Showing posts with label Survey. Show all posts
Showing posts with label Survey. Show all posts

Tuesday, October 30, 2012

Survey Highlights Investors Misguided Beliefs About Republicans

Barclays Research recently released a survey which was highlighted over at Zero Hedge. Apparently, investors in the survey seem to think that an Obama victory will more likely result in a stocks selling off, while a Romney win would result in an increasing stock market (as seen in the chart below from zero hedge).
The most interesting part of the above graph is how FEW see a sell-off under Romney. There seems to be this odd belief, despite the facts, that Republican policies are better for markets. However, history would say otherwise as the chart below shows from CMC Markets going back to 1900.

The stock markets have returned an average annual return of 15.31% with Democrats vs 5.43% with Republicans. Now some may correctly point out that Republican policies have changed over this long time-frame. However, the trend holds over the last 50 years as well as this chart from Janus Funds highlights (link is to their white paper: Market Performance and the Party in Power).

Furthermore, the Barclays survey also highlights how investors think the BOND markets would initially react to a Romney win.....yep they think bonds would sell-off.
Granted the question only refers to the "knee-jerk" reaction, but again, why would the market react this way when history has shown that the BOND markets are what actually has done better during Republican presidencies?  This is also illustrated by the Janus Funds paper as seen below.

Clearly it is bonds NOT stocks that have done better under Republicans. I think Jeremy Grantham may have addressed investors misguided belief best in a recent interview with Charlie Rose.
"These capitalists who are desperate to elect Republicans should study their history books."         ---Jeremy Grantham
Now, having said all this, I do not actually think it actually matters whether the president is Republican or Democrat. The powers of secular market cycles, valuations and events outside of any presidents control is what truly drives the market. For instance, the S&P 500 was up 26% in 2009, a gain which is attributed to Obama despite the fact that he just took over office. The reality is the market would have bounced off it's lows in 2009 even if McCain was president.....Besides, Democrats and Republicans?? They both push the same agenda in reality......

Friday, December 16, 2011

GDP Estimates 2012 Vs. 2008 and More Economic Consensus Groupthink

The Wall Street Journal recently released it's December Survey of Economists. This is where you generally get to hear about the current consensus groupthink. In the survey, 54 economists gave their projections for GDP in 2012 (among many other things). I decided to compare this years projections for the year ahead to what these great minds saw coming in December 2007 (the month the last recession started). Does anything about this strike anyone else as quite similar........

Now just maybe if they would have added a negative sign to their 2008 forecasts they would have been pretty spot on (considering GDP for the year finished down -2.5%). The December 2007 survey included 51 "economists"....yet not 1 came up with a negative GDP projection. Here we are now in 2011, with the European situation, the rest of the developed world including the US and Japan soaked in debt, and China trying to build ghost cities until someone rises from the dead, and not one of the 54 "economists" is willing to project anything lower then 1.3%? Interesting......

What else do they have to say?

With the unemployment rate right now at 8.6% (due to massive labor force shrinkage) the consensus is things will essentially stay as is. Funny, anyone know what the unemployment rate was in December of 2007? 5.0%. And what was the consensus for the end of 2008? 5.1%. In reality it tuned out to be 9.9% and yet not one of the economists predicted anything above 5.6%. Nice work guys.

Some more on unemployment....

Yikes, they can't predict one year ahead and now their being asked about the unemployment situation 3 years out? Anyone know how I can get in touch with James F. Smith from Parsec Financial Management who made that 5.0% projection? Because I would gladly pull a Mitt Romney on him and bet him $10,000 that's not gonna happen!

Alright, What about Treasury Rates?

Looks like they are calling for rates to rise from the current level of 1.85% to 2.75% (we can be sure this is due to their more optimistic view of the overall economy and not worries of the US ever expanding debt situation). In Dec of 2008 when it was 4.1% consensus said it would move up slightly to 4.28% (the yield ended 2008 down to 2.25%)

So what about their views on the probability of a recession in the US in the next 12 months?

23% and nobody puts the odds at higher then 40%? What about the Eurozone? Surely they must realize the Eurozone is already in a recession -- After all, the OECD already declared as much (and they are never the first to spot anything)


Really? You can't even get them to admit "yes" on a Eurozone recession which is clearly already happening? Well, what should we expect.......this is what they thought in July 2008 (7 months after the last US recession already started).

Ok so maybe we should interpret anything in the 50% range as their version of certainty LOL!

Will at least one member leave the Eurozone? 48%? Guess that should mean it's pretty near certain!

That may be about the biggest dispersion of views you will see on a subject from these groupthinkers.

Ah the joys of "economist" forecasts!