Fear Factor

Posted on July 14, 2010 by David Laidlaw  At the height of the reality show craze earlier this decade, NBC aired a show in primetime called “Fear Factor” that had contestants perform stunts that appeared frightening or stomach turning. Most of the challenges involved dangling participants from heights or plunging them into vats of snakes or insects. Given either innate courage or a strong desire to capitalize on their 15 minutes of fame, most of the show’s contestants gamely withstood the challenges without faltering. Over the past two months, investors have been subjected to harrowing…

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2010 Second Quarter

Posted by David Tillson 2010 Second Quarter As we enter the second half of 2010, investors are still faced with an unusual amount of uncertainty, a reduced appetite for risk, and a barrage of mostly bad news from the media. The sharp recovery in equity prices leading up to the second quarter was brought to a halt in May and June as the market declined 15% from its April peak. Stocks were weighed down by the Euro-area sovereign crisis, a loss of confidence in the global economic recovery, and the Gulf…

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Inflation Update

Posted on April 14, 2010 by David Laidlaw  The latest release of figures from the US Bureau of Labor Statistics regarding inflation shows that changes in prices have been quite tame over the recent months and during the past year. During February, the Consumer Price Index (CPI) did not increase at all on a seasonally adjusted basis. Additionally, the CPI only increased 2.1% over the prior year. Looking at the elements that compose the CPI presents a different picture and suggests inflation is not as benign as appears at first blush. Housing is the largest element used in…

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Market Multiple

Posted on April 14, 2010 by Ben Connard  The market has increased about 50% over the last year, causing many talking heads to wonder if the market is over-valued. One simple method of valuation is the current P/E ratio. Is today’s P/E ratio higher or lower than the historical average? Behavioral economist Robert Shiller, perhaps best known for his March 2000 book Irrational Exuberance which correctly predicted the tech bubble, publishes historical P/E ratios. These numbers can provide general insight as to whether the market may be over or under-valued. He tabulates a Cyclically Adjusted Price…

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