Posts tagged ‘Rodney Dangerfield’

No Respect: The Rodney Dangerfield of the Investment World

Source: Photobucket

Ask any average Joe off the street what investment category is at or near record all-time highs, and a good number of them will confidently answer “gold,” as prices recently eclipsed $1,600 per ounce. But of course this makes perfect sense, right? The Fed is printing money like it’s going out of style, the dollar is collapsing like a drunken sailor, inflation is about to sky-rocket to the moon, and China is on the verge of becoming the world’s new reserve currency. Never mind that Greece, Portugal and Ireland are in shambles with the Euro on its death bed. Or Japan has achieved a debt to GDP ratio that would even make U.S. vote grubbing politicians blush. A sub-3% 10-Year Treasury Note doesn’t appear to discourage fervent gold-bugs either.

No Respect

While gold has experienced an incredible sextupling in prices over the last decade and hit new-all time highs, believe it or not, there is an unlikely asset class that is reaching new historic highs and has outperformed gold for almost 2.5 years. Can you guess what asset class star I am talking about? If I said U.S. “stocks,” would you believe me? OK, well maybe I’m not referring to large capitalization stocks like Johnson & Johnson (JNJ), Microsoft Corp. (MSFT), Wal-Mart Stores (WMT), Intel Corp. (INTC), and AT&T Inc. (T), all of which have effectively gone nowhere in the 21st Century. However, the story is quite different if you look at small and mid capitalization stocks, which have received about as much respect as Rodney Dangerfield.

 

As a matter of fact, the S&P 400 (MidCap Index) and S&P 600 Index (SmallCap Index) have more than doubled gold’s performance since the lows of March 2009 (SmallCap +149.0%; MidCap +145.1%; Gold/GLD +71.0%). Given the spectacular performance of small and mid-sized companies, I’m still waiting with bated breath for a telemarketer call asking me if I have considered selling my small and mid cap stock certificates for cash – since everyone has melted their gold chains and fillings, a new hobby is needed.

S&P 400 MidCap and S&P 600 SmallCap (Source: Yahoo! Finance)

What Next?

Has the fear trade ended? Perhaps not, if you consider European sovereign debt and U.S. debt ceiling concerns, but what happens if the half empty glass becomes half full. The early 1980s may be a historical benchmark period for comparison purposes. An interesting thing happened from 1980-1982 when Federal Reserve Chairman Paul Volcker began raising interest rates to fight inflation – gold prices dropped -65% (~$800/oz. to under $300/oz.) from 1980-1982 and the shiny metal lived through approximately a  25 year period with ZERO price appreciation. Since there is only one direction for the Fed’s zero interest rate policy (ZIRP) to go, conceivably history will repeat itself once again?

In hindsight gold was a beautiful safe haven vehicle during the panic-filled, nail-biting period during late-2007 throughout 2008. Since then, small and mid cap stocks have trounced gold. Like stocks, Rodney Dangerfield may have gotten no respect, but once fear has subsided and rates start increasing, maybe stocks will steal the show and get the respect they deserve.

See also Rodney Dangerfield’s perspective on Doug Kass and the Triple Lindy

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper.

www.Sidoxia.com

DISCLOSURE: Performance data from Morningstar.com. Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds (including small cap and mid cap ETFs), and WMT, but at the time of publishing SCM had no direct position in JNJ, MSFT, INTC, T, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

July 22, 2011 at 3:11 pm 1 comment

Kass: Triple Lindy Redux

About a year ago, I wrote about Doug Kass (founder and president of Seabreeze Partners) and his attempt at pulling off the famous “Triple Lindy” dive,  which was made famous in the classic movie Back to School starring Rodney Dangerfield. If I were a judge, I would say Kass’s landing wasn’t a perfect 10, but rather closer to a 6.5. After successfully nailing the bear market in 2008, and subsequently declaring the “generational low” of March 2009, Kass became cautious in June 2009. At the time, Kass pulled in his horns by pronouncing a consumer-led double dip in late 2009 or in the first half 2010 from a consumption binge hangover, while declaring his previous 1050 S&P 500 index target as overly ambitious. What actually transpired is the S&P 500 went from around 942 to 1220 over the next ten months, or up about +30%.

Today, Kass is trying to make another large splash, but now he is reversing course and once more calling for a rally…at least a mini one. Rather than speaking in terms of his previous generational low (S&P 666), Kass sees the recent lows around 1,010 being the “bottom for the year” and his new 2010 target is based on climbing to positive territory for the year, implying a +10% to +12% move from the beginning of July.

View Doug Kass Interview and Prediction

Kass is not your traditional investor, and he admits as much:

“I’m not a perma-bear, I’m not a perma-bull. I try to be flexible and eclectic in my view, and this is especially necessary in a market, which is so volatile as it’s been for the last several years.”

 

In explaining his upbeat rationale, Kass highlights nuanced aspects to employment data, payroll growth, moderate economic expansion, and an attractive valuation for the overall market:

“I’m not technically based, therefore I’m not sentiment based, I’m fundamental based….The markets are traveling on a path of fear and share prices have significantly disconnected from fundamentals.”

 

Even if Kass didn’t nail the “Triple Lindy,” he still deserves special attention as a practitioner, in addition to his side job as a market prognosticator. Additional recognition is warranted solely based on the potshots he aimed at rent-a-strategists like Nouriel Roubini, CNBC celebrity, (see Roubini articles #1 or #2) and Robert Prechter, long-running technician who is currently predicting Dow destruction to unfathomable level of 1,000. I’m not in the business of predicting short-term market gyrations, but I’ll enjoy watching Kass’s next dive to see whether he’ll make a splash or not.

Wade W. Slome, CFA, CFP®  

Plan. Invest. Prosper.  

www.Sidoxia.com 

*DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds, but at the time of publishing SCM had no direct positions in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

July 11, 2010 at 8:07 pm Leave a comment

Kass Attempts the “Triple Lindy”

backtoschoolAlthough Doug Kass, founder and president of Seabreeze Partners, has historically been primarily a dedicated short-seller, he presciently called the market low in March 2009 (what he now calls a “generational low”). Like in the movie Back to School starring Rodney Dangerfield, Doug Kass is trying to successfully execute the impossible “Triple Lindy” dive of his own.  Thus far, Kass has completed the first two legs of the dive by accurately being bearish in late 2007 and subsequently bullish at the recent market bottom in March 2009. Now he sees, “potholes on the road to higher prices,” and he thinks we will be stuck in neutral for quite a while.

Kass YahooClick Here for Kass’ Yahoo! Video Interview

Like other prognosticators, I feel like Mr. Kass is trying to have a little of his cake and eat it too, since he previously called a run to 1,050 (S&P was at 942 on 6/4/09) and now he has adjusted his posture to a neutral stance. Therefore if prices move upwards, his previous 1,050 call is firmly in place, and on the other hand if we move sideways or downwards, then his neutral prediction is still in play.

The "Triple Lindy" Dive

The "Triple Lindy" Dive

As one of the American judges, I give Kass a score of 9.0 regardless of whether his squishy call for a potential double-dip (consumer led recession) comes to fruition in late 2009, or early 2010. Congratulations Doug on completion of the first two sequences of the Triple Lindy!

June 22, 2009 at 5:30 am 9 comments


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