions for your boss, who you haven’t spoken to or seen since you went away, it’s probably best to begin that first email back with a pleasantry such as “Good Morning,” “Hope you’ve been well,” or, if your manager was the one on holiday, “Welcome back” — even if you and your supervisor usually skip the greeting or small talk. Minding time lapses is also important for exchanges with outside clients or vendors. If you’re in touch once a week or just a couple times a month, it may be appropriate to start off the initial message after some time has passed with the go-to intro and the appropriate closing signature. A monthly touch-base with a senior member of your department may also require you to lean toward writing more conservatively. If that initial message results in a significant back and forth across a couple of days, then it’s probably fine to reduce the formal factor, especially if the other party has done so.

Pseudo-Economics

Thanks to Brian Wesbury for this commentary.


To paraphrase the late Jude Wanniski – the history of man is a battle between the creation of wealth and the redistribution of wealth. Jude was a Supply-Sider, which means an economist who believes that entrepreneurship and supply (not demand) drives economic growth.

Jude didn't invent this. Adam Smith and Joseph Schumpeter, along with Austrian economists, Eugen von Böhm-Bawerk, Ludwig von Mises and Friedrich Hayek and the late, great Milton Friedman were all instrumental in the development of free market thought; the appreciation of entrepreneurship; and the importance of small government.

The other great contribution of the Austrians and Milton Friedman was in monetary policy. Friedman proved the Federal Reserve caused the Great Depression, while Ludwig von Mises talked of a "crack-up boom" – a money and credit-fueled boom that ended in a massive economic contraction and collapse. While Nobel Prizes have become a joke, both Friedman (for monetary thought) and Hayek (for proving Socialism fails) won them.

These thoughts were the intellectual underpinning of the Thatcher, Reagan, Wałęsa, and Clinton boom of the 1980s and 1990s. They also led to a USSR collapse.

Since then, a cottage-industry of copy-cat, Wiki-reading, blog-writing, pseudo-economists has sprung up. Fueled by a misunderstanding of 2008, these prognosticators, using selective excerpts from Austrian thinkers, have created an entire theory that the US economy today is in a "crack-up boom." The boom, according to them, has been caused by the Fed, QE and zero-percent interest rates, and now that the Fed has tapered and started hiking rates, it's over and a bust is on its way.

These ideas and forecasts find fertile ground because so many investors are still scared of 2008. They have "hypochondria" or "PTSD" as opposed to faith in free markets. And, if someone tells them the only reason stocks are up in the past seven years is because of easy money, and if there is plausible basis for believing this, many investors feel like the market could collapse at any moment.

And this is the nub of the matter. The pseudo-Austrians have focused almost solely on money; they've forgotten the entrepreneur. So, with the Fed tightening, everything becomes bad and requires some reaction by government. Falling oil prices (which should be viewed as a great supply-side success) are viewed as a demand-side (money) problem. China, which is a communist country, becomes a problem that government must manage. In other words, these so-called Austrian thinkers have, in effect, become demand-siders because they focus so much attention on what government is doing.

We view the world through Austrian and Monetarist thought processes, but we don't see anything like what the doom and gloom crowd does. We believe quantitative easing did not boost economic growth because banks shoveled that money straight into excess reserves. Even after the recent Fed tightening, there are still roughly $2.3 trillion in Excess Reserves in the banking system. This is the first Fed tightening in history that doesn't really reduce liquidity in the banking system.

We also believe new technologies, like fracking, 3-D printing, cheap and quick manipulation of the genome map, the cloud, apps, smartphones, faster communication and computer chips – in other words, good old entrepreneurship is driving profits and economic output inexorably upward.

And when we step back, the past six years suggests the creation of wealth is proceeding fast enough to offset the growing redistribution of wealth. The economy is not growing as fast as it could, but it is growing nonetheless. Ludwig von Mises called entrepreneurs "Angels." These Angels have been eking out a victory against big government. It's a small victory, creating Plow Horse growth, but there is no reason to suspect it has come to an end. Stay positive. Real Austrians do. 

Stock Market Corrections

Data from Bespoke Investment Group shows that, since the 3/9/09 market low, the S&P 500 has experienced 20 declines of 5% or more but less than 20%, according to USA TODAY. The smallest pullback was 5.30% (8/31/11-9/9/11). The biggest drop reached 17.27% (7/7/11-8/8/11). In 2014, the S&P 500 posted 53 record closes. The index, however, also suffered four pullbacks ranging from 4% to 7%. The S&P 500 has not endured a 10% correction in more than three years. Historically, 10% sell-offs occur about every 18 months or so.
Thanks for reading, David Eckess

Finance Gurus, Crystal Balls and Predictions

By David Eckess

Every January investment experts and firms publish their market forecasts for the new year.  You will hear about top down, bottom up, qualitative analysis, quantitative analysis, proprietary forecasting models and the list goes on. These experts, with some degree of fanfare, proclaim where they believe the financial markets will end the year and their reasoning for it.  Then, at mid-year the revisions pour in as "adjustments" to first of the year forecasts have to be made.

 If any of these experts, economists, strategists or others are lucky enough to predict the year-end values correctly, they will pull out a soap box, stand up and profess their brilliance. The firms they work for will create a marketing campaign around them. The commentators at CNBC, Bloomberg TV and Fox Business will be stumbling over themselves to get the first interview and ask what is in store for the next year. But that doesn't happen very often. Rarely do the experts get it right. Indeed some investment gurus will come close to forecast but most will miss and others will flat out blow it! Early in my career, one of my mentors gave me a gift with a note attached saying "everyone in the industry needs one of these" and I unwrapped a brand new, bright, shiny crystal ball. I still have that crystal ball, the base is a bit tarnished now but still a useful paperweight.

Last year (2014) was another good year for the equity markets. The S&P 500 gained 12.63% and the Dow Jones Industrial Average was up 8.54%. In reviewing forecasts for 2014 I was unable to find any experts that predicted the years performance . In all fairness there are some who have consistent records of success; and while they don't particularly nail it, they at least come close and were on the right track. When we find these strategists we listen to what they say and maybe lean toward them. However, it is not a matter of if but when they too will get it wrong.

After 29 years as a financial advisor I have heard many aphorisms that tend to hold true as they pertain to the stock markets. Consider these as you gaze toward the rest of the year and beyond:

Don't fight The Fed (Federal Reserve Bank).

Don't tell the market what to do, let the market tell you what to do.

Never confuse brilliance with a bull market.

You pay a very high price in the market for a rosy consensus.

Market forecasts for 2015 are no different than other years. The predictions run from one extreme to the other. Perhaps next January there will be an expert who can stand up and profess their brilliance, but don't hold your breath.